Transcripts For CSPAN2 Tonight From Washington 20130719

In washington. Congressman darrell issa chairs this House Oversight hearing. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] the committee will come to order. The Oversight Committee exists to secure two fundamental principles. First americans have a right to know the money washington takes from them as well spent and second americans deserve an efficient and effective government that works for them. Our duty on the oversight and government reform committees protect those rights. Our solemn responsibility is to hold government accountable to taxpayers because taxpayers have a right to know what they get from their government. Its our job to work tirelessly in partnership with citizen watchdogs to deliver the facts of the American People and bring genuine reform to the federal bureaucracy. Todays hearing particularly touches on taxpayers and what taxpayers should expect from the government. It continues the committees investigation into the irss inappropriate treatment of groups applying for taxexempt status. It is now our understanding that some of those groups for 501 c 3 s groups for whom they received a text direction if you give and the vast majority were 501 c 4 s groups for whom he did not receive a Tax Deduction for your contribution but you do not pay the same corporate taxes on that income. This scandal first came to light when a planted question directed at lois lerners request at the American Bar Association in may 10. Prior to the planting of that question designed to obstruct the truth about targeting and break the news to a sympathetic audience friday afternoon this committee had worked with our Inspector General, the treasury for more than 10 months. Multiple committees in the house of representatives had wanted answers, had sought answers and were waiting on those answers. In response to the planted question lois lerner blamed the inappropriate irs activities of lying people in cincinnati. The irs hoped, we believe the irs hoped that this would make the scandal quickly does date could dissipate. It did not an impact today we are going to hear from one of those employees in cincinnati. Our committee do we have also begun hearing from people they reported two works change information with in washington. Sadly the White House Press secretary continues the narrative characterizing it as Inappropriate Conduct by irs officials in cincinnati. Todays hearing needs to dispel that so we can begin following the witnesses and following the testimony and following the truth wherever it leads. We are now convinced and we will hear testimony that as the Inspector General found in his investigation audit what began in cincinnati with one case of a tea Party Application soon was in fact in washington at levels well above line employees. They say that the assertions cincinnati was to blame were absurd and we will hear that today. More importantly, it is now understood that these files, these hundreds of files, or in many many hands most of whom, many of whom were not in cincinnati. As we look for the truth, let us baer in mind that we can debunk many things along the way. We will probably never debunk all accusations nor should we make accusations and less testimony and takes us baer. We can today i believe debunk the accusations that cincinnati was in fact the source or that it didnt go to washington in which it clearly did. Particularly when we hear from the honorable Russell George, the ig who brought us this and his staff. I think we are going to find out more within the limits of his ability to tell us. I certainly want to make sure that the smear stops here today. I want to caution the ladies and gentlemen on both sides of the aisle here, we will work with what we know and we will work to find out what we do not know and i for one and i hope everyone on both sides of the dais will reject categorically assumptions for which there is not evidence. It is difficult to say who should have come forward first. We know one thing. Conservative groups came forward with their accusations more than 10 months ago and they were heard. We know that in fact members of both parties sent letters to the irs and i believe that is an important area that this committee cannot overlook. Everything we have learned of real substance began with mr. Mr. Georges impartial, independent investigation of irs treatment of taxexempt organizations since march of 2010. Our investigation will continue. I hope that both my side of the aisle and the Ranking Member side of the aisle will be very careful and cautious cautious in what we say. When i Say Something goes to the office of the console of the irs , let it not be construed as the office of the president or to the console itself. It is important we understand that words matter and nuances matter and that we not go one step beyond what we know. What we do know today and what i believe we are going to hear is that in fact washington made a catastrophic mistake in taking what would have been in an ordinary course and individual one by one application, its value it at them as mr. Sub five has done for 48 years, accepting them, denying them are asking for more information and not looking at them as a group with some sort of special cynicism. That is not what america expects. America does not expect people to be targeted as groups. One of the questions i will ask today will be if they were fairly evaluated would sum up these cases have been resolved if they were not lumped into a group . I may not get an answer today but i will not cease until i get that answer. Lastly there have been accusations leveled against the Inspector General and the work that he has done and his team has done. This committee is the most important place to resolve that. We have oversight over all the Inspector Generals. We control the legislation that created the position and we take seriously accusations about their independence. We will investigate it and as of right now we stand solidly behind the best efforts of all our Inspector Generals and a credible accusation occurs we will take it up. Lastly mr. Ranking member want to make sure that i make something clear. You are frustrated about 6103 and its interpretation you have made that clear. I am frustrated about it. I believe this committee must ensure that the fair interpretation of this law designed to protect taxpayers confidential information is in fact not used to revictimize people who have previously been victimized and i will work with the Ranking Member and anyone else to make sure we protect victims from being kept from finding out what actually happened to them and the public is appropriate appropriate and with that i recognize the Ranking Member. Thank you very much mr. Chairman. Let me be very clear. We come today to seek the truth, the whole truth and nothing but the truth so help me god. Eight weeks ago on may 22, we met in this room to give testimony about a report from the Inspector General about the irss review of rules applying to taxes and status. At the time there was justifiable outrage including from me about the inappropriate search terms used to screen these groups and the unacceptable delays they endured on this side of the aisle and i know the other side of the aisle we are not only concerned about conservative groups, we are concerned about all groups, all individuals who have anything to do with the irs. Since that hearing republican politicians have engaged in a sustained and coordinated campaign to accuse the president a white house of targeting tea party grooves for partisan political purposes without any evidence to support these claims. Our chairman led the charge saying this was quote targeting the president s political enemies end of quote. Other republicans followed suit inside a quote. [inaudible] they argued that president obama quote doesnt have clean hands and a quote. They invoked to disgraced former president richard nixon. The fact is that there is no evidence before for this committee to support these claims, none. Two days ago what i entered a memo finding that since the chairman and other republicans began making these accusations that they identified no evidence whatsoever documentary, testimonial or otherwise, to substantiate them. I ask that this memo be entered into the record at this time mr. Chairman. Without objection so ordered. Committee staff that is conducted a bipartisan staff have now conducted 16 transcribed interviews of irs employees in cincinnati and washington. We did another one just to stay and none of them reported in a white house involvement or political motivation including six who identify themselves as republicans and to the chairman chose not to invite today. To the contrary these employees indicated that they sought guidance on how the process of these applications in a consistent manner according to the law. For example, a tax law specialist in washington d. C. One who identifies herself as a republican called the accusations made by the chairman of quote laughable. She explained, this is purely cases that unfortunately cincinnati didnt have enough guidance on, that the c4 area is a very difficult area and there is not much guidance is what she said. And so the length of time unfortunately was just trying to apply the law to the specific facts of each case. I didnt say that. She said it. Yet even today this very morning the chairman is still claiming this. In an oped appearing in usa today he asked a question, was the targeting of the tea party applicants a record from the white house or somewhere else outside the irs . As our investigation is ongoing the responsible answers that judgment should be withheld. End of quote. This is unsubstantiated nonsense. It undermines the committees integrity and every member of this bodys integrity and it destroys the committees credibility. The chairman certainly did not withhold judgment. He rushed to it with no evidence whatsoever. The responsible answers that we have no evidence at all to back up that claim. Since our previous eight weeks ago, hearing a weeks ago we have obtained new documents that raise serious questions about the Inspector Generals report and im led to hear that the chairman stands by the Inspector General and i do too. I am very interested as he would be to know certain questions that we will be asking and im encouraged that he is free to come back in order to address him directly. I want to thank you mr. Chairman at my request for bringing him back. We must have an independent, transparent attorney general. I mean ig. Its so very important because we all depend on his word. For example the Inspector General fay to disclose mr. Chairman to this committee that he passed his top investigator with reviewing 5500 emails from irs employees. After conducting its this review this official concluded quote there was no indication that pulling these selected applications was politically motivated and of quote. I want to ask the Inspector General by he did not disclose the specific information when he testified on may 22. Just as i railed against mr. Shulman for not coming back to this committee to let us know what he may have found out. I also want to ask the Inspector General why he was unaware of documents we have now obtained showing irs employees were also instructed to screen for progressive applicants and why his office did not look into the treatment of leftleaning organizations such as occupy groups. I want to know how he plans to address these new documents. And again, we represent conservative groups on both sides of the aisle and progressives and others, so all of them must be finally i want to ask the Inspector General but some very very troubling testimony we heard yesterday from the acting head of the irs daniel werfel. Mr. Werfel testified the irs is about to produce unredacted documents to the Committee Last week that include references to additional categories of nonTea Party Groups but the Inspector General personally, personally intervened to block the irs from producing this information to this committee. According to mr. Werfel no irs irs ever recalled such an unprecedented intervention. We need to know why that was. Finally, i am not here to attack anyone. Im here to get to the truth. Not a partial or selective truth but the whole truth. I believe that there should be the goal of everyone in this room. We do need to stop making tasteless accusations and we need to get full information and i emphasize full, but the treatment of all businesses, conservatives, liberals and everyone in between and i sincerely hope that we can do that today. Without mr. Chairman i go back. I think the gentleman. All members will have until the end of the day to submit their written statements. And we now welcome our first panel of witnesses, ms. Liz hofacre Quality Assurance and the Cincinnati Office of the Internal Revenue service. That is a mouthful for any chairman. And mr. Carter hull was a senior tax law specialist at the exempt organizations technical unit in washington d. C. And was with the Internal Revenue service for an astounding 48 years of service and we want to thank you for your service. Or so into the Committee Rules i would ask that you please rise to take the oath. Raise your right hands. Do you solemnly swear or affirm that testimony youre about to give up a the truth the whole truth and nothing but the truth . Please have a seat and let the record reflect that both witnesses answered in the affirmative. I know that sometimes prepared statements are the best way to go and i am not going to dissuade you from it but use your five minutes in any way you want to abbreviate your statements if it makes it appropriate in light of Opening Statements for any other reason to add to me. I will not hold you to exactly five minutes but when you see the countdown getting close please wrap up. Ms. Hofacre. Chairman issa Ranking Member cummings and members of the committee since 1999 i have been an irs employee in the office of exempt organizations in cincinnati. As of april 2010 my position was in a eulogy termination specialist. At the time i have been assigned to serve as the emerging issues coordinator. In this role as test with handling applications and identified issues. In late april i was assigned by my supervisor to handle all applications that have been identified as applications by Tea Party Groups applying for 501 c 3 or 501 c 4 exemption status. Initially around april 302010 approximately 20 tea Party Applications were assigned to me. Subsequently received a steady flow tea Party Applications. There were occasions when other agents and applications from liberal or nontea party type groups. When that occurred pursuant to the instructions i have been given i would send those applications of general inventory since they were not within the scope of the tea party issue. Around the same time these applications were assigned to me i also learned that to tea Party Application that ben assigned to carter hull pedestal that was the too quickly. It is applications assigned to me with mr. Sub by. I called mr. Hull in the simulators see prepared assigned to him to use as examples for my applications. Mr. Hove requested i send him drafted Development Letters and he subsequently asked me to send them copies of applications as well. At the beginning of the process when i semidressed Development Letters to mr. Hu he suggested edits to the letters. I would make the edits and send them to the applicants. When i received responses i notified mr. Hull. Do not remember how many responses i received. I would estimate 15 to 25. No point did i receive guidance from anyone as to what to do with these responses. Similarly beginning sometime in the summer of 2010 for when i sent dressed Development Letters to mr. Hull i received no guidance from him or anyone else. In my experiences it was a highly initial process and i never had [inaudible] and i never before edison copies of applications assigned to me for technical review. I was frustrated because what i perceived as micromanagement with respect to these applications. Received numerous calls from applicants asking about the status of their applications. I was only able to tell the applicant applications were under review. I became very frustrated because until i receive guidance i was unable to process these applications. I expressed my concerns to both mr. Hull and my supervisor at the time. As a result of this frustration and july of 2010 i applied for a transfer to Quality Assurance and in october 2010 i received a requested transfer. When that occurred these cases that that i had have assigned for reassigned to another agent. To the best my recollection i have a total of 40 to 60 tea party cases assigned to me at that time. In july and august of 2000 i attended several meetings with mr. Bowling and another manager in which i was informed that the creation of the bolo list. They told me the purpose of list was to consolidate into a single document the instructions that agents received about certain applications. The bolo list was a new tab added to an existing spreadsheet that had other discussions of groups of agents. Mr. Waddell told me the language that should be added to the bolo list with respect to Tea Party Groups. After adding the language i sent the document to mr. Waddell for his review. Mr. Waddell then told me to send a document document to send a thomas in a couple of other managers. A few days later he told me to email the list to everyone else in cincinnati. Accidentally emailed the list to everyone including agents in washington d. C. Since october 2007 ive had no direct involvement in the processing and review of tea Party Applications aside from occasionally repeating them in the course of my Quality Assurance responsibilities. In december 2011 and january january 2012 i attended two to three meetings regarding the creation of a team to process tea Party Applications awaiting guidance. I provided this group of Development Letters drafted in 2010. I had no role in the processing of tea Party Applications offering those meetings. Thank you. Mr. Hull. Chairman issa, Ranking Member cummings and members of the committee as of the spring of 2010 i was employed by the irs as a tax law specialist in the exempt organizations in washington d. C. In april of 2010 i was assigned by my supervisor to work on to applications from the Tea Party Groups. In that same month i became aware of the tea Party Applications held by io determinations in cincinnati. It was my understanding that the applications assigned to me what the test cases to provide guidance for other applications. I was also told by my supervisor that i was to coordinate the review of the tea Party Applications assigned to Elizabeth Hofacre in cincinnati. With respect to the two applications assigned to me i review the applicatiapplicati on materials and and i send out initial Development Letters to the applicants. When one of those applicants not respond to the file was closed and i was assigned another tea Party Application to replace it. As part of my review i also researched to terminations made with respect to previous implications by groups applying for taxexempt status that have similar indications for potential political activity. Throughout this process i spoke to my reviewer about these cases. At some point and i do not have a clear memory as to when i make conclusions as to how the applications assigned to me should be determined and subsequently drafted document stating my recommendations and analysis. I am constrained from saying more about this applications due to prohibitions regarding disclosure of taxpayer information. I discuss my recommendations with her and she suggested i forward the recommendations to judy candle who was at that time a senior technical at laser to lois lerner. I later had a meeting with ms. Goodale and katzenberg in march of 2011 at which she told me to port my recommendations to the office of counsel for their review. While this process was going on i received drafted on the letters from mrs. Hofacre in order to assess the purpose of the question she had drafted and the application assigned to her. I asked ms. Hofacre to send me copies of the application as well. I gave ms. Sub were suggesting for burning her letters over the telephone. I also asked her to send me the responses to the letter she received however i was not able to give her guidance because the review of the test cases assigned to me had not been completed. At some point i stopped giving mrs. Hofacre feedback for the same reason. During this period of time i prepared sensitive case reports on a monthly basis regarding the tea Party Applications. In october 2010 or requested guyot technical manager i also wrote a memorandum to the eeo director holly perez that describe the coordination of the tea party cases in cincinnati. I attached a list of all the tea party cases i had received from ms. Hofacre. In the summer 2011 i were called attending to meetings. In july 2011 i attended a meeting with ms. Lerner ms. Pettis ms. Candle mrs. Mrs. Katzenberg and chief counselors officers were present. Ms. Lerner lesson meaning instructed everyone the applications werent he the referred to advocacy applications and not tea Party Applications. August 2011 i attended a meeting with the applications assigned to me were discussed. I recalled don spelman and amy franklin of the chiefs counsels office as well as justin low hillary. Ever recall ms. Franklin stated that more current information was needed from my applications and letters be sent to the applicants. I recall a discussion of the creation of a template of the tea Party Applications very express my opinion that a template was not a good idea and a great deal of variance among the groups and each application needed to be developed according to its particular facts and circumstances. After the august 2011 meeting the applicatiapplicati ons assigned to me were transferred to another tax law specialist. After the applications were transferred i had no further involvement with respect to the tea Party Applications. Thank you. Thank you. I am going to start with a round of questions. Mostly these are pretty much yes or no if at all possible. Ms. Hofacre is it true that you are unable to close any tea party cases because you are awaiting guidance from mr. Hull. Yes. Mr. Hull while were you unable to give ms. Hofacre the guide and she needed and i guess i will abbreviate it by saying were you waiting on answers from chief counsel and lois lerner and is that effectively what youre opening testimony said . [inaudible] i was waiting award from the chief counsel on how to proceed. Thank you. Mr. Hull you testified he made recommendations in these cases. Is that correct . That is correct. Under some caution of 6103 youre not prepared to tell us your recommendations at this time, is that correct . Am prepared to tell you almost applications exempted moms and application to be denied. There were applications recommended yes and applications recommended no. Were those to your knowledge . In other words if they agree with your recommendation to act on it or did they not act on it . [inaudible] so its fair to say when you recommended yes you got told, go get more information . Correct. Mr. Hull you have 48 years of experience. Throughout those 48 years did you ordinarily for similar cases to the ones you are speaking have enough facts to close these cases and where you often overruled in those decisions . I dont recall that i was ever overruled. Im not sure if this goes back a long way. With your 48 years of experience your recommendation was that these cases should be treated as individuals but in fact they were treated as a group over your recommendations. Is that correct . I recommended each organization as i saw fit. Those two organizations. Could we put up the slides . Mr. Hull mr. Cito one of your superiors in washington told Committee Staff that lois lerner sent him an email saying that these cases need to go through a multitiered review and they will eventually have to to go to ms. Lerners senior visor and the chief counsels office. Is this consistent with the instructions you received . I dont recall seeing that memo, sir . Is it consistent with the instructions you believe he received. Yes. In your experience is that unusual. Yes, that is unusual. Particular the multitiered process of essentially suspension. Oftentimes there was more than one reviewer put multitiered is unusual. Ms. Hofacre, to your knowledge do you know of anyone that you would say in your opinion had political motives in the role of treating of Tea Party Groups . No, i do not. Mr. Hull do you know to your personal in washington and ms. Hofacres primarily cincinnati by free their view that new had political motives against Tea Party Groups . No, sir. Do you have any personal knowledge of lois lerners politics activities are motives . No, sir. Lastly, one of the challenges that we have here is determining whether or not specifically there was special treatment in your knowledge of Tea Party Groups and ms. Hofacre you said you only work on Tea Party Groups. Is that correct . In 2010, that is correct. At that time your experience is that the special treatment that you experienced was specifically related to groups who had gathered some 298 as is the number we have during the entire 10 year and 471 today for special treatment. Is that correct . Yes, that is correct. Mr. Hull you have 48 years of serbs and i cant say that enough without realizing what a unique and long career that is. Can you give us a single valid reason for groups to be lumped together and not granted for this long period of time and realizing that you did not look about these that give us a reason wearing history you have seen that kind of lumping together of people primarily 501 c 3 ors in the kind delays, this nearly threeyear delay and still counting . I dont think i can answer that question, sir. But you dont have an experience of seeing it. I have no experience with it. Thank you. Ranking member. Thank you very much to you ms. Hofacre and mr. Hull. Before i begin i want to take a moment to thank you ms. Hofacre for your 14 years of service and for you mr. Hull for your 48 years. I know this can be, its a tough environment to be in. You are retiring mr. Hull and im sure there are a lot of other things you would rather be doing. And to you ms. Hofacre both of you we are simply seeking the truth, thats all. I am sure to let me just go back to one thing. The chairman invited only two of you today and he didnt invite the 14 other irs employees who were interviewed even though they could help provide a more complete explanation of what occurred. At any rate i just want you to answer the questions as best you can and that is all we can expect. Ms. Hofacre if you will let me start with you. Since the ig released its report we have been hearing over and over again from republicans that the Obama Administration in the white house were responsible for the targeting of Tea Party Groups for political reasons. In the chairmans oped this morning in usa todays continues to ask questions [inaudible] with would the gentleman yield . Of course. I would hope that you arent linking the two. Ive never said it was the president and ive never said he directed and certainly my questions in the oped were posed as questions not as conclusions. Very well. I am just stating facts. This is despite of the fact that the committee has conducted 16 interviews, reviewed thousands of documents and found no evidence of white house involvement this is also despite the fact that the Inspector General identified no evidence of white house involvement or email searches. Given the sustained focus on this socalled white house involvement. Ms. Sub for let me start with you. During your transcribing with Committee Staff you were asked if you were aware of any, aware of any political bias by employees in the Cincinnati Office against tea partier cassations and he responded no quote now i am not. Is that correct . That is correct. Do you still stand by that . Yes. Youre also best if you you were aware of any political motivations in tea party cases and quote now i am not. Is that correct . Is your testimony the same today . Yes, serb. Based on your own personal experience did you receive directions from anyone in the mic white house that Good Tea Party applicants . Speaking just to let you know we have heard the same things that you just said from every Single Person we interviewed. 16 of you also i dont understand why these allegations keep cropping up. Senator Mitch Mcconnell released a video that was paid for by his Political Campaign and i would like to read what it says. Quote, i dont know about you but i think the leader of the free world and his advisers had Better Things to do than dig through other peoples tax returns. What they are trying to do is intimidate donors to outside groups that are critical of the administration. They have got the irs, the sec and other agencies going after their contributors and the quote. Ms. Hofacre you have basically answer this question but do you have any personal knowledge of the president or the white house digging through other peoples tax tax returns . No, i do not have any personal knowledge. Do you have any knowledge . No sir, i have none. Again i want to thank you all for being with us today. There has been no greater defendant, defender of public employees. I know that in the great words of one of my favorite theologians, he says so often the great unknown unappreciated and applauded. I take this moment to thank you for what you have done and continue to do and thank you for being great public servants. Thank you. We now go to the gentleman from ohio mr. Turner. Just very briefly if i could just tell a story. The amazing thing is i keep saying it wasnt just cincinnati that they now see it leading to washington. It reminds me that although i expect the right to say it immediately leads to the white house on my shocked when the Ranking Member seems to want to say like a little boy whose hand is caught in the cookie jar what hands, what cookie . Ive never said it leaves the white house. We have gone out of our way to say we are following the facts where they lead so hopefully when these kinds of statements, people understand that we are following the facts and they undeniably nobly to washington to the offices of the lois lerner and to the consul and that is what we are saying here today. Mr. Cummings was attempting to address. Let me say this. I know that neither of you have any direct personal knowledge of whether the president of the United States had lunch yesterday and mr. Cummings cannot ask you whether not the president of the United States had lunch and neither one of you will have personal information. It doesnt mean he didnt have lunch. It means you dont know and we knew that already when you you were here so asking questions that we no you are not here to prove or have information about really is irrelevant to our discussion. I want to ask is if you about what we have heard so far in the testimony previously. I want to thank both of you because you are coming forward and being honest. There not only those who want to stick their hand heads in the sand. Both of you are telling the truth and telling us what happened and this was not just directed out of ohio. I am from dayton ohio just a few miles from you so i was personally offended when it was placed as a bunch of rogue employees in cincinnati. What we now know from you and mr. Hull to financially under oath is that was not true. If if we stop this investigation previously would have answers that it was of rogue employees. How did you feel when you know was not the case when i was just rogue agents . Sir, i was deeply offended. My reputation in the replication of other agents and other employees. Mr. Hull youve had a great career dedicated to what we know is people who execute things honestly and with detail and you dedicated yourself to the principles of that. How did you feel when you heard that they were saying he was just cincinnati when you know that was also not the case from your involvement . I didnt feel i had anything to say, sir. I know it would seem to me as ms. Hofacre when you are dedicated to make and should the truth occurred when things were at executed that it violated your sense of really integrity. I want to ask both of you have either of you been contacted by the department of justice or the fbi to the questions about this matter, ms. Sub for . Who were you contacted by . The department of justice or the f. E. I . I believe both. I was contacted by the department of justice. One of the questions we have had from the beginning the American Public should never be afraid of the investigative arm and and of the government being turned against them. I have a it till 1950 that would make this a specific crime and certainly we are hopeful as the departmedepartme nt of justice and fbi looks into this that they dont merely just stop and stick their heads in the sand as some of those wishing to do but they would actively look at all the aspects of this to make certain that we can hold this, hold people accountable and make certain this doesnt happen again. Mr. Hull when you have said that this was different and this was not what your experience at them before you said i cant recall it ever happening but it may have been overturned or things had this type of a delay. Is there a process by which you could enter an inquiry as to this is unusual that you mightve been able to report to supervisors that this process was unusual and therefore why you needed additional scrutiny . I dont believe that was any part of my duty, sir. This was not part of my duty to complain about the process would be. So you would not have a forum by which to say this is of concern and have someone else else review review that before being reviewed . As a tax law specialist and a suggestion that i had a determination would go to a reviewer and a reviewer would agree with me or disagree with me whereupon we would have a discussion about it. For the review is very beyond that, its very rare but it did happen in this particular case. Thank you both for your honesty. Mr. Chairman. I thank the gentleman. We now go to to mr. Lynch is gone. The gentleman from virginia mr. Connelly. Thank you mr. Chairman and thank you both for being here. I must say i agree with the Opening Statement of our distinguished chairman. I listened carefully to what he said. We should not rush to judgment. Words mean something. We need to be careful. And if only those very commonsensical principles had been at work when the very same chairman called the press secretary of the president of the United States a liar. Rush to judgment . Words mean something . He took time just now to insist that the Ranking Member is wrong in suggesting that he had rest to judgment and elaborately took what now turns out to be not much of a scandal. Bad judgment, they went after progressives as well as conservatives and its a terrible thing when the narrative we have in our heads that doesnt work out because the facts just dont back them up and witness as we call to back them up turn out to be flawed. Not you. Would the gentleman yield . I will in the second mr. Chairman but before i yield i would read back a poe from the chairman on National Television. Does he just assured us that he never linked the president to this end i read this quote. This was the targeting of the president s and lies about it during the Election Year so that it wasnt discovered until afterwards. That is the narrative and there is no evidence including from these two Witnesses Today that is true. So when the chairman cautions us correctly to withhold judgment and to be careful and that words mean something i wonder whether the chairman wants to retract his own statements including that one i just read on television. Mr. Chairman i yield. I thank the gentleman and i look forward to seeing evidence that the and anything more than then looked at but i will say this. I think its fair to say today that with the harsh statements the president has made about tea party grooves and with the way the Tea Party Groups feel about the president usurping of the constituconstitu tion and his expansion beyond his powers, yes, they are enemies of the presence politics. I stand by that. I reclaim my time. You can samba that mr. Chairman but that wasnt your initial narrative. Your initial narrative was there was an enemies list and it was limited to conservative groups like the tea party and that is not true. In fact the evidence tells us thats not true. More and more evidence coming out that the Inspector General cherrypicked evidence to help with your narrative. We will hear from him on the next panel but the fact that the tea party would the gentleman yield . No, mr. Chairman. I am asking you to stop the clock. Folks we are going to take about a fiveminute recess. Your time will be reserved. We will stand in recess for five minutes until we get that stopped. The gentleman from virginia may continue when ready. Thank you mr. Chairman. Mr. Chairman. Mr. Chairman we left off with you saying that you welcomed democratic evidence that progressive and democratic oriented groups were targeted. I will ask unanimous consent that this press release be entered into the record from the Ways Means Committee but i will read from it. A group of democratic leaning organizations was denied tax exempt status by the irs after their applications were pending for over three years. These denials happened during the period of the but they were not disclosed by the ig in the ireport or during his testimony before a committee and the Ways Means Committee. These applications were processed in the same manner as the tea party cases outlined in the audit report. The cases were identified in screen for Political Activities and transfer to exempt organizations technical unit. They were the subject of the sensitive case report. They were subject to multiple levels of review with an irs and review by the irs chief counsel. The chairman has asked for evidence and i will be glad to make sure that this evidence from the Ways Means Committee is provided to the chairman and his staff and i would ask that this be entered into the record. Reserving. As long as you dont want to call it evidence we dont call press releases. It describes evidence and im happy to make sure that evidence is made available to you. Look forward to seeing that evidence. It has not been provided to them provided to the minority are the majority at this time and i thank the gentleman and without objection will be entered into the record. I thank each of the witnesses and im sorry you have to be here today but i thank you for coming. We now go to the gentleman from florida mr. Mica. Thank you mr. Chairman and first of all a comment observing this process today and to the past couple of months that we have been working on this. I am disappointed that the Ranking Member on the other side of the aisle has chosen to continuously try to close down this process of discovery to get to the bottom up what did place. Would the gentleman yield for just five seconds . Thats absolutely not true. First of all i did not yield but he said that. We started this the 22nd of may. On that night of june mr. Cummings said, and you can put it up on the screen. Based on everything ive seen the cases solved then it started almost immediately to try to close this down. When they couldnt do that they tried to discredit the chairman and then they released time and time again as we interview folks different transcripts taking parts out and trying to begin discredit the process. When they couldnt do discredit the chairman and we proceeded in a very orderly fashion now they are attempting to discredit the Inspector General. I find that offensive because whether they targeted conservative or Progressive Groups its our responsibility to get to the truth and find out what happened. In fact we first went to the cincinnati folks and mr. Hull you are the second irs official at the washington level we have had on the dais so you are the first one. I think they were eight folks are so that we interviewed that were the rogue employees. I had never met one before but you look very different from a rogue employees. Ms. Hofacre im sorry. In any event you started getting these cases in the beginning of 2010, was that . Server, it was the end of april 2010. Okay, the beginning of 2010 and this wasnt the targeting by a group of your colleagues in cincinnati that decided we are going to go after folks. Most of the cases where they tea partier patriot cases . Served, they were all tea partier patriot cases. Where their progressive cases and how were they handled . I was on the project until october 2010 and i was only instructed to work Tea Party Patriot and then you sought counsel for advice from higherups in washington and that was mr. Hull sitting next to you . I was instructed to contact mr. Hull. Did you get a device that what was happening with those who contacted you ordered you were just waiting for hull . What was going on . Im not rude clear on what youre asking. Taxpayers and those who submitted those requested you hear from them at all . Yes, sir. As mr. Hull and i said i sent him a copy of the the response in you is to get back to me in order to process the response. The taxpayers call me when i had gotten the instructions from mr. Mr. Hull. That didnt happen some mr. Mr. Hull you would also contacted ms. Lerner for advice and counsel and also if i understand it, the council, the irs council. Is that correct . I gave my recommendation to my reviewer and my reviewer scented up to to ms. Candle and ms. Candle suggested they be submitted to the council. That is in lerners office . Did she tell you something had gone to Legal Counsel . She suggested or said that i should go to the chief counsel. The chief counsel is one of the two i believe of the irs employees that are political appointees. Is that correct . I am not sure but i think that is the case. So far we find again the cincinnati rogue employees are asking for a device from washington. You are in washington and youre the second person we have had in washington and i think we had mr. Shulman was the only other one. So we are just beginning this investigation. We are just starting this. Its not going to be closed down. With the gentleman wrapup . Finally mr. Hall you sought counsel and advice from above and you never got it down below and finally what happened . Did you step aside or seek another assignment . The gentleman may answer briefly. His time has expired. Were you asking me . Im trying to get back not getting answers the frustrations the experience. Do you understand the question . We are out of time. Yes i do get transferred out of there. At your request. Yes i did. We now go to the gentleman from massachusetts. Thank you mr. Chairman and i think the Ranking Member and no witnesses were coming before the committee and trying to help us with our work. I would like to try to reset this if i could. It seems we are getting into a debate about whether or not there was a failure by the irs to enhance scrutiny for Tea Party Groups, if they did the same thing for Progressive Groups and i just want to point out that when the Inspector General mr. George came before the committee indicated there were three classifications of u. S. Citizens that were subject to enhance scrutiny. Will we do know is that the irs was targeting groups who were critical of the way that government is being run, which is the core democratic bright small d democratic. And a core right for every citizen. Have you in your experience there, have you come across groups that will targeted because of could you call it criticism of the way the government is being run . No, sir. I have not. Okay. What about yourself, mr. Hall . I am not aware of any. But you are aware of instances where patriots, and tea party was investigated. Only when i read the newspaper, sir. Only what . Only when i read the newspaper. Okay. How about you . I dont understand what youre asking. Well, why do you think the folks that had those labels, what you think there were being investigated . To you been scrutinized by the irs . Sy. Each application is evaluated. Consequently this is something, on the lookout for patriot, twoparty. You know, that i mean, help me. If you can. Those seem to be political positions. Political view. And so the irs is focusing on that. Im just curious. When i was there in 2010i was instructed to develop these applications. And what does that mean . That means that somebody else i was assigned these applications that that the parameters. Okay. Well, you why the one who was involved in the process. Why these people being singled out in . Because the screen is in the management identify that there should be screened out or for this particular reason. And to is the individual who screened them for you . It was a whole group. I mean, mr. There were several screeners. It was not what they were tasked to do based on my understanding. Soaker. How about 20 seconds left. I just think it is as credible that we are squandering this opportunity to get to the bottom of this because of partisan bickering. One group trying to blame the president and the other trying defend themselves the progressives were also being targeted. Think it is very unfortunate because people who were critical of the way this government is being run were being targeted regardless of what the source of their complaint was there were being targeted as u. S. Citizens by the irs. I think we have squandered the opportunity to get to the bottom of this. I yield back. I would ask unanimous consent. I have 30 seconds. Without objection. I could not agree with you more. Hopefully you are setting a tone that we will lazar Going Forward i will do my best. I said in the beginning, i think that we and i said it 50 million times. We have got to get to the bottom of this. There have been recommendations made by the ig. We need to make sure. I dont think that people want the irs to be destroyed. It wanted to function the way it is supposed to function for everybody, conservatives, progressives, those in the middle. We now go to the gentleman from tennessee. Thank you, mr. Chairman. We have heard mr. Hall and his experience say that these cases were handled in a very unusual manner. I understand the you said that in your 14 Years Experience these cases were handled differently, was that the word . Us, sir. That is correct. And you have 40 to 60 of these cases that were given to you in april and then in october you requested a transfer, is that correct . The number that you had just stated was some many i had assigned to me when i left in october of 2010. Initially i have maybe about 20. I see. Prior to this how common was a that you would be told by someone in washington to hold of an application . It was not very common of all and was your frustration coming from the fact that you felt the you had enough reformation to go ahead and process these applications but you basically were just made to sit on them . Well, my frustration primarily was that i had to sit on them and wait for guidance from d. C. Now july and told and aig report, 72 Tea Party Groups, 13 patriot groups. Now im told those numbers of bin revised upward to said there were 298 Tea Party Groups and three groups that had the word progressive in their Application Zero that have the word occupy. But i also, staff tells us that washington officials asked for two additional twoparty cases that was service test cases. As of the present one of those cases is still pending, and the editors, the application process was withdrawn because the person person or persons could not take it anymore. I would assume that that is an extremely unusual to be delayed from 2010 when you work on these cases until now, 2013. Still all these cases are part of a pending. Yes, sir. This investigation was started in part because of complaints from twoparty groups to various members of congress. We dont have any evidence or common to that in a Progressive Groups, these three that have the word progressive ever complained to any member of congress about their hold up if they were held the. But you also know that this was started in part not entirely from the complaints of members, but from los lerner said at an aba conference that the tea party in patriot groups were being targeted. What was your reaction when you heard about that comment . Well, as i said previously and has been reported, said it was like a Nuclear Strike. And did you and other people in the office feel that there were being unfairly blamed . Used to excuse this political activity that was being done in washington . I cannot comment on what others, but personally i felt like it was a Nuclear Strike. I felt there were blindness. All right. Thank you very much, mr. Chairman. With the gentleman yield . I yield the rest of my time. The gentleman to mr. Lynch is left, you have been asked repeatedly about the politics of it. I just want to take a moment to say that i appreciate that both of you are not political folks and that it is appropriate that no surprise, you did everything as far as we know very professionally. Particularly i wanted thank you again for being here. You represent a larger group who have all said similar things. You were chosen quite candidly because of the time. Maybe this is not a lottery you wanted to win, but we appreciate the fact youre here today to speak on behalf of many people you work with in cincinnati who is far as we can tell by the close of this hearing today we will understand, they did what they could do, limited as what they could do, then moved to washington. Through a great extent we have had you here to show that you and others to get cases after you did what they could do as far as we know waited on others to make decisions. I think you. With that we get to the gentle lady from california. Thank you. Thank you both for your service in a department frankly that none of us like. Nonetheless we recognize the great value that you provide making sure that everyone is treated equally in the law. Let me to start off with you. Isnt it true that in the Division Within cincinnati that you were working in, your responsibility was to determine whether or not applicants for 501c for status met the definition which meant that they could not primarily be engaged in political activity . Yes, it is. And as a result it has always been the your task, at least when you were doing at their to scrutinize applications to make sure that it was less than 50 . Was our job to make a determination and insure that there were 51 social welfare. And there was an unusual increase in the number of applications during an amount of time, was there not . For my i understand, i believe thats correct. You stated in your written testimony that there were occasions when other agents sent you applications from level to five liberal where non tea party type groups. When that occurred pursuant to instructions i will send these applications to a general inventories as they were now within the scope of the twoparty emerging issue. When you met with Committee Staff you were asked where you received direction to send not tea party cases back to general inventory. I will read the exchange. You remember if anyone told you to send progressive or liberal cases back to general development . No, i dont remember anything like that. It just made sense to you . Exactly. My function was to develop a twoparty and work with the tea party. Can you explain the discrepancy between these two statements . I was instructed by managements. It was on the list. A thing that did not meet the parameters between that meant the parameters i sent to general and mentoring. But you did not know what happened to those non tea party cases . No, i do not. How many do you think you referred to and ventura . I cant estimate. Five for 50 . I sent everything back it did not meet the parameters of to party on the right and on the left. Okay. Serve was a significant number that. Is seen at the time. I cant estimate how many. One of the documents obtained by the committee is a power point presentation for a 2010 Training Session instructing employees and have a handle applications for a taxexempt status from groups in days to block a collectivity. Photos of an elephant and a donkey, not very good ones. And since that is the employee should look for names like the following. You see there on the next 80 shows what those employees should be looking for. Tea party and the next page compatriots, 912 project. Then on the following pages says to look for the word progressive and there is a loss of a lot of redacted information which i understand may be a list of progressive or leftleaning groups. He turned to the next page, the slide show explains that most of these applicants will file. And is says that the concerns are that there may be more than 50 percent political possible paths. Do you recall attending this training . I did not specifically recall attending the training. Do you dispute the you were there . I do not recall. I do not dispute either. I understand that your plate was full handling a lot of these twoparty applicants. And you prefer not to party cases back to the general inventory. Based on this document it appears that someone else may have been looking a Progressive Groups. I dont have the facts to verify that. So you never talked to anyone else in the Cincinnati Office that might have been looking at another site meant . I do not recall talking to anybody else. Mr. Chairman, based on the training materials and think we need to see what is under those projections and examine in more detail how these progressive cases were handled as of. I agree with the young lady, we would like to see the claim of 60103 modified to be more reasonable. I would not mention that Teddy Roosevelt was a progressive. The term is not automatically liberal. No, but my point is, there is a lot under the second bullet that has been redacted. For us to really do an exhaustive investigation we really need to know that. And to the extent that she has testified, she did return significant numbers the should find the significant numbers of at house wanting to testify. I agree. This committee has reached out. I will ask again directly with the larger orleans. There is a Progressive Group that was over three years, asked abuse of questions, ask about their campaign activities, board of directors, names of their contributors and so on i would ask that they come forward because they can get as around this arcane 6103 law that causes victims not to be protected. I join with the gentle lady that i would like to see groups on the left and right be able to come to us as victims and get some resolution rather than being read victimized by a system that is opposed to fair supposed to protect confidential of permission. With that we go to the gentleman from ohio. Thank you. Forty years of experience with the irs. In your annual review and evaluation was that all positive . Yes. Most of the time that you spent there you go with applications for taxexempt status. Yes sir. And you are viewed as an expert in this field, is that fair to say . Which field, sir . Dealing with and you can your dealing with politicians here. You can give a yes answer. Thats fine. Im very knowledgeable about applications. Is nature u. S. Conducted Training Sessions . Yes. And in some los lerner even showed up and was present. Is that true . Adelle recall. We have been and other witnesses we talked to said that is the case. You were assigned the now famous to test cases. It is important, these were test cases of Tea Party Groups. Is that correct . Yes. In your testimony said those cases were taken from you in august of 2011. Is that right . Yes. And there were given to hillary. Is that correct . As far as i know. Can we put this up . We want to talk about you know how long she had been at the irs will she get this case is . Im not sure. We do because we astor. How long you been with the irs, late april 200011. Prior to this time have you had any experience in camping, lobbying, or as it relates to taxexempt organizations . No. A lady who spent four months, never dealt with this area and now gives the student must test cases. The taken from a guy whos been there 48 years and give him to this individual. Correct . Okay. Fine. Heres from your testimony, they were taken from you after you made recommendations on how to deal with the test cases. Is that correct . As correct. Recommended, the recommendations were split. One group should be approved and what should be disapproved and get further information and data. Is that correct . Yes. They give it to someone who had no experience and they also took them away from you after you met with the chief counsels office. Is that correct . Thats correct. This is important to understand, the real harassment of twoparty groups was not just the fact that they applied and maybe the fact was they had to wait, they never got resolution. Even if your denied you have an appeals process. You can finally get some closure. The real harassment was never getting to an answer. Fortyeight Years Experience, the expert, conduct the Training Session, gives the recommendations of test cases and they say, oh, wait a minute. You let that happen. All these cases. For the more we will take them away from you. We do that after you made the recommendation and after theres been a meeting with the chief counsel. That is why this was all about washington and why we will have mr. Wilk and in front of this committee at some point in the future. Tear public servant, you serve the irs for 14 years. That is correct. Prior to that you serve our country, wore the uniform our country as a veteran. I was on active duty and reserve. Tell me how you felt . The plan in question, she goes public and says this was an appropriate action by people in cincinnati. Like us to before, it was like a Nuclear Strike. Thats a term he used with the earlier interviews. A Nuclear Strike. You would agree with one of your boss is in cincinnati is the people felt like there were being drawn around the bus. Im not sure of the context, but literally that statement the me ask you one other question. You were asked in your interview by our staff, this specific question. To you think the public has been purposefully misled by assertions the cincinnati was to blame . And your response was. As i believe so. I think your response was exactly. Such statements made by folks in washington, to rogue agents, this narrative, that was bandied about, statements made by the White House Press secretary, apparent conduct by harris officials in cincinnati, irs personnel had improperly targeting conservative groups. There were purposely according to your statement you think folks in washington were purposefully, the key point, you said you think it was a purposeful misleading of the facts over the to place. In my opinion when ms. Lerner made that statement that would be correct. Thank you. We now go to the gentleman from pennsylvania, mr. Carter. Thank you with. Im sorry, mr. Carr rate. I apologize. Mr. Hall, thank you for being here. I want to thank you for your service. According to the transcript of your interview this did that the processing of twoparty cases was subject to substantial delays because we didnt know exactly where rebeling. Is that still your testimony . Yes. What do you mean . An indication of which where we should be going. I made some recommendations. I was not told what the recommendations would be setup there were not we need to disappear and permission. You previously told the committee that mr. Hall took a long time to give you guidance for tea party applicants. Youre not suggesting that mr. Of intentionally delayed the case that you handled. My correct . Yes, you are. And back to you. You never intentionally stalled or delayed your work on the tea party case. No. We have learned that there was a miscommunication. The Cincinnati Office. The group Group Manager rescind a political advocacy cases that caused a 13 monthlong delay. When the person the cases were transferred to stop sending Development Letters while waiting for guidance from the technical unit, unfortunately both the individual who held the cases and his manager at the time of republicans, and neither of them were invited to testify here today to discuss that delay i believe that the delay in processing these political advocacy cases is highly problematic. The evidence compiled by the committee, there were intentional or motivated by bias. Mr. Hall, did anyone tell you to stall or delay your work on the twoparty cases . No, sir. One irs official we interviewed was an attorney in the irs office of chief counsel who worked on these cases. When he was asked if anyone ever instructed him to stall or delay providing guidance he responded as follows, on the contrary we were told their return to look extremely fast. We were given a 48 hour time deadline for the first document. We turned around and had such extremely short deadlines to turn that around. As far as you understand, author of up to both witnesses. Im not aware of anything. Okay. Thank you very much. The yield back. We now go to the gentleman from utah. Thank you. I do think it is important we continue want to find the truth and i appreciate you holding this hearing and for these two fine americans are coming forward. I appreciate your service. Nearly 70 years of service between the two of you. Both of serve in the military, and for that we are grateful and i think you. We have had your reaction to some of the statements by some very powerful people in washington. I would like to have you comment, if you could, about the accuracy of their comments. We have had a cnn reporter, the former commissioner miller plans to employees in cincinnati. To rogue agents. True or not true . Im not clear on what youre asking. The former commissioner to myras commissioner blamed all of this targeting on to rogue agents. I suspect that you would be one of those. It was inferred that i was one. Is that true . No. I was following directions from management, and there were where was doing. To is that management . Well, when i started with the project it was joseph her. And i was transferred to another group. Who when the spokesperson for the president of the United States, jay carney, stood up before the American People and said irs personnel had improperly targeted conservative groups, what is the accuracy of the statement . The accuracy of any inference to rogue agents is not correct. How they had to be a moment when you went back home. A kind of by yourself. What is not like . Like i said, it was like in a clear fallout. I mean the press hounded my family and i. There were handing is at work. So i mean it wasnt a character builder. Why date to the attack why was everybody i dont have any factual knowledge of what is said with a set or why they did what they did. What did you do about it . There was nothing i could have done. What did you want to do . Go back to my life previously. I guess that is the sad part of the story. I am glad that the trip to surfacing because i think most people are now reflecting back will understand that you are more heroic in this. Really i think when you have such senior powerful people in washington d. C. Trying to discredit you and your person, your service. So we did with the white house was to do, if we did with the Ranking Member suggested we do this thing would be over. Nothing here. Dont do it. As far as im concerned its over. You have the spokesperson for the president of the United States make a definitive statement that it was to rogue agents and start poking at these people who have no power to do anything about it, that is wrong. This is the beginning of this. We have to make an example of it they keep having these hearings. Weve done on fast and furious, benghazi, the irs. Why . Each time theres a pattern. Nothing here. This case should be closed. Thats wrong. They had the greatest respect. Digital in yields. Yes. Let me be clear. Some wall talking points going on here. No. My time. I want to answer your allegation. It is the john stern. To suggest that they are talking points, these and not just talking points. Yield the jones time. Thanks. The me be very clear. Hope that john will join me when i say that every single syllable of every single, we can get rejected. Have been asking for that. I want that. Saying that the president and the white house was responsible for this. I said that the evidence to that point continues to be not care. As far as the investigation, was to get to the bottom of that. It is very, very, very important i just want to make that clear. Part of the reason it has risen to this level is you have a white house spokesman blaming one of the people sitting there at this table. You have the former acting commissioner saying it was to rogue agents. It was the most powerful people in washington d. C. Placing blame on the person sitting before us. Thats why it continues forward, and thats why do think the white house is now engaged. Is an omen is entitled to his opinion. You stick to the facts. We thank originally. With that we go to the general lee from the york. Thank you. Thank you for your Public Service and for being here today and for your testimony. I just would like to get to the bottom of this and get over with it. I have to ask you, like to ask both of you, would it make your professional life easier if you were not retired and still working . If it was just very clear in the law that no notforprofit that engages in political activity shell received in any way, shape, or four to my tax relief from the irs. With that make your life easier . Yes, i think it would. Out by your . Yes. I agree. Okay. I intend to put in such a bill. Stoppage. Lets just make sure that there is never any confusion in the future. The irs is there to perform a function, not to decide whether someone is involved in political activity and not. Quite frankly most americans believe that not for profits serve an Important Role if they are addressing the social concern in need of this great country. Deserve a Tax Deduction. Serve the political activity does not. So in the concerns of efficiency and cleverness, i think that is the approach we should take in a bipartisan way and end this, as my colleagues on both sides of the aisle want to do so much. Let me say that as a member of congress we do have a serious responsibility and a constitutional responsibility to practice and conduct oversight, but we must do it in a responsible and clear way and not make unfounded political attacks. Incredibly important responsibility. One of the mets that keep being pushed out there by the right and some others is that the Obama Campaign was somehow involved in directing the irs to target Tea Party Groups for under scrutiny. According to all the testimony that ive read, some many, many people testifying, only two of you before us. In the depositions there was no connection whatsoever. But to give an example of on founded conduct and statements, i would like to quote center rubio who recently claimed on National Television that both the Obama Administration and president obamas campaign had attempted to use the irs, and i will quote directly, muscle anyone who is there political opponents and to use whatever power they have at their disposal to intimidate people who they dont agree with. So i would like to ask both of his sent question. Would any of you intimated are contacted or influenced in any way, shape, or form by the Obama Campaign committee to do anything . Mr. Hall . I was not contacted. No, i was not. Did any one from the campaign , either a political appointee, of volunteer, up by standard, or an employee ever give instruction or direction on how to process the Party Applications . Did anyone interfere in the process . No. No. Okay. Did any of your irs colleagues ever tell you that the Obama Campaign gave them any instruction or direction on how to process applications for taxexempt status of twoparty applicants . Did any other employee no, they did not. They are giving the exact same answers that were given also by other witnesses that were interviewed by both the republican and Democratic Committee that it is completely not true. It is im getting very concerned about this because it keeps going on and on. I just want to make it clear that there was no connection whatsoever. Thats correct. That is correct. Again, would it make your life easier for just a clear directions from congress that no notforprofit receive any Tax Deduction whatsoever for the engagement and political activity . And sure it would be a help. Estimate would. I yield back. Of the young lady would yield to of followup to get clarity and your question. Wouldnt the American Lung association support of an initiative in california, the naacp support of civil rights, when all of those be a challenge in which you would like to have clarity that zero may not be the right number either. I am not sure would be allowed to answer that question. Currently it is roughly 5 . Under 50 . You would have a challenge if you had to audit at zero for organizations such as the American Lung association that actually endorse initiatives and so on. And that only happens the gentle lady. Were not the Tax Committee, but i think we have to Work Together to find solutions for this. Hopefully we will recognize that the narrow interpretation of non might have in fact hampered the very Good Charities and well support. Will the gentleman yield . Of course. The difficulty, it appears to me, is when an employee who is trying to do their job honestly and fairly and correctly is then given the task to interpret the 5 . That is a very difficult thing to do when you dont have access to their books or their activities are everything theyre doing. And given the fact that our democracy is such a sacred right , and i want to share this with you very quickly, the ambassador from pakistan, they just had their first peaceful transfer of power. Theyre so thrilled that they have a peaceful election. If we had that honor continued economic. And allegations are very serious allegations. The democratic system that the tax cut would be used in a way in any way shape perform. Digital ladies time. I feel very strongly about it and appreciate that they agree that they dont want to get involved in the election. Please. The journalist time really has expired. We now go to the gentleman from michigan. Thank you. Thank you for continuing these hearings because, frankly, it is important to get to the truth. I think the two would this is. You deserve your day to have the truth come out, especially since you were put and has rogues incorrectly. I read a deasy newspaper and is seen on cable news. Some people believe the irs case is solved. We know that not to be the case. My constituents, the groups in question, those being targeted, the evidence we have uncovered so far and continue to look for says differently. We appreciate you being here. Just to continue some questioning, where you had indicated that in working with mr. Hall initially some deprivation with sharon questions were answered. It might not have been direct statements from individuals, yes. He stopped responding. We know from his testimony the reasons why. With taxpayers calling the her of. Until the end of 200010. How often . Initially i get numerous calls per day. What did you tell them . I continue until the the case was under review. Other than make you feel torn in of the cases were under review . Beckham said, it was like working in lost luggage. There was never any positive response because i could give them a clear answer. Like mas said in my previous testimony, every taxpayer deserved an answer because of the answer is negative, other avenues they can pursue like appeal still accounted for much different ankle. He said also i remember in your response to the committee, i remember thinking this is ridiculous because of the same time youre getting calls from irate taxpayers, and i see their point, even if a decision is not favorable, that is there some kind of treatment, you know, timeliness. It was just these applications and their responses were just being sent up there. Im not sure what was happening, but i me, i just kept in the same responses from carter all. Under review. That is what i tell the taxpayer. I continue to tell them that. Did you express frustration to anyone about the delays in the process . Yes. I expressed it to my manager at the time. I understand you tell the Committee Staff that you express that frustration. What was his response . He was just saying that he was waiting on washington. Then he was just waiting on them. I understand he switched positions in october of 2010. Thats correct. Yes. That is correct. What cost to the switch positions . It was the frustration of working on this project. Like a man previously said, was getting more and more tea Party Applications. I was also getting applicants, applications with any kind of political or legislative activity, and i was passed. I think i said in a previous interview that i became a dumping ground on august 2010. I was seeing every case with any inkling of any kind of political or legislative activity. At the same time i was getting slammed the phone calls from taxpayers who seemed to have a legitimate right to complain about the process because they deserve some kind of answer at that time, and i was three years ago. What happens to the tea party cases in your queue when he transferred . There were transferred to another agent. It was that . It was rondel. And do you know if he was able to make any progress . Someone i understand. Now. If you have any contact with them over these cases subsequent to your transfer . I was still receiving telephone calls from taxpayers. On these issues . Right. For a few months after i changed. So i would call him and give him and of the applicant and the Contact Number to have him call them and tell them all was going on. Did he indicate to you whether the continued Holding Pattern . I was led to believe they were in Holding Pattern. I believe he did say that. And these were just the party cases. In october of 210, thats correct. Was a pink slip . Sir, lot of these organizations and various activities. A couple of the applicants would have these email blasts on the web sites and you could send a pink slips your congressman or senator. Twoparty groups. Yes, sir. He party groups websites. So were you to select out these banks lets . The gentlemans time is expired. Sir, that was just one of their activities. I mean, if the activity was in the fall i would ask about it. I guess i just wonder what relevance that is to the irs, mr. Chairman. Can i ask if she would answer and then as the end. Like we keep saying, the facts and circumstances. Our job was to determine and for me to get the information to help determine whether or not there were primarily social welfare or political, and that was just one piece of the pie. Thank you. Thank you. The gentle lady from illinois thank you, mr. Chair. I understand that you were originally assigned to tea party cases in april 2010 and then have those cases transferred away from you in august of 2011. Is that correct . Yes. Were you given any special instruction on how to work those cases . No, i was not arrested anyone ask you to give them special attention . No. No one has been given special attention. When you sat down with the committee in june a total 13 you to all staff u. S. For a special card to be drawn up to the you could put your time into that particular place would needing cases. Each time we get a case. Spending time on coordinating cases. I asked that card be made up so that when i did talk to her i could put my time correctly as to what was doing. Did taking these cases on at eight add a significant burden to your workload . Yes. To the add to the many responsibilities you already have . Yes. Back into the committee is a republican. Your mentor to that of the of the tax law. I was never told the reason. They transferred away from you in order to give them extra scrutiny or further delay. According to evidence gathered by the committee it appears that these cases transfers so that they could be there would be worth 00. A manager in the technical unit and acknowledges your experience. Until the committee you were not many fast enough. Until the Committee Staff had been stagnant for yearandahalf. Ms. Harper, he told Committee Staff, more timely. But as months dragged on he became less timely and non responsive. They wanted to move more quickly. Nobody ever express that to me. As we can see, the original tea party cases were not transferred within the technical units. There would be delayed and given extra scrutiny. Instead the opposite was true. These cases were transferred away where there were a burden on is already heavy work to another tax law specialist in order to ensure that there would be processed more efficiently. Thank you, but. I yield. A distance to pick up on one thing. I want to thank the originally for yielding. Your cases were transferred to a republican. Is that what you said . I have no knowledge of what the political affiliation was. And you said you had not received any here work speeder anything like that. Not that i can recall. And you never complained to him about his works peter anything did you . No, i did not. Okay. And again, when youre looking at all of this, youre trying to figure out what part of a case for general welfare. Is that a complicated situation . Yes. 51 percent. Saudi do that . Again, is facts and circumstances. We have to go through each case carefully. Thats correct. Would you agree . Yes. So you had gone through the cases and looked over them carefully. Yes. The facts and patterns of each one. Of the two cases, yes. And what did you go through to get your conclusions . I did research. I went to their website. I looked for a precedent. As to have cases like this may have been handled in the past to try to decide how we would will buy recommendation should be. Thank you. We now go to the gentleman from obama. Thank you. Thank both of you for being here. You know very well have another stalker out applications and groups, these folks have names and faces, some of them live in my district. I appreciate bill to work and diligence for the process on this. The tea party test case, a sensitive case report. A sensitive case report was sent up the remote. Okay. I want to ask. I think we have one of those the staff has requested. Is this im not sure if you can tell from where you are, but as the stock like one of the test case reports . I cant actually read anything. The form looks familiar. The form looks correct. You will try to get a copy of it. The top are seems to have a template of information. To the various to Party Organizations or organized but appear to be part of a National Political movement that may be involved in Political Activities the two Party Organizations are being followed closely in National Newspapers such as the los to post a loss of a regular basis. Further down that says this man with jay kimball to discuss organizations to entry in Service Position. Recommended Additional Development activities, the activities then forwarded on to the chief counsel. Later on and says coordination between hq in cincinnati is continuing regarding information letters. Applicant exemption under 501c3 and four. Sounds like the document you have created . Yes, it does. To someone and structure to create a sensitive case report . My manager, mr. Shoemaker best way to repair one. Of me as the question. One. You met with taken ill to discuss organizations to entry and Service Positions. What to do me by discussing Service Position . Whether or not the organization, if the facts were beating an exemption or denial. Trying to make a broad decision, you were waiting on decisions on a broader case. He said case by case. He pushed back on things. Each case is different. On trying to interpret the Service Position of what that might be. My recommendations the recommendation was to acceptable. You are continuing to wait on the counsels office to bail to get your response back. You are waiting on the Service Position not only just the two and three, not only these two individuals, but also trying to figure out what will be the broader perspective as well. If we were able to tell from the facts and circumstances, not a recognized as exempt. The whole thing. This organization is not recognized as exempt. So desired or move on to mr. Bell. And is waiting and counsels office to respond back. Yes, sir. The site from the sensitive case reports you created for the tea Party Applications did you create sensitive case reports for any other political advocacy case between march 2010 and july july 2011 . Extremely rare. What to do me . Usually the case would go to the supervisor for signature. The application cases. Some application cases go further. And some go to council. In this case the review were agreed. Seen either agree or disagree. She said it should be afforded. You also mentioned she canada some point and said it was some kind of training in burma. These cases need to be referred to as advocacy applications, not to Party Applications. Thats correct. Was that for all of these are just these particular groups . Anytime we should use the word advocacy as opposed to tea party questions advocacy groups. Correct. Knew that she was referring to the Tea Party Groups. Dont say that. Yes. I yield back. Thank you, mr. Chairman. All the way to the end of the hearing. But its my understanding that in the two years following the citizens united, the decision which allows social welfare organizations to directly send them one campaign activities. The number of applications nearly doubled. In the testimony that i have heard today and your previous tariffs it becomes clear that there is no political motivation , there is confusion at best about what should do about the fact harris pitched circumstance review to figure out whether the funding has been sent directly to the aspin correctly on political activity. Following the line of questioning by my colleague from york, i have such a bill that says that the 1959 congressional wall is is to assume that the irs and the treasurer ralph lynyrd should never have been allowed. Now we have the disorganized at best complete mess. I agree with this committee. However you are objectively trying to take subjective information and identify whether another has been a violation has caused grave concerns by both this committee in particular. Its not true. In fact as long as theyre taking the positions, they are limited. As long as theyre taking an advocacy position in line with an organization like the Cancer Society of the muscular dystrophy decided, and gazed and broad political activity should not be allowed. You answered my colleagues question, mr. Hall, that that would certainly simplify this issue and allow the irs to determine clearly and definitively who meets the standard 4501c4 injured is not. Correct . It is very difficult to deal to say that an organization is wrong 51 of their time in social welfare activities. There is no bright line that defines a. And the fact of the circumstances usually fall one where the other. There is no bright line at the present time. And if they can still follow their basic, they can advocate a position. The political activity, the organizations and then is it also true that you want to engage in political activity . Theyre original structures. And in those organizations doesnt have to be disclosed. Model know if thats correct. Managing just for the first night. The congress is required. The point being, it seems that based on the testimony today, but clear way for if were going to solve the problem , we should solve it. Lets make them go back to exactly what congress intended in 1959. Exclusively for the purpose of social welfare. Mr. Chairman, i yield back the rest of my time. Originally is recognized. Thank you, mr. Chairman. Thank you both the behalf of the people of tennessees Fourth District of people across america. Theyre anxious to get to the facts. Testified here briefly. She proclaimed but i also believe that she is possibly a lot more than even the two of you but did not sit there and do what youre doing in testified. The big unanswered question of all these hearings his why were these trips started . Kind of the first to submit to the irs did target conservative groups. His hair done and did he have an opinion as to why these kids for target in this fashion with your 62 years of combined experience . I cant he did answer that question. And he ever seen anything like it before . There was an instance. Forty years ago. Go ahead. I was not aware of any situation where applications were treated in this function. The other question is to, under certain to get an idea. We have of the folks here. As in some of the people you named today probably do interact with the commissioner. Dont know how high up they are, but they actually interact with the commissioner. I would imagine so. I have no knowledge. There testimony, they did not know anything. The new that it was a couple of rogue agents in cincinnati. We dispel the rumor. He may not know anything that this was going on. The actual basis to agree or disagree. The chief counsel is the political appointee. For my understand. Is that your understanding . Yes. These cases were sent to chief counsels office. Yes. I was just made aware that recently. To his tessin to beat somebody doesnt want the two to come out. There was nothing wrong with would be sitting he had. Have no knowledge. Did you have a special expertise in this area . Said the specific expertise. Any idea why you were assigned . At the time it was identified by management as an emerging issue. The emerging issue coordinator. Consequently i was assigned to cases. Says you were doing these, both of you, did it ever dawn monday it this was kind of strange . Abnormal. The fact that i pursued another job is evidence of that. Did you find this strange . I approached it as to organizations determine whether or not there were exempt. That did not go into speculation you thought you were given an assignment and you were just doing your job. Yes. Die their view think it was strange the type of questions that were being asked . Mike toner information, do you think that was inappropriate . I think it was inappropriate. Well and that i did talk to somebody. That question should not be asked. Doesnt really matter where the money comes from, the organizations activities are. When did make, as you were after, your lives a lot easier if somewhat that the irs, this was designed within the irs to target these groups would to step up and say i did this or even the president , of the president did not know, when did make life easier someone on the president s team and made this decision which a step up and say i did this so the American People constructor read in the credibility that they deserve from an agency and expects a much of them. I cannot comment on that. I cant comment. I know that you guys are very brave to come forward. There really, youre just telling the truth. As oliva asked. Let me say we very much appreciate that and hope for the sake of the country and everyone else that we do get to the bottom of this because theres obviously something to be determined. Thank you for your help. I yield back. Thank the gentleman. We will now go to the gentle lady from illinois. Thank you, mr. Chairman. Thank you for your years of military service in vietnam and, of course, youre over 13 years of service in the army. I would like to ask about the involvement of the irs office of the chief counsel in this process. Did you. We talked to a number of the colleagues and for example the committee spoke with a specialist and she has identified herself as a republican i just want to quote what she said. She said it has been from the case that received some Media Attention and the law is really murky. That is the experience is that she has had with the chief counsel. Sir, do you believe that this is needed for clarification . I do not think that we have those reasons for the council, im not aware of those particular reasons. The cases it you have worked on, you recall any cases that he worked on . I dont recall that the chief cancel would have to defend them. And that is why we are going there. I understand. You have any reason to believe that your colleagues are biased against the tea party . We also spoke with the counsels office about the two tea party cases and two of these tea party cases, it would be customary because we have seen a situation before and they would send over some time to look at. You disagree with you are colleagues . Im not sure that i understand what youre getting at. My two cases, im not sure how long this will take. It could be part of the chief counsel. Okay. We also spoke with employee that served us as part of the technical Group Manager and the simply employee said that it was quite typical to send to the counsel cases that were particularly difficult or they had a need for further review of the case. You agree with colleague of his statement . I think the person who have more knowledge of those cases than i did. Im not aware of all the cases that may or may not have gone through this. You have any reason to believe that this decision to have the irs Office Review the tea party cases that was motivated by political bias . No, do not. So it seems to me that seeking advice from one of the 1600 lawyers in the irs, it seems reasonable. And the witnesses have told us that this is not a tactic or evidence of political bias of course they are denied the right to go to this legal console. I want to thank both of you for being here. Mr. Hall, your two cases went to another employee. Thank you, mr. Chairman. I have been fascinated, not necessarily in a good way, but by the evolution of the defense. Initially it started when lois lerner disclosed this information in a fashion that most calculated to be ignored with a planted question at some boring conference. In the second iteration of this defense, it was in the Ohio Field Office it is the willingness to say that i dont know, this is exceeded only perhaps by his willingness to acknowledge that he appreciate the question. But he didnt say that i dont know. He advanced the narrative that they were responsible for azores this insidious discriminatory practice goes. Then we have colleagues that said that this matter was closed. Months ago, mr. Chairman. It morphed into the irs being too poorly managed to concoct a scheme that sophisticated. That was the defense. But my client has committed this crime. Then we moved to the most recent defense, which is no, we didnt just properly target conservative groups, but all groups. So while we may be guilty of improper conduct, we are not guilty of discrimination because we did it against people of both ends of the political spectrum. And that is our defense. So now to see the Inspector General. If you have the facts, pound the facts, he didnt if you didnt have either one, come the judge. And what has been said about mr. George is reprehensible and i cant wait until we have an opportunity to defend himself. But let me tell you what else is reprehensible, lois lerner sat where those two witnesses said today. Several weeks ago. These two witnesses put on a uniform and the defended this country and the constitution so she could hide behind the constitution and invoke her fifth amendment right but only after she blamed them. She went to an ohio and we ought to be thankful anytime they invoke the fifth amendment. I would be glad if anyone is willing to come before congress and testify. But to have this, by someone who doesnt have the courage to do what they are doing you have been in service for exactly as long as i have been alive. Forty years. So whether you want to be called an expert or not, you are one. By virtue of your education and your both experts. We were in a court of law, the defense would stipulate this and they would challenge. I have heard about the novel issues and there is nothing novel about political activity. So that party analysis, what was novel about that . What is phenomenal about this political activity . This is an effort to a particular case. You have done this a hundred times. Im not aware. Is a because you cant count that high . I cant remember that far back, sir. I cant either. There is nothing new about political activity. And on the america we have had since lord knows when, but mr. Chairman, im out of time and im just vexed by the complexity what is new about this . Why do we have to have test cases, why did we have to have washington involved. But im out of time and i yield back to the chairman. The chair now recognizes. Answering his question by complexity, there can be a great deal of complexity the most pregnant word in the english language is the word political, what is political and what is not political. And i want to congratulate these two syllable servants and encourage them to come forward. The president wont sign that, but out of retaliating in this. I dont see any rogue agents come i see Civil Servant sauron or lowes and who are trying to deal with the complexities and it has lots of complexities. And i congratulate you for the way that you do it. I dont see targeting or confusion. This is what i see and forgive me for getting out the statute that it is, it says concerning these social welfare organizations that they must be operated exclusively for the promotion of social warfare. Other people of the community. Then it goes on to define what it means an organization has a part of the purpose for bringing about civic governments and social improvements i wouldnt want to look at this exclusively and then trying to figure this out. I said that because i dont see what so many are looking for. So why would anyone pick out anybody . So i noted that after citizens united, we are talking about this, well, you dont get any Tax Exemption, but you do you do have to disclose their donors. And there is a way to raise unlimited funds. The figures are in there now in the last campaign. Almost 85 of that surge of the funds we went to organizations that have conservative viewpoints, many switched to that. After citizens united, it would not be true for those who have a lot of money to take advantage of a Court Decision and come forward in the numbers that they have not done before. Could that not be reflected to look at this special group called tea party tech publications. The opportunity for spending unlimited amounts of money open the door for people who have that money to spend. Because we could have limited funds, there would be reason to come forward. The gentlemans time has expired. We will take a short break. [inaudible conversations] people are taking their seats and i want to announce that we expect a series of votes there will be a concurrent Committee Hearing here so it is your responsibility to go back and forth and we will comment to people as they going to take care of that. With that, we go to the gentleman. Thank you, mr. Chairman, thank you to the witnesses for your time. You know, as ive have been sitting here through this whole ordeal, it has been the refusal of higherups in the irs to take any responsibility for the malfeasance within the agency and we had that was shown and testify in front of this committee, and he said that that while he had this impropriety on his watch, he was responsible at the time. Lois lerner blamed rogue agents in cincinnati. It has been part of the personnel in cincinnati. The group was in denial because they could not appeal a decision and i think it had a very tangible effect on these groups. As the testimony demonstrated today, we deliberately misread the public by blaming rogue agents in cincinnati for something that she knew was being orchestrated from washington dc. As a witness testified, this was akin to a Nuclear Strike against employees in cincinnati. They were were the ones that you wanted to throw under the bus. She tried to cloak best buy ordering the employees use advocacy groups, which denotes a conservative group. But for her it is a behavior change change or could i think she needs to answer for her behavior. That she needs to wave her fifth amendment rights and i think that she should be required to testify as we get more information. Its becoming increasingly clear to me that if there were any rogue agents, that would be lois lerner. I yield back the balance of my time. I want to take a point of privilege for a moment. I want to make sure that i make something very clear. When i referred to my Ranking Member, when we are not sparring over politics, we work very well together and i talked about effectively doing too much as we debate the question of whether things not be rogue agents in cincinnati, but that would be in washington at various levels that we are discussing here today. Which include the office of the console and lois lerner. I have been offended by the Ranking Member who i have not accused. I took a shortcut and i want to make it clear that when i talk about the little boy putting his hand in the cookie jar, i am talking about cookie jar went into this. It is intended to be about a small child and no way to be anything else. The Ranking Member and i enjoy a personal relationship that is by definition strained because of our jobs but not because of how we respect each other. So i would like to make it clear that that difference of opinion should always be expressed in a way that you understand you and i disagree sometimes about policies but never about our individual roles. We want to make sure that that is clear. And so to the extent that anyone is offended, i certainly do not want to be. Thank you very much. I really appreciate this and i do appreciate this and i know you mean that. Like you said, we differ sometimes on our views but at the end of the day, the respect level is still extremely high. So i really appreciate that. The gentleman from illinois, mr. Davis come as the full five minutes. Thank you very much. I want to thank our witnesses for what i call the careful analytical professional way in which they have responded to many highly subjective individuals. So i appreciate your service to the agency as well as the professionalism. Yesterday it was testified before this committee that Progressive Groups received treatment from the irs that was similar to Tea Party Groups when they apply for taxexempt status. The congressman, who is the Ranking Member of the ways and means committee, explained these similarities in more detail. It took years to resolve these cases, just like the tea party cases. In the irs screens for these groups, transfers them to the exempt organizations technical unit made them the subject of the case report and have them reviewed by the office the chief counsel. Some of these Progressive Groups actually have their applications denied after a threeyear wait in the the revolution of the Inspector General had to the release of this information and i can only ask you about these groups in a vague manner. Let me ask you, i understand you were not assigned any of these Progressive Groups . Do you know who in the washington technically unit was assigned these applications . No , sir. No , sir, i do not. Do you have any information you can share with the committee about how such groups were screened or reviewed . No , sir, i do i cannot. According to Ranking Member levin who was able to review the name of the category of groups. Key terms to search for the groups are included in the screen in workshop slide show from july of 2010. It appears from that document that they were told to, and i quote, look for names like the ones for these groups as well as for the terms progressive and tea party and patriot and 9 1 12 project. Certainly from this document it appears the Tea Party Groups were not treated differently than Progressive Groups rather they appear to be handled in a similar manner. Do you agree that in order determine whether a group has been singled out and treated differently than it peers is it is important to review how all similarly sexually swotted group situated groups are handled . I think thats above my grade level. I wouldnt be able to comment on that. All right. To me, based on the evidence before us the Inspector Generals report did not tell us the full story how the Internal Revenue service handled applicants with political advocacy issues between 2010 and 2012. I hope that the reviews will provide relevant information and those corrections can be made. I thank you again both, and i yield back the balance of my time. I thank the gentleman. Were not now going complete as fast as we can as many as we can before the vote. Im sorry. If you please go next. Thank you, mr. Chairman. I wanted to thank you for your perseverance today both with the witnesses and. I have struggled to find out as we dont pursue what happened with the tea party cases. I think they look back and put them in the context. Im trying to find out on the baseline how cases were handled normally before Tea Party Got put in to your life. First, you were working in a division that was responsibility for you was to make decisions about people who were applicant for these 501 c 4 designations. Is that not accurate . Yes, sir. And in that period of time, you had to make decisions numerous times about the very characteristic we have identified here that would include the possibility that sum of it might be political activity and some may bed a vote casey for their activity; correct . Sir, i worked cases that had all different activity. I worked 501 c 3 , all different tax exempt codes. Once you made those decisions. What did you have to do . When you made conclusion that passed muster . What happened then. We would worked paper and provide a marry of the case use the appropriate law and come to a conclusion. Then i would recommend to the manager and decide whether or not to sign off and approve the case. Did your manager and approved and signed off on the case, what happened then . The applicant would get the exception and get the letter. If it were mandatory what creates mandatory review . Well, they can be manager designated. We have an Internal Revenue manual that designates numerous cases made to a review. Thats what happened with the tea party cases at one point in time . It may have done the road after i left. Okay. But normally you were able to make a recommendation, your supervisor presumably in cincinnati then approved it, and the normal course of business many of those cases then were the exemption granted and went on the way. Thats correct. Okay. When you were making those calculations you would ask who designed the questions . Sir, the individual agent myself designed the question based on the information typically in the file. Once again, it was part of your analysis. Nobody else was looking the questionses to make the calculation were they . Generally thats correct. When you were assigned this special class of cases that were now going to seek approval of working on the tea party cases is in the first time then you then had to automatically make sure it went to eo technical . Yes, sir, that would be correct. Now, when you asked the questions at the outset, did you design that questionnaire . Well, mr. Hull had provided me copies of the letters he sent to the applicants. And i used those and tailored them to my particular applicant activity. Did you design those to all of the question nears that were used in the applications for the tea party . With regard to those cases assigned to me simply two cases . Two cases. Okay. I prepared a letter asking for Additional Information from the organizations. No one reviewed it. I signed it. Just a letter. How complex was the letter . Was it a lot of issues being asked for . I dont recall the exact number of questions, but usually if you listen with a page of questions or maybe a page and a half. Okay. A page and a half. The circumstances, sir. Thank you. Did you get any other extensive question questionnaires directed to you from washington, d. C. . No, i did not. That the point in time. Okay. You didnt ask those questions. When you forwarded these to mr. Hull then, which was technical and your responsibility, mr. Hull, in all of the cases or only in a few of these to make decisions on the recommendations that were made by mrs. Hofacre with regard to tea party . In the beginning it was a first applications came in. There was a manager that overlooked it with me. He decided at the end of the first group he didnt need to see anymore. I looked at all of the questions that mrs. Hofacre how did it change . When did it change . How did what change . He decided he didnt need to see anymore. Im presuming you made determinations, sent them down to cincinnati in the beginning as you stated with some of these cases, and that was the resolution, and it was either granted or appealed . I made suggestions to mrs. Hofacre on the letters that were sent enough information. When did it change there was a requirement not simply to send it back down to her with the recommendations you had to send it to other places including chief counsel for resolution . I had to send it to chief council to find out what would be appropriate as far as they were concerned. Able to tellt whe finallyuld mrs. Hofacre how she might want to tailor her questions. If the gentleman can wrap up. I want to thank you. I was asking about routine process. I thank the gentleman. We go to the gentleman from massachusetts who will complete this panel and be excused following his questions. Ill do it quickly. Thank you. Just on the reform side of things, both of you had an extensive history the agency. We thank you for your service and experience. Let me ask you to put the experience to work. Do you have any suggestion as to how the process might be speeded and run more smoothly as a result of the issues that bring us here today . I never thought of it, sir. Im sorry . I never thought of a suggestion with regards to how it might go faster. It never occurred to me. Okay. So many unknown available and facet to a question like that. Im not in a position to give an answer. Okay. I always say it. Part of the problem people thought they were getting delayed and seemed to be endemic for the entire system on that. I dont know if it was a manpower or lack of clearer guidance or what it might be. If you havent thought about it. You havent thought about it. I thank you. I yield back my time. I thank the gentleman. That allows us to dismiss the panel. I want to thank you for your years of service, i want to thank you for your patience with if you will, im not trying to be unkind. We know you were asked the same questions over and over again. We know you heard the same speeches over and over again. You have moved in a decisive way toward the next level of investigation. I do not expect to ask you to come back. I do expect you to enjoy your retirement, mr. Hull, and liz hofacre, i hope your career is as long as you want to have it. Something tells me it may not be 4r8 years. Hopefully we havent diminished your confidence in congress. [laughter] i want to thank you for your service and thank you for being here. Mrs. Hofacre, i have tell you one of the most painful things ive heard when you said there was some threat or whatever to you and your family. You know, that is totally unfortunate. If theres anything we can do, i know the chairman joins me in that and all of our members. We want to make sure we do what we can to help you. And again, thank you very much. Your testimony has been quite helpful. Thank you. We stand recessed for the next panel. [inaudible conversations] [inaudible conversations] [inaudible conversations] the committee will come to order. Thank you for your indulgence and patience during the recess. We welcome our second panel of witnesses. The honorable Russell George that is treasury and Inspector General for tax administration. He comes today with mr. Michael mccarthy, who is the chief counsel for treasury Inspector General for tax administration, in other words your counsel. And mr. Gregory kutz who is the assistant Inspector General for tax administration. In other words, youre the guy that digs in to it. Pursuant to the committee role, as you all know, and michael, particularly, you know. Would you please rise to take the oath. Do you solemn swear or affirm the testimony you are about to give will be the truth, the whole truth, and nothing but the truth. I do. Have a seat. Let the record give by Inspector General, we will not observe the five minutes. Take the time reasonable you need. Youre effectively only witness. And, mr. Mccarthy. Welcome back. I know, you looked for this many side. You wonder what it would be like on that side. Today you find out. Thank you, mr. Chairman. I look forward to it. The gentleman is recognized. Thank you chairman issa, Ranking Member, and members of the exee. Thank you for the opportunity to address specific issues that have been raced related to our report published may 14, 2013, on inappropriate cry criteria used by the Internal Revenue service to identity tax exempt applications for review. Our report included three key findings, first, the Internal Revenue service used inappropriate criteria that identified for review organizations applying for taxexempt status based upon their name or policy position rather than on tax exempt treasury regulations. Second, that the cases of the irs referred for review as potential political cases experienced delays. Third, the irs made unnecessary and burdensome request for information. On may 10, 2013, at an American Bar Association Conference Held in washington, d. C. , lois lerner the directer for the irs at the time stated, quote, instead of referring to the cases as advocacy cases, they actually used case names on this list. They, the determination unit in cincinnati, ohio used names Like Tea Party or patriot and selected cases simply because the applications have those name in the title. That was wrong, that was absolutely incorrect, insensitive, and i inappropriate. End of quote. She also stated that some cases were des moines, iowaed delayed and unnecessary questions were asked confirming three key findings. The storyline based on her presentation that the irs app guyed for inappropriately targeting conservative organizations. She made her statements on may 10, 2013, before our order was completed and issued on may 14th, 2013. Has been asserted that they concluded that the irs inappropriately targeted conservative organizations; however, that narrative is based upon miss lerners statement not on the conclusion. It is im emphasize that our order never labeled groups as conservative or lib are liberal. They reviewed the process used by the irs from may 2010 to may 2012 to screen cases for potential Political Campaign intervention. In other words, advocating for or against a candidate running for political office. As of the end of may 2012, the irs provided a list of 298,000 organizations that it, the irs selected for further scrutiny. The report focuses on the terms, quote, tea party, patriot, and 9 12, unquote. Is that the irs provided us a document at the beginning of our order that showed these were the terms they used to select the potential political cases. I submit for the record a document that the irs provided to my organization on may 17, 2012, while we were still in the planning phase of our order. This is the language used on be the on the lookout over time to describe potential political cases. We focused our order on the bow low entry shown in the document precisely because of the irs represented these were the criteria relevant to potential political cases. Further more, the irs provide aid additional names and policy positions we used to select cases including patriots and nine 2012. Used to review applications for Tax Exemption from groups potentially involved in Political Campaign intervention. During the order, our understanding was that the other bolo entree were not used to select cases for this type of specialized review. As new information emerges, we are continuing to review whether this is accurate. In interview, email, and documents we found repeated discussion of the use of tea party and other related criteria described in our order report. New documents from july 2010 with the term, quote, progressive, unquote, but noting that progressive are not considered tea parties were provided to them last week on july 9, 2013. They were not provided during our order, even though similar documents that, quote, tea party, unquote, but not progressive word. Im very disturbed these documents were not provided to our auditor at the outset. We are currently reviewing this issue. To follow up on the information that other terms like, quote, progressive and occupy, unquote, appeared in various sections of the list we conducted additional able cease to provide member of congress with the data we have due to the interest in the issue. However, we do not have full audit findings on the use of the other criteria. With respect to the 298 cases at the irs selected for political review, as of the end of may 2012, three have the word progressive in the organizations name. Another four were used are used, quote, progress, unquote. None of the 298 cases selectedded by the irs as of may 2012 used the name occupy. I know you have questions and so do we on the other be on the lookout listings. From the date of the may 17th, 2012, document until we issued our report one year later, irs staff at multiple levels concurred with our analysis citing tea party, patriot, and 9 12 and certain policy positions as a criteria the irs used to select potential political cases. An audit was focused on the potential processes. We were concernedded about the appropriateness of other criteria appearing appearing in listings. We took prompt action after the report was issued to follow up on the concerns and communicated them to Congress Consistent with legal restriction on the release of considerable taxpayer information. The name of the 298 groups and the majority of the information on the listings returned information as defined on the title 26 United States code section 6103 and prohibited by law from disclosing this information to member of the committee and to the public. However, we provided this information to the acting commissioner danny or Danielle Werfel on may 28, 2013, and recommended he reviewed whether the listings were still in use and whether they were appropriate. He since amounted he has taken action on the suggestion and restricted the use of be on the lookout listings. We also provided this information and briefed staff from the committees authorized by statute to receive tax. In early june of 2013. Our office of audit also referred the irss use of other listings to tick datas office of investigation for further review. The letter from Ranking Member cummings to the chairman dated july 12, 2013, states that i fail to disclose to congress that we had no evidence of political motivation. With all due respect, i believe the shows otherwise. When i testified before the committee on may 22, 2013, that presented cartwright as to whether any evidence that irs employees were politically motivated in their creation or use of inappropriate screening criteria. I stated, quote, we have received no evidence during the course of our audit to that effect, unquote. In addition, when i testified before the house Committee Ways means. Ranking member levin inquired, quote, they find any evidence of political motivation in the selection of the tax exempt. We did not, sir, unquote. The letter from Ranking Member cummings also states that may have improperred prevented disclosure for relevant information. Thats not correct. Career and irs attorneys independently determined that certain taxpayer information should be redacted. Following that decision, the irs told us they changed their mind about one entry. This was an interpretation that we requested Additional Information about and our lawyers dont have a dialogue regarding it. It it is important that i be clear on this point. None of this information has been withheld from congress. They provided it in unredacted form to the Tax Committee entitled to receive the information weeks ago. Since the issuance of our report on may 14, 2014, congress, the department of justice, the Internal Revenue service have been reviewing the issue surrounding the irss processing of tax exempt applications. As such, we thans additional questions may be raised and additional issues may need to be reviewed. Permit me to conclude by saying when miss lerner reviewed information on the unissued report on may 10, 2013, her statements confirmed the findings in our report. In fact, as previously noted, we provided irs officials with several opportunities to comment on the findings and they consistently agreed that, quote, tea party, unquote, and related criteria described in our report were the criteria that the irs used to select cases of review for potential Political Campaign intervention during the 2012 time frame we reviewed. Chairman ice is a, Ranking Member cummings, member of the committee. This concludes my testimony. Thank you, thank you all three for being here today. Mr. George, 216603 was created by congress; right . Yes, thats correct. But the rules and the interpretation to a great extent come from the irs itself; is that correct . Thats my understanding. And the intent, as far as you know, of 6103 was in fact to protect confidential information from members of congress and others diving in to it and extracting person information for whatever use that would be thus inappropriate; is that right . Among many others. Not just members of congress. Right. Thats good case law for why a law like that would be on the book. Let me ask you first a question, are you interpreting 6130 if your years since i guess since 2004 and your two deputies there substantially the same as your predecessors . Yes. Does it frustrate you that often a victim can in fact be denied the toobility get information as a result of that law . It is extremely frustrating, mr. Chairman, and its court intuitive someone who may be the victim of a taxrelated crime incident, what have you, can complain to us, complain to members of congress and we have limited opportunity to provide them with an outcome of any information that we conduct. Our own House Counsel explained many times that under speech and debate we can take a great deal of information and use it on the house floor in official committee in ways that the executive branch objects to. I want to get specifically in to mr. Cummings and i receiving. Rightfully or wrongfully has been interpreted 6103 isnt it true that each body, the senate and the house, produce their own rules as to who receives 6103 . That i will refer to my chief counsel on. Mr. Chairman, the house rule and the senate rule can determine the way the statute is written that the chairman of the committee on ways means, the chairman of the committee on finance and the senate and the staff correct on the joint committee on taxation can make request for information from the treasury department. And share it. Then they can designate who theyll share it with. However, in closed session. Sure. I understand. Of course they also can make the final determination whether they agree with the 6103 or not as a body. So when they get unredacted information, they then, in the ordinary course, usually work with your organizations and make decisions on what should be redacted before release; is that right . I believe we do have discussions but theyre not limited at up. They work the final decision. I dont know if i would use the word work in consultation, sir. They make the determination on their own unless so, if i understand correctly, i want to make sure i understand this. Mr. Cumentings and i are in agreement on the agreement to protect victims and get full disclosure to the public as appropriate. The senate, stindz, the chairman shares with the Ranking Member . Yes, the chairman back cuss has authorized we share information with the staff as well as the Ranking Member hatch and his staff. They made a decision that includes money a dozen people. Thats correct. The house hasnt made a similar decision . Im not sure. [inaudible conversations] a little more narrow. The receive we severed from the chairman authorizing us to revise 16003 included member of the republican staff. I believe there has been information shared between the majority staff and the minority staff; however, we do not have currently on file an authorization from the chairman allowing us to share that information directly. Chairman sent a letter saying mr. Cummings was included the group to see 6103 you could come comply with that . I would have to review that. I believe its accurate. All right. I want to make sure we understand to the extend if somebody pushes back on 6103 we have two problems. One, make sure the scope is narrow enough it only includes 6103, thats open to consideration including by the chairman. And secondly, the question of who gets the information, which currently in open session would not be appropriate. Even in closed session would not available to us; is that correct . Yes, thats correct,