Inspector says IRS withheld info on targeting liberals

• House committee chairman looking for administration involvement in targeting of Tea Party groups
• Democratic lawmaker says %22partisan bickering%22 is preventing getting to bottom of what happened
• It was the seventh congressional hearing on IRS controversy

WASHINGTON — The federal investigator who concluded that the Internal Revenue Service inappropriately targeted Tea Party groups said Thursday the tax agency had failed to give him documents showing progressive groups were subjected to similar screenings.

J. Russell George, who serves as an IRS watchdog at the U.S. Treasury, told the House Oversight and Government Reform Committee that only last week did his office receive documents showing the term "progressive" was used to flag cases for additional review.

"The moment I became aware that other groups were spotlighted by the IRS, I directed my staff to commence review of that," George said.

"I am very disturbed that these documents were not provided to our auditors at the outset," he said. "They were not provided during our audit, even though similar documents that list 'Tea Party' … were."

George came under sharp questioning from the committee's Democrats, who have suggested his initial review of the targeting was flawed and incomplete because it focused on how conservative groups were treated.

The IG audit, released in May, said that Cincinnati-based IRS employees developed and implemented "inappropriate criteria" — using terms like "tea party," "patriot," and "9/12" — as triggers that sent those applications into a lengthy, burdensome review process. Newly released documents have shown that the IRS also used the key words "progressive" and "Occupy" to identify political groups for added scrutiny, and that a review of 5,500 e-mails by IRS employees showed no political bias.

"How could you not have, in the ordinary course of doing your work, discovered the treatment of progressive groups?" asked Del. Eleanor Holmes Norton, D-D.C. "That goes to a flaw in methodology."

George and other IG staffers defended the original report and said IRS officials shaped his inquiry at the outset by providing his investigators with a "be on the lookout" list — or BOLO list — that included the terms "tea party," "patriots" and "9/12."

George said IRS officials told him that the BOLO list was used by agents to select potential political cases. At no time did IRS officials provide additional information about progressive groups being screened, nor did they contradict his findings put forth in the IG's final report.

"IRS staff at multiple levels concurred with our analysis," George testified.

Republicans on the panel defended George and said there was still no evidence that progressive groups were subjected to the same high level of scrutiny as Tea Party groups. Rep. Mark Meadows, R-N.C., said Tea Party groups were "singled out" and "systematically detained," with some groups' applications stuck in limbo for more than three years.

Thursday's hearing was the seventh such session Congress has held to probe the IRS' handling of tax-exempt applications from political groups. But it was the first opportunity lawmakers had to hear directly from IRS employees involved in the targeting.

In addition to George's testimony, two IRS employees responsible for handling tax-exempt applications from Tea Party groups testified that those cases were handled in an unusual way with significant involvement from supervisors.

Elizabeth Hofacre, a specialist in the Cincinnati office, said Tea Party groups got caught up in an atypical process in which lawyers in Washington controlled every step of the process.

"I was frustrated because of what I perceived as micromanagement with respect to these applications," she told the House Oversight Committee on Thursday. She said she was never able to close the cases as she awaited guidance from the IRS' technical unit in Washington.

"It was like working in lost luggage," she said. "I could never give (applicants) a clear answer."

The Washington attorney tasked with advising Hofacre on those applications, Carter Hull, said the holdup came from above. "I was awaiting word from chief counsel about how to proceed," he said. The Chief Counsel's Office is a unit of 1,600 IRS employees that are the tax agency's top lawyers.

Democrats have argued that Republicans have blown the whole story out of proportion. They contend it is increasingly clear there was no White House involvement in the targeting and no political agenda at work.

But for Republicans, the investigation is still working its way up the IRS organizational chart. "Was the targeting of Tea Party applicants directed from the White House or somewhere else outside the IRS? As our investigation is ongoing, the responsible answer is that judgment should be withheld until all relevant witnesses are interviewed and all documents reviewed," Rep. Darrell Issa, the California Republican who chairs the committee wrote in an op-ed in Thursday's USA TODAY.

Rep. Elijah Cummings, D-Md., responded: "We need to stop making baseless accusations, and we need to get full information about the treatment of all of these groups, conservative, liberal and everyone in between."

Shesgreen reports for Gannett Washington Bureau