IRS commissioner: 'Primary mission' is regaining public trust

The IRS suffered a 'fundamental failure' of management, the new chief told Congress on his 12th day in office. Daniel Werfel said he had already replaced leadership 'at several critical levels.'

Newly appointed Internal Revenue Service (IRS) Commissioner Daniel Werfel said the agency has lost the public’s trust because of a “fundamental failure” by IRS management that included allowing the political targeting of conservative groups.

In his first appearance before a Congressional committee Monday, Mr. Werfel said his "primary mission is to restore” trust in the tax collection agency. Werfel, who has been in office 12 days, said he had ordered a review of a “broad spectrum of IRS operations” and had installed new leadership “at several critical levels” of the IRS. He pledged to “permanently fix” the problems he found and to be “open and transparent with the American people.”

The meeting of the Financial Services and General Government Appropriations Subcommittee was the fourth hearing since the IRS Inspector General released a report in May. The document revealed that during the 2010 and 2012 elections groups with conservative sounding names that applied for tax exempt status were singled out for extended questioning by an IRS office in Cincinnati. At Monday’s hearing, Werfel called the conduct “inappropriate and unacceptable.”

The hearing began with members of Congress from both parties railing against IRS misconduct. Rep. Hal Rogers (R) of Kentucky, chairman of the full appropriations committee, said the IRS “has committed grave violations of the public trust” and that “we will not tolerate another political enemies list.”

Ander Crenshaw (R) of Florida, the subcommittee chair, criticized what he called  “newly discovered incredible waste” in IRS spending on employee conferences and videos. The Inspector General’s office is scheduled to release a report on the conferences on Tuesday that the Associated Press says will show the IRS spent $50 million to hold 220 employee conferences between 2010 and 2012. 

Among the embarrassing evidence: a video showing IRS employees dancing to the rhythm and blues song “Cupid Shuffle” at a 2010 conference.  Rep. Rita Lowey (D) of New York, the ranking Democrat on the full Appropriations Committee, said reports of the spending on employee conferences left her “simply wondering what the IRS was thinking.”   

The IRS scandals come at an especially sensitive time for the agency since it will play a key role in implementing the Affordable Care Act, President Obama’s signature legislative achievement. The Obama administration is seeking a 9 percent increase in IRS funding for the federal budget year that starts in October. Representative Crenshaw said Congress would have to “think very carefully about how much money to provide the IRS.”

At Monday’s hearing, Commissioner Werfel said “the solution here is not more money.” He said “the right starting point is” finding the “optimal footprint” for agency operations and only then turning to the question of agency funding.

The political impact of the controversy has been on display. On CNN’s “State of the Union” Sunday, Rep. Darrell Issa (R) of California said interviews with workers in the Cincinnati IRS office show the targeting of conservative groups was "a problem that was coordinated in all likelihood right out of Washington headquarters – and we're getting to proving it."

Representative Lowey asked IRS Inspector General J. Russell George whether there was evidence that the targeting of conservative groups was ordered by the White House. “Within the White House, no,” Mr. George replied.

Congressional scrutiny of the agency will continue. The House Ways and Means Committee will hold a hearing Tuesday featuring representatives from conservative groups that were targeted by the IRS. As ABC News’ “The Note” reports, some of those groups filed a joint lawsuit against the agency last week.

Later in the week, the Inspector General will appear before the House Committee on Oversight and Government Reform to discuss his audit of IRS spending on employee gatherings.

Material from the Associated Press was used in compiling this report.