IRS scandal report prompts partisan sniping in House

WASHINGTON — A House committee inquiry into the targeting of political groups by the Internal Revenue Service devolved into partisan finger-pointing Thursday as the controversy expanded to allegations that progressive groups were flagged as well as tea party organizations.

Republicans criticized the acting IRS commissioner, Daniel Werfel, for his handling of an internal review into the issue as he faced lawmakers for the first time since taking the job last month.

They said Werfel failed to interview key current and former IRS officials before issuing a report this week that found no evidence that agency employees intentionally did anything wrong or were directed by the White House.

President Obama, who ordered the review, has called the IRS targeting of conservative groups inexcusable. White House officials have said they were not involved in the extra scrutiny directed by the agency’s Cincinnati office.

IRS officials have said employees inappropriately devised shortcuts to deal with a flood of applications for tax-exempt status from “social welfare” organizations, which can participate in politics if it is not their main purpose.

Republicans have tried to link the scandal to Obama and objected to the report, which absolved the White House of any connection to the now-banned practices and declared IRS officials were not motivated by political bias.

“Mr. Werfel, this report is a sham,” said Rep. Kevin Brady (R-Texas) during a three-hour House Ways and Means Committee hearing. “I would call it a whitewash, but it’s too thin and unsubstantial to meet that description.”

Werfel acknowledged that some IRS officials were not interviewed, but said Justice Department and inspector general investigators must question them first. And he noted the report — labeled an initial assessment — was based on what’s been determined so far in an investigation that still has months to go.

“There’s a lot of questions to be asked and answered that haven’t been asked and answered yet,” said Werfel, a former Obama and George W. Bush White House aide.

Democrats strongly defended Werfel, noting he arrived at the IRS only five weeks ago after former acting Commissioner Steven Miller was forced to resign because of the controversy.

And they said Republicans were hypocrites for not expressing more outrage about revelations this week from IRS memos that “progressive” was also used as a key word to flag applications for tax-exempt status, as were terms used by conservative groups, such as “tea party” and “patriots.”

Democrats accused the Treasury inspector general for tax administration, J. Russell George, appointed by Bush, of failing to tell lawmakers about the targeting of liberal groups when he testified before the committee last month. They demanded he be called to testify again.

In a letter to the committee’s top Democrat released Thursday, George said his investigation was not limited to allegations of tea party targeting.

But he said his review found no evidence progressive groups were selected for extra scrutiny by using terms that identified them as progressives. The word “progressive” did appear on an agency “be on the lookout” spreadsheet. Unlike other entries on that spreadsheet, however, there were no instructions on how to select progressive groups for added review.

George said his report and testimony didn’t mention targeting of progressive organizations because there was no evidence such groups were targeted during the 2010-12 time frame he investigated.

Committee Chairman Dave Camp (R-Mich.) said that “no taxpayer, regardless of political affiliation, should be unfairly targeted” and that any groups that believed they were mistreated should come forward. But he said that so far the evidence showed that only conservative groups were “systematically targeted by the IRS, not just flagged” through the “be on the lookout” list.

Camp and other Republicans criticized Werfel for not interviewing Miller, former IRS Commissioner Douglas Shulman or Lois Lerner, the former head of the IRS’ exempt organizations division, which oversaw the processing of applications from tea party and other groups seeking tax-exempt status.

Rep. Sander M. Levin (D-Mich.) said that memos indicating the IRS also screened applications for the term “progressive” showed the agency was not politically motivated and that George was not “forthcoming” in his report and testimony.

“If he had come forth with that information, I think it would have undercut a lot of the wild innuendoes that talk about a White House enemies list, talking about a culture of coverup,” Levin said.

jim.puzzanghera@latimes.com