Internal Revenue Service managers at Washington headquarters thwarted attempts by field employees to speed up review of tea-party groups' applications for tax-exempt status, two agency employees testified Thursday before Congress in the strongest evidence yet that higher-ups were involved in the targeting of conservative groups.
During the hearing of the House of Representatives Committee on Oversight and Government Reform, the Treasury Department auditor whose report triggered the IRS scandal told lawmakers that the agency had withheld from him until this month information that liberal groups also may have been inappropriately targeted.
After numerous weeks of leaks and transcripts, Congress and the public heard from IRS rank-and-file employees, who told of exasperation at the lack of guidance from Washington about groups for which they'd been instructed to provide special scrutiny.
Elizabeth Hofacre, an IRS application processor in Cincinnati, and Carter Hull, a recently retired 47-year IRS veteran at the Washington office, shed new light and effectively shifted the focus back to Lois Lerner, the head of the Exempt Organizations division, which determines the tax-exempt designation requests from applicants.
Lerner, who's refused to answer questions from Congress, has been put on administrative leave by the new IRS chief, Daniel Werfel. She infamously tried to get ahead of a negative report in May from the Treasury Department's inspector general for tax administration by answering a planted question about inappropriate scrutiny of conservative applicants for tax-exempt designations. She described that scrutiny as the work of rogue agents in Cincinnati.
"I was deeply offended," Hofacre said of the "rogue" allegations. "I mean, it impugned my reputation and the reputation of other agents and, basically, all federal employees."
Asked again, she added, "Personally, I feel it was like a nuclear strike. They were blaming us."
Hofacre said IRS employees had reached out to Washington for guidance in 2010 on how to proceed with tea party cases and were told to wait. She was handling these cases from April to October 2010, shortly before crucial midterm congressional elections. She eventually requested a transfer because of her mounting frustration over the delays and lack of guidance.
Republicans blame the special scrutiny of conservatives on political motivations, although Hofacre and Hull, to whom she reached out in Washington, said they weren't aware of any such motives. New information confirmed Thursday by Treasury Department Inspector General Russell George suggests that liberal groups with the terms "progressive" or "occupy" in their names also were targeted for special scrutiny, albeit on a different track.
Democrats have criticized George, alleging that he deliberately left this information out of his report on tea-party scrutiny. The inspector general, a Bush administration appointee, said the IRS had shared this information with him on July 9, never challenging his report's assertions for more than a year.
"IRS staff at multiple levels concurred with our analysis," George said, acknowledging that he wonders what else the IRS may not have shared with auditors. "I am very concerned about that."
Thursday's hearing raised new questions about management in the Exempt Organizations division. Hull, a lawyer, testified that he was put in charge of a couple of test cases for tea-party applicants. Then, he said, they were taken away from him after he raised concerns and handed to someone who'd worked for the IRS for just four months.
"Further review is very rare. But it did happen in this particular case," he told lawmakers about the cases that originated with Hofacre, who testified that she was "frustrated because of what I perceived as micromanagement" of the applications.
"They take it from a guy who's been there 48 years with stellar evaluations and give them to this individual," said Rep. Jim Jordan, R-Ohio. "They were taken from you after you made recommendations how to deal with the test cases."
The committee is considering bringing Lerner back for more testimony, arguing that since she'd given an opening statement in earlier testimony before refusing to answer questions that she cannot plead Fifth Amendment protections. The committee also plans to seek public testimony from top IRS lawyers in Washington.
By David Lightman and Kevin G. Hall
McClatchy Washington Bureau