IRS investigation one step closer to White House

WASHINGTON — The investigation into the IRS practice of targeting conservative groups moved one step closer to the White House today in testimony before the House Oversight Committee.

Career IRS official Carter Hull, a self-described 501(c)4 expert with 48 years experience with the tax agency, testified the IRS chief counsel's office in Washington demanded information on the 2010 election activity of tea party groups applying for tax-exempt status.

Hull testified that instead of carrying out his recommendations to approve or deny tax-exempt status to conservative groups, Lois Lerner, the director of the IRS Exempt Organizations division, ordered tea party applications to go through a multi-level review that included her senior adviser and the office of the IRS chief counsel, a political appointee.

William Wilkins, one of two Obama administration political appointees at the IRS, leads the IRS chief counsel.

Scapegoating Cincinnati

Also testifying was Elisabeth Hofacre, an IRS official in the Cincinnati office who was assigned to review as many as 60 tea party applications and who coordinated her work with Hull.

She said the review process and extra scrutiny given the conservative groups was so unusual and she was so frustrated by what she saw as micromanagement, she asked for a transfer in July 2010, which was approved in October.

When Issa asked Hofacre how she felt when IRS officials began blaming the scrutiny on conservative groups on "rogue agents" in Cincinnati, she said she was deeply offended.

She said it hit her like a "nuclear strike."

Fireworks were provided by Rep. Jason Chavetz, R-Utah, who was visibly upset over the treatment of Hofacre.

He expressed outrage that the White House Press secretary would blame the IRS targeting of conservatives on two agents in Cincinnati and that former acting IRS director Steve Miller would blame two rogue agents.

Chavetz said the most powerful people in Washington were blaming one of the people sitting at the table in front of him, referring to Hofacre.

He said that makes him believe Washington is involved.

"How dare anyone suggest we are at the end (of this investigation) -- we are at the beginning," Chavetz thundered.

Practically shouting, Chavetz said when ranking member Elijah Cummings, D-Md., went on national television and said the investigation should be closed he was wrong.

Chavetz attempted to soften the stinging public rebuke by adding he had the utmost respect for Cummings.

And, indeed, after Chavetz finished his questioning of the witnesses, Cummings walked across the row, took a seat next to Chavetz, and as the two whispered, broad smiles grew over both their faces.

Cummings then slapped Chavetz on the back and departed.

'Following the facts'

Committee Chairman Darrel Issa took a moment to deny Democrat charges he was targeting the White House and insisted the investigation is just following where the facts lead, but he also insisted the facts now lead to Washington and the IRS counsel's office.

However, building up to the hearing, Issa and the House Oversight committee, together with majority leadership on the House Ways and Means Committee, indicated they are getting nearer to laying political blame on the White House for delaying the tax-exempt applications of tea party groups, with the intent to keep tea party groups from fully participating in the 2010 mid-term elections.

"As a part of this ongoing investigation, the committees have learned that the IRS Chief Counsel's office in Washington, D.C., has been closely involved in some of the applications. Its involvement and demands for information about political activity during the 2010 election cycle appears to have caused systematic delays in the processing of tea party applications," wrote Issa, House Ways and Means Committee Chairman Dave Camp, R-Mich.; Oversight Subcommittee Chairman Jim Jordan, R-Ohio; and Ways and Means Subcommittee Chairman Charles Boustany, Jr., R-La., in a joint letter addressed to IRS director Daniel Werfel.

“[B]ased on his decades of experience, [career IRS official Carter Hull] determined he had enough facts to make recommendations whether to approve or deny the applications … However, Mr. Hull's recommendations were not carried out. Instead, according to Michael Seto, the head of Mr. Hull's unit in Washington, Lois Lerner instructed that the tea party applications go through a multi-layer review that included her senior adviser and the chief counsel's office."

The House Committee on Oversight and Government Reform has found, according to a website statement posted this week, that according to Hull, sometime in the winter of 2010-2011, the senior adviser to Lerner told him the IRS chief counsel's office would need to review all tea party applications.

Hull said it was the first time in his 48-year career at the IRS he was told to send an application to Lerner's senior adviser.

The committee continued, explaining it was not until August 2011 that the chief counsel's office held a meeting with Hull, Lerner's senior adviser and other Washington, D.C., officials to discuss these test applications. During the intervening months, the applications languished.

The chief counsel's office also instructed Hull that it needed updated information to evaluate the applications, the committee said.

Since the applications were up-to-date months earlier, when Hull made his recommendations, Hull testified that he found this request surprising. The chief counsel's office also discussed the possibility of a template letter to develop all the tea party applications, including those being held in Cincinnati. Hull explained that all the applications were different and that a template was impractical.

Hull's supervisor, Ronald Shoemaker, provided insight on the type of additional information sought by the chief counsel's office. The counsel wanted the applicants' political activities leading up to the 2010 election, the committee reported.

The lengthy review of the test applications in Washington created a bottleneck and caused the delay of other tea party applications in Cincinnati. The committee said IRS employees in Cincinnati – including Hofacre — have said they were waiting on guidance from Washington on how to move the applications forward.

The statement also said Hull explained that he could not provide advice to Hofacre because his hands were tied by his superiors in Washington. Therefore, none of these applications was approved or denied during the time he worked with Hofacre on the cases.

The head of the Cincinnati office, Cindy Thomas, testified that she continuously asked senior Washington officials when guidance was coming, to no avail.