IRS 'Rogue Agents' Draw Bipartisan Praise at Scandal Hearing

Two of the so-called “rogue agents” from the Internal Revenue Service division at the center of the political targeting scandal took turns being praised for their professionalism at a Thursday House oversight hearing, but lawmakers remained divided on whether their testimony showed that the tax agency has been politically misused.

The two employees, one who recently retired after 48 years and the other a 14-year veteran, expressed frustration at “micromanagement” and “unusual” delays in guidance from supervisors in processing politically sensitive applications for tax-exempt status. But both testified that they saw no political motivation in their managers’ conduct.

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, convened the hearing amidst an ongoing partisan dispute over two-month-old revelations that employees in the IRS’ Exempt Organizations division singled out certain groups applying for tax-exempt status.

Lawmakers also clashed Thursday over whether the May report from the Treasury Inspector General for Tax Administration that launched the controversy omitted key details about IRS scrutiny of progressive groups in addition to Tea Party-types. Republicans focused their outrage on statements by presidential press secretary Jay Carney, former acting IRS Commissioner Steven Miller and suspended IRS exempt organizations chief Lois Lerner that the mishandled applications were the work of “rogue employees” rather than Washington higher-ups. The Republicans said Washington officials will be called to future hearings.

“Sadly,” Issa said, “the White House spokesman [Jay Carney] continues a narrative of inappropriate conduct” by a few employees in Cincinnati. “But what began in Cincinnati with one case was soon at the Washington level, well above line employees,” he said. “Hundreds of files were in many hands, most of which were not in Cincinnati. I want to make sure the smear stops here today.”

His portrayal was countered by ranking member Rep. Elijah Cummings, D-Md., who said, “Republican politicians and commentators have engaged in a sustained and coordinated campaign to accuse the president and the White House of using the IRS to target Tea Party groups for partisan political purposes -- without any evidence to support their claims. The fact is that there is no evidence before this committee to support these claims. This is unsubstantiated nonsense. It undermines the committee’s integrity.”

The IRS employees, though among 16 recently interviewed by congressional staff, were the only two at their level to testify in public on how they performed the process for deciding whether a given nonprofit is too political to merit tax-exempt status.

Elizabeth Hofacre, a determinations specialist in the Cincinnati unit who had been assigned to be an “emerging issues coordinator,” described how in April 2010 she was given 20 applications from Tea Party-like groups to determine whether they warranted a tax exemption. She did receive applications from neutral or progressive groups, but she re-rerouted them to “general inventory,” she said. Her supervisor, in what she called a “highly unusual” practice that felt like “micromanagement,” asked to see her proposed letters seeking additional information, “but at no point did I receive guidance on what to do.”

It was frustrating, Hofacre said, “to become a Tea Party dumping ground for all cases with any inkling of politics” while at the same time “I was being slammed on the phone by taxpayers, and they deserved an answer.” She could tell them only that their applications were “under review,” she said. “I know the accuser’s reference to rogue agents is incorrect,” she said, describing how she and her family were “hounded by the press. It wasn’t a character-builder.”

Her supervisor in the Exempt Organizations technical unit, Carter Hull, who recently retired, told the panel that he could provide her no guidance because his own supervisor had yet to supply it. He had been asked to send two test cases to his superiors, including staff in the IRS General Counsel’s office, for review. He had recommended one for approval, and the other for denial.

The cases are decided by “facts and circumstances,” Hull said, describing how he disagreed with a suggestion from a higher-up that his unit create a “template” for processing multiple applications in the same manner. “There is no bright line that defines 51 percent social welfare,” he said, explaining how he would research the applications by visiting the groups’ websites and searching for similar precedents. He said his manager asked him to create a “sensitive case” report on the Tea Party applications.

Under questioning, he agreed that sending cases recommended for denial was standard operating procedure.

Both Hofacre and Hull, under prompting, stated that they found no political motives or hostility toward the Tea Party, that they had no contact from the White House or the Obama political campaign, and that they did not know what drove the top division boss Lois Lerner’s questions about their handling of different nonprofits. Asked how IRS might accelerate applications processing, both declined to make suggestions.

Hofacre, responding to Democrats’ recitation of Republican statements and political advertisements suggesting President Obama’s involvement, said, “I have no personal knowledge of the presidential campaign digging through other people’s tax returns.” But on a personal level, she said she was “deeply offended” by comments implying that she was a rogue agent. “It hurt my reputation and that of other employees,” she said. When Lerner so-characterized her office, “it was like a nuclear strike,” she said.

Lawmakers from both parties praised the professionalism and honesty of the two witnesses. “I don’t see any rogue agents, I see civil servants, some of which are on furloughs,” said Del. Eleanor Holmes Norton, D-D.C. “I don’t see targeting, I see confusion.”

Said Rep. Jason Chaffetz, R-Utah, “I’m glad the truth is surfacing. You have Jay Carney blaming one of the people at this table, but you are more heroic than that."

Rep. Matt Cartwright, D-Pa., said their testimony showed that the situation stemmed from “a miscommunication between Cincinnati and Washington.”