Former IRS commissioner apologizes on Capitol Hill: 'Foolish mistakes were made'

The ousted head of the Internal Revenue Service apologized to Congress on Friday for his agency's tougher treatment of tea party and other conservative groups seeking tax-exempt status. He said they resulted from a misguided effort to handle a flood of applications, not political bias.

"I want to apologize on behalf of the Internal Revenue Service for the mistakes that we made and the poor service we provided," Steven Miller, who has been acting IRS commissioner, told the House Ways and Means Committee as the panel held Congress' first hearing on the episode. "The affected organizations and the American public deserve better. Partisanship and even the perception of partisanship have no place at the Internal Revenue Service."

At a hearing that saw lawmakers from both parties harshly criticize his agency, Miller conceded that "foolish mistakes were made" by IRS officials trying to handle a flood of groups seeking tax-exempt status. He said the process that resulted in conservatives being targeted, "while intolerable, was a mistake and not an act of partisanship."

Though Miller and another top IRS official are stepping down, the chairman of the committee said that would not be enough.

"The reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers," said Rep. Dave Camp, R-Mich.

At one point, anti-IRS sentiment was voiced by spectators, who included members of grass-roots conservative groups. They broke into cheers after Rep. Mike Kelly, R-Pa., said, "This is absolutely an overreach, and this is an outrage for all Americans."

Camp also said the tougher examinations that conservative groups encountered seemed to be part of a "culture of cover-ups and intimidation in this administration." He offered no other examples.

Camp's remark about cover-ups drew a sharp retort from the committee's top Democrat, Rep. Sander Levin of Michigan. Levin said if the hearing became a preview of the 2014 political campaigns, "we'll be making a very, very serious mistake."

The administration has been forced on the defensive about last September's terrorist attack in Benghazi, Libya, that killed the U.S. ambassador and three other Americans, and the government's seizure of The Associated Press' telephone records as part of a leaks investigation.

Republicans are hoping to link the issues in an effort to raise questions about President Barack Obama's credibility and make it harder for him to press a second-term agenda.

Friday's hearing is the first of what are expected to be many on the subject by congressional panels. Underscoring the seriousness of the episode, Miller was sworn in as a witness, an unusual step for the Ways and Means panel and one that could put Miller in jeopardy if he is later shown to have misled lawmakers with his testimony.

When the hearing ended after nearly four hours, Camp said, "I promise the American people, this investigation has just begun."

Levin said that the IRS's mistreatment of conservative groups meant the agency "completely failed the American people." He said Lois Lerner, who heads the IRS division that makes decisions about tax-exempt groups, should be "relieved of her duties."

Miller said the IRS struggled to efficiently handle growing numbers of applications for tax-exempt status.

The agency has said between 2008 and 2012, the number of groups applying for tax-exempt status as so-called social welfare groups more than doubled. Along with that was an increase in complaints that such groups were largely engaging in electoral politics, which is not supposed to be their primary activity.

"I do not believe partisanship motivated the people" at the IRS who engaged in the harsher screening for conservative groups, Miller said.

In recent months, Republicans on the Ways and Means panel had repeatedly asked the IRS about complaints from conservative groups that their applications were being treated unfairly.

On Friday, numerous Republicans wanted to know why Miller and others never told them the groups were being targeted, even after May 2012, when the IRS has said Miller was briefed on the practice. Miller was previously a deputy commissioner whose portfolio included the unit that made decisions about tax-exempt status.

"I did not mislead Congress or the American people," Miller told Rep. Charles Boustany Jr., R-La., one of several Republicans who challenged him about why he hadn't mentioned the targeting in the past.

Also testifying Friday was J. Russell George, the Treasury Department's inspector general for tax administration.

In a report he issued this week, George said IRS officials reported they were not politically pressured to target conservative groups. Asked about that conclusion, George said Friday, "We have no evidence at this time to contradict that assertion," but in prepared testimony to the committee he said he is continuing to investigate that question.

George's report concluded that the IRS office in Cincinnati, which screened applications for the tax exemptions, improperly singled out tea party and other conservative groups for tougher treatment. The report says the practice began in March 2010 and lasted more than 18 months.

The report blamed "ineffective management" for letting IRS officials craft "inappropriate criteria" to review applications from tea party and other conservative groups, based on their names or political views. It found that the IRS took no action on many of the conservative groups' applications for tax-exempt status for long periods of time, hindering their fundraising for the 2010 and 2012 elections.

Republicans have spent the past few days trying to link the IRS' improper scrutiny of conservatives to Obama. The president has said he didn't know about the targeting until last Friday, when Lerner acknowledged at a legal conference that conservative groups had been singled out.

Many of the groups were applying for tax-exempt status as social welfare organizations, which are allowed to participate in campaign activity if that is not their primary activity. The IRS judges whether that imprecise standard is met.

Attorney General Eric Holder has said the FBI was investigating whether the IRS may have violated applicants' civil rights.

Obama has rejected the idea of naming a special prosecutor to investigate the episode, saying the investigations by Congress and the Justice Department were sufficient.

Obama has named Daniel Werfel, a top White House budget officer, to replace Miller.

Also Thursday, Joseph Grant, one of Miller's top deputies, announced plans to retire June 3, according to an internal IRS memo. Grant is commissioner of the agency's tax exempt and government entities division, which includes the agents that targeted tea party groups for additional scrutiny.

Grant joined the IRS in 2005 and took over as acting commissioner of the tax exempt and government entities division in December 2010. He was just named the permanent commissioner May 8.

When asked whether Grant was pressured to leave, IRS spokeswoman Michelle Eldridge said Grant had more than 31 years of federal service and it was his personal decision to leave.