Treasury officials told of IRS probe in June 2012

Senior Treasury officials were made aware in June 2012 that investigators were looking into complaints from tea party groups that they were being harassed by the Internal Revenue Service, a Treasury inspector general said Friday, disclosing that Obama administration officials knew there was a probe during the heat of the presidential campaign.

J. Russell George, the Treasury inspector general for tax administration, testified alongside ousted IRS head Steven Miller, who did little to subdue Republican outrage during hours of intense congressional questioning.

Both defiant and apologetic, Miller acknowledged agency mistakes in targeting tea party groups for special scrutiny when they applied for tax-exempt status, but he insisted that agents broke no laws and that there was no effort to cover up their actions.

George said he had told the department’s general counsel about his investigation on June 4, 2012, and Deputy Treasury Secretary Neal Wolin “shortly thereafter.” But, George cautioned, those discussions were “not to inform them of the results of the audit. It was to inform them of the fact that we were conducting the audit.”

After the hearing, inspector general spokeswoman Karen Kraushaar said George “informed Department of Treasury officials that we were looking into the IRS’ handling of applications for tax-exempt status, partly due to allegations raised by conservative organizations.”

Kraushaar said the disclosure was part of a routine briefing about the office’s activities.

The Treasury Department issued a statement Friday saying officials first became aware of the actual results of the investigation in March of this year, when they were provided a draft of George’s report.

George and Miller’s testimony came in a hearing of the House Ways and Means Committee, the first of several Congress plans on the matter.

Miller was contrite as he apologized for the actions of agents who singled out conservative political groups for additional, often burdensome scrutiny. But the hearing turned prickly when Miller insisted he did not deceive Congress, though he repeatedly failed to reveal the controversy last year when he was asked about it by lawmakers.

“Listening to the nightly news, this appears to be just the latest example of a culture of cover-ups and political intimidation in this administration,” said committee Chairman Dave Camp, R-Mich. “It seems like the truth is hidden from the American people just long enough to make it through an election.”

Committee Democrats were also critical of the IRS, but several took offense at Camp’s assertion that the matter is part of a wider problem within the administration. They noted that there has been no evidence so far that anyone outside the IRS was involved in targeting conservative groups.

“If this hearing becomes essentially a bootstrap to continue the campaign of 2012 and to prepare for 2014, we will be making a very, very serious mistake,” said Rep. Sander Levin of Michigan, the top Democrat on the panel.

Obama forced Miller to resign this week though he will remain on the job a few days until a new acting director takes over. Obama named Daniel Werfel, a top White House budget officer, to replace Miller, and met with Werfel on Friday.

Camp said Miller’s departure is not enough.

“The reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers,” he said.

But George, the inspector general, backed up Miller’s assertion when he said the yearlong investigation did not uncover illegal activity.

“It is not illegal, but it was inappropriate,” George said of targeting conservative groups.

George’s report concluded that an IRS office in Cincinnati, which screened applications for the tax exemptions, improperly singled out tea party and other conservative groups for tougher treatment. The report said the practice began in March 2010 and lasted in various forms until May 2012.

Agents did not flag similar progressive or liberal labels, though some liberal groups did receive additional scrutiny because their applications were singled out for other reasons, the report said.

The IG’s report blamed ineffective management in Washington for letting the inappropriate scrutiny continue for so long.

Miller said he was notified of the practice on May 3, 2012. After he was briefed, members of Congress repeatedly asked the IRS about complaints from tea party groups that said they were being harassed by the IRS.

But Miller was not forthcoming back then about groups being targeted in at least two letters to members of Congress and in testimony before a Ways and Means subcommittee.