May 21 2013

Cantwell During IRS Oversight Hearing: ‘This Kind of Targeting Won’t Be Tolerated’

Cantwell presses for clarity on where the ‘bright line’ stands to prohibit IRS employees from targeting groups based on political affiliation

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) pressed the acting head of the Internal Revenue Service (IRS) to provide clarity on the regulations that are currently in place to prohibit employees from targeting organizations based on political, religious or other social affiliation.

Cantwell specifically addressed the recent admissions by IRS officials that the agency had targeted conservative groups applying for tax exempt status for additional scrutiny, calling the actions “wrong.” During questioning of top officials with the IRS and the Treasury Inspector General for Tax Administration, Cantwell demanded a “clear statute” be in place to prevent such targeting, saying this was especially important in “an information age with too much information in large organizations.”

Cantwell’s remarks occurred during a Senate Finance Committee hearing today looking at the criteria used by the IRS to identify tax exempt organizations, and in particular, 501(c)(4) applications for greater scrutiny. Those testifying included the Honorable Douglas Shulman, Former IRS Commissioner; Steven Miller, Acting Commissioner of the IRS; and the Honorable J. Russell George, Treasury Inspector General for Tax Administration at the U.S. Department of Treasury.

“Where is there a bright line at the IRS? Because what I think happened here is that somebody saw a gray area,” Cantwell said at today’s hearing. “Gray doesn’t mean there’s a green light to go ahead and use these powers of information to go on fishing expeditions. And so, what I want to know is: Does the IRS either by law, by internal process, have something on the books right now that says you cannot target people for political or religious or other social issues within the IRS?”

Miller responded: “Forgive me, Senator. I have to go back and check on whether there is something specific on that. There are general rules of conduct that would indicate that you should not do anything that even gives the appearance of that type of activity, but I’m unsure and we’d have to come back and let you know whether there’s something specific statutory or regulatory in that area.”

Cantwell continued: “I agree with my colleagues that we need to have a very clear system here that the American people know that this kind of targeting for political purposes does not happen and won’t be tolerated and that people would lose their jobs over that. Mr. Miller, the fact that you don’t know crisply that in the context of whether this existed, it says to me that the bright line wasn’t bright enough. The minute there was a gray area, the counterbalance should have been someone saying this could be perceived as targeting an organization for political purposes. It’s wrong. This is a violation of our organization.”

Senator Cantwell also spoke to the importance of clarifying the rules and regulations relating to 501(c)(4) organizations, noting the ambiguity that exists in this area of the law and the importance of correcting this uncertainty.

Watch a video of Cantwell’s remarks at today’s hearing.

A complete transcript of Cantwell’s remarks follows.

Senator Cantwell: Thank you, Mr. Chairman. And I want to make it clear at the outset I really do believe that we need clarity in our tax exempt status on 501(c)(4) organizations. And we need that clarity, Mr. Chairman, as soon as possible. I think that is a major issue. But I have a larger issue, which is just understanding at the IRS, Mr. Miller, what exactly exists today as a prohibition against investigating people, investigating organizations, targeting organizations based on political or religious or any other social issues?

Mr. Steven Miller, Acting Commissioner, Internal Revenue Service, Washington, D.C.: So, we would have two different areas. One is the determinations letter area where we had issues this time. We’ve elevated to an executive level the either creation of a list or the modification of a list. And the list will not have names on it. The list will have what has…

Senator Cantwell: No. I’m asking a larger question. Which is what rule, what regulation, what statute is in place that prohibits an employee of the IRS from targeting people for either political, social, or any kind of personal reasons, and what are the safeguards? Mr. George, in response to my colleague from South Dakota, mentioned the criminal code section that applies to revealing or disclosing personal information. But I’m asking: Where is there a bright line at the IRS? Because what I think happened here is that somebody saw a gray area, and instead of addressing the gray area – because it’s clear Director Lois Lerner had an attempt to go back and give guidance when they were not there and didn’t take action and then more problems ensued. So, my question is, I do not think that gray areas whether it’s in our national security and this media shield issue or in this issue with the IRS can be seen as a green light. Gray doesn’t mean there’s a green light to go ahead and use these powers of information to go on fishing expeditions. And so, what I want to know is: Does the IRS either by law, by internal process, have something on the books right now that says you cannot target people for political or religious or other social issues within the IRS?

Mr. Steven Miller, Acting Commissioner, Internal Revenue Service, Washington, D.C.: Forgive me, Senator. I have to go back and check on whether there is something specific on that. There are general rules of conduct that would indicate that you should not do anything that even gives the appearance of that type of activity, but I’m unsure and we’d have to come back and let you know whether there’s something specific statutory or regulatory in that area.

Senator Cantwell: Mr. George, do you have any idea?

The Honorable J. Russell George, Treasury Inspector General for Tax Administration, United States Department of the Treasury, Washington, D.C.: The Restructuring and Reform Act delineates a number, they call it the deadly sins, the 10 deadly sins, and one of them is the revealing of tax information, woefully, to harm a taxpayer. And so it is my understanding that that is one that, while administrative in nature, that does not have any criminal penalties associated with it, it could result in the removal from the position of the IRS employee.

Senator Cantwell: But that’s revealing that information to some outside organization?

The Honorable J. Russell George: It’s the misuse of that information, actually. And so, and how that’s…

Senator Cantwell: In this case, could this be seen as misuse of information?

The Honorable J. Russell George: In theory, it could be interpreted that way, Senator.

Senator Cantwell: Well I think it’s clear that we need a very clear statute here. If not in intent that things happened, certainly the perception that this could have been the intent. And I agree with my colleagues that we need to have a very clear system here that the American people know that this kind of targeting for political purposes does not happen and won’t be tolerated and that people would lose their jobs over that. Mr. Miller, the fact that you don’t know crisply that in the context of whether this existed, it says to me that the bright line wasn’t bright enough. The minute there was a gray area, the counterbalance should have been someone saying this could be perceived as targeting an organization for political purposes. It’s wrong. This is a violation of our organization. And they should go back and should’ve created a different, a very, very different process. I worry in an information age with too much information in large organizations, people have got to get this point. And so, Mr. Chairman, thank you, but I also do believe that the 501(c)(4) status issue needs to be resolved as quickly as possible as well. Thank you.

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