0 steven miller already in the hearing room. he was early. what do you expect he will face today? >> what he faces something you don't normally see with big controversy. which is really a bipartisan grilling. democrats and republicans equally outraged. sometimes when you have these hearings, it's more of a partisan show, members of congress trying to make political points. in this particular hearing, they genuinely have a fact finding mission. a lot of unanswered questions about who these agents were who started the -- these inappropriate criteria, that's the way the inspector general put it. how far up did it go, why was it done? and most importantly from the congress point of view, why didn't they tell congress, especially stever miller, he knew one year ago, congress investigating the very committee he is testifying before now. they were asking questions, didn't disclose, they want to know why. >> also, mr. miller tried to pave the way to this hearing with excuses and "usa today" he wrote in an op-ed, mistakes were made, but in no way due to any political motivation. i am thinking committee members won't stand for that. >> well, definitely on the republican side, no, i did an interview in that very room with the chair of the committee, dave camp, and he's extremely speckty call that the reason they made these criteria were for a shortcut. because they were being inundated for tax exempt status. he thinks it was political. but we'll have to hear what he has to say. what miller has to say. if he has the answers about exactly why they did it, and why if it wasn't political, it was just these conservative groups and not the more progressive groups. that's what it appears to be right now. >> may be no federal agency that invites the scorn of every american quite like the irs. even the president's fellow democrats aren't likely to tamp down the outrage of scandal. let's check in with gloria. clearly the obama administration is scrambling to contain this thing. with today's hearing the first of several, what kind of staying power does this have? >> this irs scandal is something that every american can understand. right, carol? this is something -- >> gloria, i want to interrupt you right now. the hearing is under way. i apologize. stay with us. let's listen. >> four days later, the treasury inspector general for taxpayer administration confirmed that, and i quote, the urs used inappropriate criteria to identify organizations applying for tax exempt status. this abuse of power began as far back as 2010. this revelation goes against the very principles of free speech and liberty upon which this country was founded. the ambulate ant disregard upon which agencies, and concerns about leadership, and let's establish the facts that we do know. based on the report, we know for an 18-month period beginning in spring 2010, irs in the agency's determinations unit employed key word, such as tea party, patriot and 9/12 to target tax exempt status. they were subject to further irs investigation and document requests. irs employees later expanded search to include groups concerned with government spending, debt, taxes, the constitution, the bill of rights or trying to "make america a better place to live." let me repeat that. people were targeted for trying to make america a better place to live. thighs americans had their applications delayed for nearly three years and 98 applicants were asked for inappropriate information, such as donor lists and whether family members planned to run for political office. during the delay and while applications of conservative groups sat untouched for more than a year, other applications with named like progress and progressive were approved in a matter of months. the headline in "usa today" from earlier this week, really says it all. "irs gave liberals a pass, tea party groups put on hold." the audit said some should be set aside related to potential political activity, but no such review was done. without objection, i entered the "usa today" news report into the record. this week, we learned that senior irs officials knew about this activity almost two years ago in june 2011, and irs leadership in washington knew about it in may 2012, a year ago. despite a two-year investigation by this committee, the never told americans or their representatives about this truth. we were repeatedly told this wasn't happening, that isn't being misled, that's lying. but now we know the truth. or at least some of it. we know these revelations are the tip of the iceberg. it would be a mistake to treat this as just one scandal. this may be one generating -- the one generating headlines, but in total i count at least five series violations of taxpayer rights. the right to be treated fairly, honestly, and impartially by their government in august 2010, a white house official discussed the status of a private company. the tax status of a private company, clear intimidation tactic. second, in june 2010, the targeting of conservative groups began. third, in may 2011, the irs started to threaten donors, and that they were liable for certain taxes. fourth, in march 2012, the huffington post published the confidential donor list for the conservative tax exempt organization. and fifth, but unlikely the final transgression, pro publica said that irs leaked confidential applications from conservative groups. mr. miller, with all due respect, this systemic abuse can't be fixed with one resignation, or two. as much as i suspect more people need to go, i suspect this isn't a personnel problem. this is a problem of the irs being too large, too powerful, too intrusive and too abusive of honest, hard working taxpayers. there isn't a person that i come into contact at home or here in washington that doesn't fear the irs. they fear the irs' ability to audit them and wreak havoc in their lives, especially when all they are trying to do is improve their lives, let alone, god forbid, try to make america a better place to live, which is what the irs targeted them for. under that kind of thinking, every civic group in america is at risk. the nighknights of columbus, ro, jacees, american legion and vfw clubs. the power to tax is the power to destroy. under this administration, the irs abused its power to tax and destroyed what little faith and hope the american people had in getting a fair shake in washington. this will not stand. trimming a few branches will not solve the problem when the roots of the tree have got rotten and that is exactly what happened with the entire tax system. it is rotten at the core, and it must be ripped out so we can start fresh. only then will the mesh people get a tax system that treats them fairly as they deserve. that's a largest discussion directly tied to the issue before us today. how and why the tax system has gone off track. many questions still remain. why did the irs repeatedly target the american people and keep that fact covered up so long? who started the targeting? who knew? when did they know? how high did it go? who leaked the private taxpayer information? why were the names of donors asked for, and what was done with those lists before they were supposedly discarded? when did the administration know about these, and what was its reaction? listening to the nightly news, this appears to be the latest on a culture of coverup and mitt call intimidation. it seems like the truth is hidden from the american people just long enough for re-election. the american people have the right to a government that delivers the facts, g or bad. president obama pledged to we different. he is right. america deserves better. it's time to end the corruption at the irs and fix the tax code that allows washington and the irs to pick who wins and who loses in america. i expect nothing less than total cooperation by the irs as we investigate what happened and what we must do to fix it. i recognize ranking member levin for the pump of his opening statement and his commitment to pursue this issue. >> thank you, mr. chairman. i'm going to read my opening statement. i will expand on it a bit now that i heard the opening statement of the chairman. this committee on a bipartisan basis takes seriously its oversight role. and we are fully committed to ensuring an irs that serves the american people fairly and efficiently. what is now completely clear, the management and joef sight of the agency's handling of tax exempt applications have completely failed the american people. i emphasize that. as we know from the inspector general's audit, the agency used totally inappropriate criteria in the review of tax exempt applications, singling out organizations for review, based on their name or political views, rather than their actual activities. these criteria changed four times over two years, with little management review or oversight. applications sat for years. work stopped for 13 months while one department waited to hear back from another. questions were asked that were not necessary. again, no oversight, no accountability. all of us are angry at this on behalf of the nation. and we are determined to get answers to our questions about how this happened to ensure that it does not happen again. finally, throughout this time, the irs leadership has demonstrated a total disregard for the oversight role of the congress and this committee. former irs commissioner shulman testified in front of us in march 2012. and said that in quotes, no target targeting, end of quotes, was going on. two months later, he was briefed on the investigation, and was fully informed that, indeed, singling out by name had occurred on his watch. he had an obligation to return to this committee and set the record straight. so did mr. miller. neither fulfilled their obligations. a little more than a week ago, louis learner in front of the oversight subcommittee, she serves as the director of the exempt organization division, and she has been directly involved in this matter. yet she failed to disclose what she knew to this committee. choosing instead to do so at an aba conference two days later this is wholly unacceptable. and one of the reasons we believe, and as i stated several days ago. ms. learner should be relieved of her duties. chairman camp and i put together this hearing on a bipartisan basis to get the facts. we must seek the truth, not political gain. and i just want to add in that regard, mr. camp has said listening to the nightly news, this appears to be just the latest example of a culture of coverups and political intimidation in this administration. it seems like the truth is hidden from the american people, just long enough to make it through an election. i totally, totally disagree. if this hearing becomes essentially a bootstrap to continue the campaign of 2012, and to prepare for 2014, we will be making a very, very serious mistake, and indeed not meeting our obligation of trust to the american people. you are here today, mr. miller, are you here today the inspector general to talk about what happened, how it happened, where it happened, who knew what when. and if instead this hearing essentially becomes an effort to score political points, it will be a disregard of the duties of this committee. so i conclude with the sentence, we must seek the truth, not political gain. we look forward to full and forthcoming answers to our questions today. >> thank you. before the websites aitnesses a recognized for their opening statements, i had swear them in. this is the prerogative of every chair, it's not the custom of ways and means, but it's not customary for an agency to be -- >> we want to bring in gloria boerger about what was said before the house ways and means committee hearing. what struck me, democrat, congressman sander levin, said if this hearing is just for political points it would be a disservice to the country. >> well, the hearing will be an awful lot about politics, because you what heard congressman camp talk about is the sort of culture he believes emanating from the white house, right or wrong, a whole bunch of stuff on their plate right now, and i think, look, this issue of the irs as congressman camp said, resonates with the american people, because as he said, people believe the irs is too large, too powerful and too abusive and that what occurred in this particular case, he said would affect every civic group in america, but every single one at risk. i think it's a very least here, what the members of congress, whether they are democrat or republican, need to find out are the whys of all of this. why did it happen? was it competence? possibility of criminal? who directed it? a couple of rogue agents or, in fact, directed at some upper level? how high did -- you know, how high did this go? i think these are the answers to the real questions that they need to get, and, of course, politics will come into play here, because this is on president obama's watch, and this is the president who has asked government to do an awful lot for people. and people don't trust the government to do a lot for them. >> we want to listen. this is the inspector general for the tax administration, jay russell george, let's listen to him testify. >> these applications, third, the irs requested unnecessary information from groups it subjected to special scrutiny. all three allat substantiated. the irs used inappropriate criteria to target for review, tea party and other organizations based on their name and policy positions. this practice started in 2010 and continued to evolve until june of 2011. as a the monitor shows, the irs was following inappropriate criteria. let me read to you this criteria held by the irs exempt function in june 2011. it included the words, tea party, patriots, or 9/12 prong. another criteria included government spending, government debt, or taxes. yet another listing criteria appeared as education of the public, by advocacy or lobbying to "make america a better place to live." finally, the criterion included any statements in the case file criticizing how the country is being run. the reason for the criteria were ininappropriate, is that they did not focus on tax exempt laws and treasury regulations. for example, 501 c 3 organizations may not engage in political campaign intervention. 501 c 4 organizations can, but it must not be their primary activity. political intervention is action taken on behalf of or against a particular candidate running for office. all these criteria appeared in the irs' own documentation as of june 20112, irs employees began selecting tea party and other organizations for review in early 2010, from may 2010 to may of 2012, a team of irs specialists in cincinnati, ohio, referred to as the determinations unit. selected 298 cases for additional krut snoscrutiny. the first time officials in washington, d.c. became aware was june 2011, with some executives not becoming aware until april or may of 2012. the inappropriate criteria remained in effect for 22 months. after learning of the inappropriate criteria, the director changed the criteria in jewel july 2011. however, cincinnati staff changed the criteria back to target organizations with specific policy positions, but this time, they did not include tea party or other named organizations. finally, in may 2012, after learning the criteria had again been changed, the exec organization of rulings and agreements, changed it to be consistent with laws and regulations. excuse me. the organization selected for review for significant political campaign intervention, again 298 in all, experienced substantial delays in the processing of their applications. the organizations experiencing these delays include tea party organizations, patriot organizations, 9/12 organizations among other organizations. as shown on the monitor, the status of the december 2012, 296 cases we revealed was 108 cases had been approved. 28 cases withdrawn and 160 cases were still open. zero cases had been denied. of the cases still open, some had cost two election cycles without resolution. with 108 cases approve, 38 were tea party, 9/12 or tpatriot organizations. 98 of 178 cases that received followup requests of information from the irs had unnecessary questions. our evidence indicates that staff at the determinations unit in cincinnati sent these later out with little or no supervisory review. the irs later determined questions were unneeded but not until after media accounts and questions by members of congress arose in march 2012. examples of the unnecessary information requested included the names of past and future donors, listings of all issues important to the organization, and what the organization's positions were regarding such issues, and whether officers or directors have run for public office or would be running for public office in the future. months after receiving these questions, 12 of the 98 organizations receive ed a lett or telephone call saying that their applications were approved. another 15 organizations were told they didn't need to respond to previous requests for information and sent a revised request for information. regarding the donor information, the irs informed us they destroyed that information. we found clear evidence that each of the three allegations were correct. was the irs using inappropriate criteria in its review of organizations applying for tax-exempt status? yes. was the irs delaying applications? yes. and finally did the irs ask inappropriate and unnecessary questions of applicants? again, yes. these findings have raised troubling questions about whether the irs had effective management and control in the organization function so that the public can be reassured that the irs' impartiality in addressing tax laws is presented fairly. thank you for the opportunity to present my views and i look forward to your questions. >> mr. miller, you are recognized for five minutes. >> thank you, mr. chair. thank you for the opportunity to be here today. unfortunately, given time considerations, we received the notice of hearing within the last two days, the irs was unable to prepare written testimony. i would note, i have a believe statement before i take your questions. first and foremost, as acting commissioner i want to apologize on behalf of the internal revenue service for the mistakes we made and poor services we provided. the american public deserve better. partisanship or the perception of partshisanship has no place the irs. it can't even appear to have a role in determining tax exempt status in the organization. i don't believe politics motivated the people engaged in the treasury inspector general's report. i believe its conclusions with consistent with that i think what happened here, is foolish mistakes were made by people trying to be more efficient in their workload selection. the listing described in the report while intolerable was a mistake. and not an act of partisanship. the agency is moving forward. it has learned its lesson. we have previously worked to correct issues in the processing described in the report and implemented changes to make sure this type of thing never happens again. we have completed fact finding and issues a report. we will take appropriate yakz. i will be happy to answer your questions. >> all right. thank you, mr. miller. are you still acting director of the irs? >> i am, sir. >> were you appointed by the president of the united states? >> yes, sir. >> when was that? >> i was designated as acting in november. november of 2012. >> 2012. and if i'm not mistaken, you hold two titles, acting director of the irs and deputy commissioner for services and enforcement? >> i do, sir. >> and in your role as deputy commissioner for services and enforcement, according to the irs in that capacity, you direct and oversee all major decisions with regard to the tax exempt and government entities division? >> that is a division t