IRS replaces official: How many heads will roll?

Moving quickly to stem a raging controversy, the new acting head of the Internal Revenue Service (IRS) started cleaning house Thursday by replacing the supervisor who oversaw agents involved in targeting tea party groups.

A day after she refused to answer questions at a congressional hearing, Lois Lerner was placed on administrative leave, according to congressional sources.

Sen. Chuck Grassley of Iowa, a senior Republican on the Senate Finance Committee, said Lerner was asked to resign but refused, so she was placed on leave. An IRS spokeswoman said the agency could not comment on Lerner's status because it was a private personnel matter.

Danny Werfel, the agency's new acting commissioner, told IRS employees in an email that he had selected a new acting head of the division, staying within the IRS to find new leadership.

Ken Corbin, a 27-year IRS veteran, will be the new acting director of the agency's exempt organizations division. Corbin currently is a deputy director in the wage and investment division, where he oversees 17,000 workers responsible for processing 172 million individual and business tax returns, Werfel said.

Werfel's email Thursday made no mention of Lerner. But congressional aides who were briefed on the matter confirmed that Lerner was placed on paid administrative leave. The aides spoke on condition of anonymity because a personnel matter was involved.

"From all accounts so far, the IRS acting commissioner was on solid ground to ask for her resignation," Grassley said in a statement. "The IRS owes it to taxpayers to resolve her situation quickly. The agency needs to move on to fix the conditions that led to the targeting debacle. She shouldn't be in limbo indefinitely on the taxpayers' dime."

Lerner's lawyer, William W. Taylor III, did not immediately respond to requests for comment.

Lerner is the IRS official who first publicly disclosed on May 10 that IRS agents had been targeting tea party and other conservative groups for additional scrutiny when they applied for tax-exempt status. At the time she apologized on behalf of the IRS, but it wasn't enough to stop a firestorm of criticism from the White House and Congress.

If Lerner, a career civil servant, is dismissed she would become the third IRS official to lose their job in the scandal. Last week, President Barack Obama forced acting IRS Commissioner Steven Miller to resign,replacing him with Werfel, a former White House budget official who started at the IRS on Wednesday.

Also last week, Joseph Grant, one of Miller's top deputies, announced plans to retire June 3, according to an internal IRS memo. Grant had just been named commissioner of the agency's tax exempt and government entities division, which includes the agents that targeted tea party groups. Grant had been the acting head of the division since 2010.

Lerner provided one of the most electric moments since the controversy erupted when she unwaveringly — but briefly — defended herself before the House Oversight and Government Reform Committee on Wednesday.

"I have not done anything wrong," she told the committee, reading from a written statement. "I have not broken any laws, I have not violated any IRS rules or regulations, and I have not provided false information to this or any other congressional committee."

Then, she refused to answer lawmakers' questions, invoking her constitutional right against self-incrimination. A few minutes later, she was excused. As she boarded an elevator, several of the men who escorted her briefly jostled with TV camera operators who were trying to film her.

Lerner learned in June 2011 that agents were singling out groups with "Tea Party" and "Patriots" in their applications for tax-exempt status, according to a report by the agency's inspector general. Lerner ordered agents to scrap the criteria immediately, but later they evolved to include groups that promoted the Constitution and the Bill of Rights.

It finally stopped in May 2012, when top agency officials say they found out and ordered agents to adopt appropriate criteria for determining whether tax-exempt groups were overly political.

Former IRS Commissioner Douglas Shulman told two congressional committees this week that he first learned in the spring of 2012 that conservative groups had been improperly singled out for additional scrutiny. However, after learning that the practice had stopped and that the inspector general was investigating, Shulman said he didn't tell anyone in the Treasury Department or the White House about it. The IRS is part of the Treasury Department.

Shulman, who was appointed by President George W. Bush, left office in November, when his five-year term expired.

On Thursday, the two leaders of the Senate Investigations subcommittee accused Lerner of misleading committee staff just a few days before it she made the controversy public.

Subcommittee Chairman Carl Levin, D-Mich., and the top Republican member, Arizona Sen. John McCain, called on the IRS to immediately suspend Lois Lerner from her job as director of the IRS division that handles applications for tax-exempt status.

On April 30, committee staff interviewed Lerner and seven of her colleagues for six hours, the senators said in a letter to Werfel.

"That interview covered, among other topics, how the IRS determines which groups to review, what actions are taken in connection with the IRS reviews, and how the laws and regulations are used to examine those groups," the senators wrote. "Ms. Lerner failed to disclose the internal controversy."

Lerner, 62, is an attorney who joined the IRS in 2001. In her brief appearance Wednesday, she expressed pride in her 34-year career in federal government, which has included work at the Justice Department and Federal Election Commission. AT the IRS, she oversaw 900 workers and a budget approaching $100 million.

Corbin, the new acting director of exempt organizations, began his IRS career in Atlanta in 1986, Werfel said.

"Ken is a proven leader during challenging times. He has strong management experience inside the IRShandling a wide range of processing issues and compliance topics as well as taxpayer service areas," Werfel said. "Combined with his track record of leading large work groups, these skills make him an ideal choice to help lead the Exempt Organizations area through this difficult period."

Rep. Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, praised the selection of Corbin.

"In naming Ken Corbin as acting director to replace Lois Lerner, the administration has taken a strong step to address serious mistakes made by the IRS Exempt Organization Division," Levin said. "This and further corrective action are vital in restoring the confidence of the American people."

Associated Press writer Alan Fram contributed to this report.