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WASHINGTON — Ranking Member Sen. Orrin Hatch, R-Utah, didn't mince words.
During Tuesday's Senate Finance Committee hearing, Hatch said the IRS's decision not to notify Congress of the agency's targeting of tea party groups was “a lie by omission” and that the man in charge at the time just "sat on that guilty knowledge."
The acting IRS commissioner, Steven Miller, replied, “Mr. Hatch, I did not lie.”
But Hatch insisted Miller knew there was a list IRS officials were using to target conservatives applying for tax-exempt status when he failed to inform Congress of the abuse.
"You knew what was going on, you knew we asked, you should have told us," Hatch said.
The harsh criticism was bipartisan.
Chairman Max Baucus, D-Mont., quickly became irritated with former IRS Commissioner Douglas Shulman, who spoke publicly on the scandal for the first time. Baucus asked why no one was fired in 2011 when the Washington IRS headquarters learned of the targeting of tea party groups applying for tax-exempt status.
Shulman was the head of the IRS when the abuse began, but he replied, “In June of 2011, I don’t believe I was aware of this.”
Clearly annoyed, Baucus shot back: “You were the commissioner. If you don’t know it, it sounds like somebody isn’t doing their job,” he said.
Baucus then asked, “What created this culture of indifference to the American people?”
When Shulman didn't directly answer the question, the chairman got straight to the point.
Referring to the office where the abuse apparently began, Baucus asked: “What happened in Cincinnati? What conditions caused that?”
“I can’t say that I know that answer,” Shulman replied.
The former IRS commissioner basically pleaded ignorance throughout the hearing, much to the frustration of lawmakers. Shulman said he didn't learn all of the facts of the scandal until he read last week's report by the Treasury inspector general.
Shulman said he first learned about the investigation into the targeting of conservative groups in the spring of 2012.
The former IRS chief says that was when he and Miller were told IRS workers were using a list of key terms, such as "tea party," to determine which groups seeking tax-exempt status should be given extra scrutiny. Shulman said he didn't know what other terms were on the list and he didn't know the extent of the problem. He also said he was told the situation was being addressed.
Shulman also refused to apologize during the hearing.
He would only say he was “deeply saddened” by what happened.
When Sen. John Cornyn, R-Texas, pressed for an apology, Shulman stated, “I certainly am not personally responsible for making a list that had inappropriate criteria on it.”
He added, ”With that said, this happened on my watch, and I very much regret that this happened on my watch.”
Cornyn asked, “The buck doesn’t stop with you?”
Sen. Bob Casey, D-Pa., criticized Shulman for not knowing about the use of improper lists to screen applicants.
"I would assert that the fact that you didn't know was a management failure of some kind," said Casey.
Senators grew increasingly frustrated with Shulman when he kept saying he didn't know what was going on because he was no longer at the IRS. When pressed, he did finally concede: “I agree that this is an issue that when someone spotted it they should have run up the chain, and they didn’t. And why they didn’t, I don’t know."
Shulman resigned in November, but before that, he repeatedly and incorrectly told lawmakers the IRS had not targeted tea party groups for extra scrutiny.
However, the Treasury Department’s inspector general for tax administration, J. Russell George, the third official testifying Tuesday, said he told Shulman about the investigation into the abuse on May 30, 2012.
Members of Congress repeatedly asked Shulman about complaints from tea party groups from 2011 through the 2012 election. Shulman continually refused to acknowledge that IRS agents had targeted conservative groups for extra scrutiny, often relaying his denials through deputies.
Shulman was adamant in denying any special targeting of conservatives at a congressional hearing March 22, 2012.
"There's absolutely no targeting. This is the kind of back and forth that happens" to those who apply for tax-exempt status, said Shulman.
When asked at the House Ways and Means Committee hearing Friday morning about Shulman's March 2012 statement, Miller said it was “incorrect, but not untruthful.”
Miller also denied the IRS “targeted” conservative groups, insisting it was a “pejorative term.”
But a congressman pointed out that “targeting” was the very term used repeatedly in the inspector general’s report on IRS abuse.
At Tuesday's hearing, Miller revealed he did know who in the Cincinnati initially office ordered the targeting – but he would not disclose the person’s name. He said he did not know who restarted the practice after the office was supposedly told to stop targeting conservatives in 2011.
“Why is that less than clear, even now?” asked Sen. Toomey, R-Pa.
“I don’t know how we could come to the conclusion that this was not politically motivated,” added Toomey. “We don’t even know who made the decision.”
“Did you ask?” said Sen. Michael Bennet, D-Colo.
Miller said he did ask, but the answer he was given turned out to be wrong.
George, the inspector general, said for the first time he has launched a probe into how the IRS handles tax-exempt applications from political groups.
George says he hasn't found any evidence so far indicating the targeting was done by anyone in Washington for political reasons, but he said that doesn't mean whoever ordered it wasn't politically motivated.
“If we determine that something has occurred, we will certainly pass it along,” George said. “We thus far have not uncovered any actions that we would deem illegal.”
Sen. John Thune, R-S.D., asked George if IRS aides broke the law by leaking applications for tax-exempt status to the left-wing media outlet ProPublica.
“It could have been” illegal, George said.
In his opening remarks, Miller basically repeated the comments he made to the House committee on Friday, apologizing and again calling it "poor service" by the IRS. He blamed "foolish mistakes by people trying to be more efficient."
Miller took responsibility for the first time for the planted question used by Lois Lerner, the head of the tax-exempt division, to publicly reveal the targeting of conservatives. Miller said the planted question was his idea.
Hatch said in his opening statement the committee was seeking to find out whether top officials at the IRS were willfully blind or whether they were holding out on reporting the abuse until after the 2012 election. Hatch said he inquired twice about reports of abuse and Miller did not even hint at the abuse, and Shulman did not respond.
Shulman said he did not respond because he did not have all the facts, and he was deferring to the inspector general to “track down all of the facts.”
Hatch asked Shulman if he told anyone at the White House or the Treasury Department of the targeting once he learned about it.
He responded, "I don’t recall telling anyone about it, because I think this is not the kind of information once TIGTA (Treasury Inspector General for Tax Administration) starts looking at it that should leave the IRS.”
Shulman added, “I have no knowledge of people at the Treasury Department knowing about tea party groups being subject to scrutiny.”
The White House revealed Monday that Chief of Staff Denis McDonough and other senior officials learned last month about the Treasury Department inspector general's inquiry into IRS abuse. The White House the officials did not inform President Obama about the review and that he did not learn of the abuse until news reports May 10.
White House Spokesman Jay Carney revealed Monday that White House counsel Kathryn Ruemmler learned of the investigation April 24 and then informed the chief of staff and other aides about the inquiry's findings.