IRS Scandal: What We Still Haven’t Learned


A hearing on the IRS rarely has so much potential for drama.

Steven Miller, the agency’s ousted acting commissioner, will spend several hours on Friday morning in the ornate House Ways and Means Committee room explaining his role in a scandal that has captivated Washington for a week.

Miller will sit before lawmakers who have turned him into an example of government overreach. And he’ll be at the same witness table as the inspector general who wrote the damaging report that led the Obama administration to show him the door.

For all the ink that has been spilled on the IRS’s practice of scrutinizing conservative groups applying for a tax exemption, there’s still plenty new territory to cover in the first congressional hearing on the scandal.

Here is a breakdown of what is still unknown:

How did all this “screening” get started?

Not much has come out about how the IRS wound up in this mess in the first place — namely, how the screening of conservative groups really began.

The inspector general’s report doesn’t delve into these details, merely stating that employees in the agency’s Cincinnati office began flagging groups for extra scrutiny if they included words such as “tea party” or “patriots.”

The practice of using search terms as a shortcut to determine which social welfare organizations will get more scrutiny is very common.

Republicans are wondering whether the employees who targeted conservative groups had political motivations for doing so and are sure to view Miller’s denial of bias with skepticism. They’re likely to pry more into how the agency decided which terms to use as a trigger for extra review.

Those decisions can mean the difference between a group waiting a few weeks or a few years to win IRS approval for a tax exemption.

Could anyone else be ousted?

So far, the casualty count is two: Miller and Joseph Grant, the commissioner of the agency’s tax exempt and government entities division who said on Thursday he plans to step down.

But the resignations might not stop there.

Lois Lerner, director of the tax exempt and government entities division, leapt to national fame last week when she acknowledged the targeting program and started the debacle.

House Oversight and Government Reform Committee Chairman Darrell Issa has accused her of misleading Congress on four separate occasions.

Lawmakers have called on her to step down and she’s certain to be called before at least one congressional panel to provide her story.

But while Obama essentially fired Miller, there are limits on what else he can order. The IRS has only two political appointees — the commissioner and the chief counsel — and the rest of its employees are protected by civil service regulations.

Has the IRS disciplined employees in Cincinnati?

Miller told lawmakers during private meetings that the agency has homed in on two “rogue” employees in the Cincinnati office tasked with reviewing nonprofits’ applications for tax-exempt status, according to CNN. And a Fox affiliate in Cincinnati said four staffers could be involved in unfairly singling out conservative groups.

But if the employees were punished, it appears those repercussions came after Republicans began questioning the targeting program — not when top IRS officials first learned about it in June 2011.

Issa (R-Calif.) and Rep. Jim Jordan (R-Ohio) wrote in a letter to the agency on Tuesday that IRS officials told lawmakers that no employees faced disciplinary actions and one employee was promoted.

The National Treasury Employees Union, which represents IRS workers, has so far stayed quiet on the fate of the employees in the Cincinnati office.

Did the IRS leak confidential information to other groups?

Congressional Republicans were all over this question Thursday and are certain to press for more details at Friday’s hearing.

They want to know whether the agency officials passed conservative groups’ confidential information to outside groups. And if so, how often.

Senate Republicans on Thursday asked the IRS inspector general to probe the agency’s release of private information from nine conservative groups whose application for a tax exemption was still under review.

The National Organization for Marriage this week also accused the IRS of leaking donor information — including GOP presidential hopeful Mitt Romney’s status as a contributor — to opponents at the Human Rights Campaign.

Could the scandal and ensuing investigation permanently hamper 501(c)(4) regulation?

If the IRS was too aggressive in overseeing 501(c)(4) groups before the scandal, there are questions about whether it will go tough on them at all now that the agency is being raked over the coals.

Reps. David Reichert (R-Wash.) and John Lewis (D-Ga.), the leaders of a recent Ways and Means working group on charitable organizations, will be particularly interested in this.

Reichert has told POLITICO that he thinks too many groups are getting tax-exempt status without merit — and he wanted to crack down to ensure taxpayer money is not being wasted on groups that don’t deserve a break.

On Friday, he wants to ask whether the IRS has redirected resources from the tax-exempt oversight divisions to the implementation of Obamacare, he says.

How does Issa handle his big moment?

Hearings will spill over into next week in both the Senate Finance and House Oversight and Government Reform committees.

While the chairmen of both committees have promised a thorough investigation, it’s Issa who has cast himself as the chief inquisitor of the Obama administration.

And this could be his time to shine.

Some of his probes — like the Fast and Furious investigation — have fallen flat.

But with the IRS debacle, Issa has been handed a potent example of government mismanagement that has resonated with the public.

What does he do now?

Issa has already set himself apart by securing a big fish: former IRS Commissioner Doug Shulman.

He led the agency when the targeting program was under way and vehemently denied to lawmakers in March 2012 that the agency was targeting conservative groups. He was briefed two months later but never followed up with lawmakers.