Liberal groups may have been targeted by IRS as well

New documents provided to the Treasury Department's inspector general indicate that progressive groups, in addition to conservative groups, may have been targeted by the IRS for additional scrutiny, according to testimony before the House Oversight and Government Reform Committee by J. Russell George, the inspector general. The revelation bolsters the case of congressional Democrats who have argued that IRS targeting was not politically motivated, and that the groups targeted were more ideologically diverse than originally believed.

In his prepared testimony, George described documents from July 2010 that included the term "progressive" within a discussion of the types of groups that should be scrutinized by the IRS. Those documents were provided to George's office on July 9, but were not provided prior to the inspector general's original audit that initially jump-started the targeting scandal and the resultant committee hearings.

"I am disturbed that these documents were not provided to our auditors at the outset," he said, "and we are currently reviewing the issue."

The top Democrat on the committee, Rep. Elijah Cummings, D-Md., said the new documents raise "serious questions" about the inspector general's original report. He said he was troubled by the fact that George did not disclose the apparent lack of political motivation during his prior appearances before Congress, and that his office did not look into the treatment of left-leaning organizations.

He also cited the "very troubling" testimony from acting IRS director Danny Wuerfel, who told the committee on Wednesday that the IRS was set to produce unredacted documents to the committee that included additional categories of groups that were scrutinized, but that the inspector general personally "intervened to block the IRS from producing the information to this committee," according to Cummings.

George defended himself, noting that he had told Congress on several occasions that there was no evidence of political motivation behind the targeting practices. He also denied that he had improperly blocked the disclosure of information to the committee.

"That is not correct," he said, explaining that employees at Treasury and the IRS "independently determined that certain taxpayer information should be redacted."

The Treasury Department and the IRS, George said, were still sorting out their differing views on whether the taxpayer information due to be provided should have been redacted.

Still, George argued, "None of this information has been withheld from Congress," explaining that his office "provided it in an unredacted form to the tax committees entitled to receive this information weeks ago."

Several other witnesses at the hearing indicated that while Washington, D.C., IRS officials were involved in the screening process for applications for tax-exempt status, they were not aware of any involvement specifically on the part of the White House, nor were they aware of any political motivation behind the involvement of Washington officials.

Elizabeth Hofacre, an IRS employee with the exempt organizations unit in Cincinnati who was tasked with evaluating the applications from tea party groups, said she was asked to forward the applications, including the groups' responses to IRS questions, to the D.C. office overseeing tax-exempt organizations.

"In my experience, this was a highly unusual practice," she said. "I never before had to send these responses to [the exempt organizations office in Washington] for review."

She said she eventually applied for a transfer out of the exempt organizations unit due to the frustration she felt as a result of D.C.'s "micromanagement" of the screening process.

She also said she was unable to continue processing the organizations' applications for tax exemption because she did not receive any word from Washington, D.C. on how to proceed.

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Carter Hull, an IRS attorney in Washington who was working with Hofacre on the screening process, explained that he had asked Hofacre to send him the copies of the applications and the responses she received from the organizations under scrutiny. He forwarded the materials to an adviser of senior IRS official Lois Lerner, who oversaw the screening process for tax exempt groups. The adviser suggested he send the letters to the office of the chief counsel of the IRS, who suggested he develop a template for evaluating the applications.

Hull testified that he believed "a template was not a good idea, as there was a great deal of variance among the groups and each application" needed to be evaluated on its own merits.

He said he stopped responding to Hofacre's requests for additional guidance because he had not received word from the counsel's office on how to proceed, not because he wanted to intentionally delay the groups' application process.

Continued feuding over Washington's role

Despite the unusual back and forth with officials in D.C., Hofacre and Hull both said they were not aware of any ideological bias or political motives behind D.C.'s involvement. Neither provided any evidence of White House involvement, politically motivated or not.

Rep. Michael Turner, R-Ohio, argued that the absence of evidence does not mean the evidence of absence, saying just because the two witnesses were not aware of any White House involvement does not definitively disprove that officials at the White House or outside the IRS were behind the targeting.

Hofacre said she was "deeply offended" by the implication that Cincinnati agents were solely to blame. "It impugned my reputation and the reputation of other agents," she said.

Committee chairman Rep. Darrell Issa, R-Calif., labeled "absurd" the narrative that the targeting was confined to a Cincinnati IRS office.

Cummings fired back, accusing Issa of peddling "unsubstantiated nonsense" by raising the possibility that the White House was involved in the IRS targeting. He and other Democrats accused Issa of recklessly jumping to conclusions to suit a pre-determined narrative that turned out to be misleading.

In his opening statement, Issa said "what began in Cincinnati with one case of a tea party application" soon made its way to senior IRS officials in Washington, D.C.

"We can...debunk the accusations that Cincinnati was the source, or that it didn't go to Washington, which it clearly did," he said. "Washington made a catastrophic mistake in taking what would have been, in the ordinary course, an individual one-by-one application, evaluating them...accepting them, denying them, or asking for more information, and not looking at them as a group with some sort of special cynicism."

Issa maintained that he has not said the White House was directly involved in the IRS targeting - that he is only raising the possibility and following the evidence, wherever it may lead.

Democrats on the committee weren't buying it.

"The chairman certainly did not withhold judgment, he rushed to it without any evidence whatsoever," said Cummings. "Committee staff have now conducted 16 transcribed interviews of IRS employees in Cincinnati and Washington, D.C. None of them reported any White House involvement or political motivation, including six who identified themselves as Republicans and who the chairman chose not to invite today."

Cummings said that Republicans have engaged in a "sustained and coordinated campaign" to imply that the White House was involved in the scandal, citing an op-ed in which Issa asked, "Was the targeting of Tea Party applicants directed from the White House or somewhere else outside the IRS?"

"This is unsubstantiated nonsense," Cummings said. "It undermines the committee's integrity...and it destroys the committee's credibility." He cited the testimony of an IRS employee in D.C. who said Issa's claims of White House involvement and political motivation were "laughable."

Rep. Gerry Connolly, D-Va., similarly said Issa "rushed to judgment and deliberately took what now turns out to be not much of a scandal" and blew it out of proportion.

In an op-ed in USA Today on Wednesday, Issa previewed much of the narrative from Thursday's hearing, accusing the administration of waging a "campaign to push the scandal as far away from their own backyard as possible." But as the committee's investigation unfolded, Issa wrote, "we heard a much different story."

He described how Hofacre, an IRS employee in the Cincinnati field office who had been assigned the tea party portfolio, told the oversight committee she "was taking all of [her] direction from EO Technical," which is an IRS unit based in Washington.

Hull, formerly a tax-law specialist based in D.C. and one of Hofacre's supervisors, described how he was "able to tell (Cincinnati) which direction the Service was taking and to be able to give guidance," Issa wrote.

"Hull and his supervisors explained to committee investigators that scrutiny of Tea Party applicants - and the reasons for delays and enhanced scrutiny - went beyond the routine," Issa wrote. "It involved Lois Lerner, the senior IRS official who would later assert her right against self-incrimination in refusing to answer questions before Congress, as well as the office of the IRS chief counsel, which is headed by one of only two political appointees at the IRS."

Issa did not explicitly inculpate the White House in the IRS targeting scandal, but he raised the possibility of White House involvement and said that "judgment should be withheld" until all relevant witnesses and documents are examined.

In the meantime, Issa argued, the administration's "clearly intentional" attempts to pin the blame on the Cincinnati office "should give pause" to those who would consign the IRS targeting scandal to history.