Like the biblical Daniel entering the lion’s den, acting Internal Revenue Commissioner Danny Werfel on Thursday braved unrelenting Republican wrath over his continuing review of how the tax agency’s exempt organizations division came to single out mostly conservative applicants for special scrutiny.
As lawmakers continued their partisan dispute over the fairness of the Treasury Department inspector general’s report that triggered the scandal at the Internal Revenue Service, Werfel defended his own 30-day preliminary report and the pace of his investigations—repeating that no “intentional wrongdoing” has been uncovered to date and reminding hostile questioners that the search for the truth must be done according to the “laws and regulations that govern our operations.”
Skeptical Republicans on the House Ways and Means Committee decried the “lack of urgency” of his probe and blasted his recent report as “an incomplete” work that “fails to deliver accountability.” They interrupted the sole witness to bash the agency for recent reports of wasteful IRS conferences, executive bonuses, “over-redacting” of documents, fraud in the child care tax credit, enforcement of Obamacare and President Obama’s request for a $1 billion hike in the IRS budget.
“From what we have learned already, it is clear that the IRS is a broken agency that needs to answer to the American people,” committee Chairman Dave Camp, R-Mich., told Werfel, who was in his 34th day in his new job after nearly 20 years at the Office of Management and Budget. “Today, Americans fear an audit not just because the tax code is too complex, but because we have an agency that is out of control,” Camp said. “After a month-long internal review, all you can tell this committee is that a few people have been removed from their old jobs, but you cannot even assure us that they have been removed from the agency.”
Ranking Member Sander Levin, D-Mich., counseled Werfel that “you’ve been a kind of technocrat over the years, so I hope you will respond vigorously to statements made by the other side.” He then criticized the Treasury Inspector General for Tax Administration for not making it clear in his initial report that progressive groups applying for tax-exempt status were also placed on so-called “be on the lookout” lists.
“If TIGTA had delineated the progress groups, it would have undercut the wild innuendo such as White House enemies list and a culture of cover-up,” Levin said. He has demanded that TIGTA J. Russell George be called before the committee to explain himself.
Rep. Jim McDermott, D-Wash., thanked Werfel for taking on “an impossible and thankless job,” noting that animosity toward tax collectors “goes back to the Bible.” He also asked Werfel to rethink his suspension of BOLO lists in processing requests for tax-exempt status requests, calling the technique “ a way to organize your thinking” used by airline pilots and surgeons.
Werfel was challenged by Republicans to explain his tentative conclusion that there were no political motives for the improper screening methods and why he hadn’t personally interviewed past IRS chiefs and other executives directly.
“This is not a complete set of answers because the fact-gathering is ongoing,” Werfel said, noting that a continuing criminal probe is underway and that interviewing is being handled separately by “professional investigators” at the Justice Department.
Werfel drew a distinction between “unintentional wrongdoing” in which an employee “thinks it’s the right thing to do as part of his job, but it could be a mistake, or incompetence,” he said. It’s different if the employee tells himself, “I know this is wrong but I’m doing it because it’s part of an agenda I have in mind.”
Asked to defend bonuses at IRS among some of the executives who’ve recently left, as well as the way those placed on leave continue to retain pay and benefits, Werfel said, “If I came in and fired and suspended people without pay, I’d be violating the rules, which were put in place for a reason to protect against unfair treatment,” he said. “We can still hold those people accountable, but in a way that is consistent with the laws governing our operations.” Werfel acknowledged that the juxtaposition of the conference spending revelations and bonuses is awkward. A better approach, Werfel added, would be to improve communication about risks to the agency’s top executives.
Camp asked how Werfel’s report had concluded that political bias had not spread to other IRS units. “Exempt organizations is one of the few areas of IRS where the nature of political activity is relevant to their work,” he said. “We are proceeding with an abundance of caution, and will review all criteria and report back.”
The fact that the tax code prevents disclosure of applicants’ names requires redacting is one obstacle to speedy analysis, he noted, and “it’s not clear where some of these groups stand on the political spectrum, but frankly, I don’t want to know where they stand.”
When Camp expressed impatience with IRS delivery of internal emails and other documents, Werfel responded: “There is lots of overlap and you are asking for an enormous footprint of documents, which is justified,” he said. “We will get them to you.”
Rep. Kevin Brady, R-Texas, told Werfel his report “was too thin even to be called a whitewash.” He added: “Your job isn’t’ to cover up but open up, not to silence the voice of people whose views you don’t like. Are you serious about getting to the truth?”
Werfel said he “wasn’t comfortable with that characterization, but I’m happy to walk you through the chain of command.”
Rep. Paul Ryan, R-Wis., lambasted Werfel for reports of lavish conferences and recent contract fraud. “How on earth do you think you have the moral authority to ask for this $1 billion budget hike given what the IRS is doing?” he asked.
“It’s an important question,” Werfel said, “and I agree costs were excessive and in many cases inappropriate. But that was two and three years ago. I’d be concerned if that were the pattern now.” He said IRS had recently cut travel and conferences by 68 percent.
“Let’s have budget cuts take place now and then come back in a few years,” Ryan said, “You forget you work for the taxpayer, not the other way around.”
Responding to Peter Roksam, R-Ill., who said his constituents were afraid of Werfel’s “somewhat clinical and dispassionate approach,” Werfel said it’s “important to make sure the public understands that this is done to protect taxpayer information.”
At one point Werfel told the lawmakers, “I consider myself nonpartisan, my career is in nonpartisan management.” He reviewed his work in reducing waste and implementing the Recovery Act. “I distinquished myself in public-sector challenges” and am currently trying serve “the best interests of taxpayers and the IRS. I go to sleep at night knowing I made the right decision to take this job.”