mr. george? >> to my knowledge we were not denied access to anyone. >> did you interview employees in both cincinnati and in d.c.? >> correct. yes we did, sir. >> on page seven of the ig report it states and i quote all of these individuals stated that the criteria were not influenced by any have you had or organization outside the irs. is that correct? >> that is the information we received. correct, sir. >> did you find any evidence of political motivation in the selection of the tax exemption applications? >> we did not, sir. >> mr. miller, during your review of this matter, you indicated when you started it. did you find any evidence of political motivation on the part of employees involved in processing the applications at issue? >> we did not, sir. >> if we could put on the screen the organizational chart is that possible? from the report? someone going to do that? it's called high level organizational report. >> thank you. mr. miller, in 2010, the inappropriate criteria that singled out ap

mr. george, is that correct? >> that is correct, sir. >> mr. miller, as then deputy, were you aware of the problem with the criteria in june and july of 2011? >> i was not, sir. >> in january 2012 the criteria were changed again to an, i quote, organizations involved in limiting expanding government, educating on the constitution and the bill of rights, and social, economic reform movement. the ig's report indicates that this change was again made in the cincinnati determinations office without executive approval. mr. george, is that correct? >> that is correct, sir. >> it was changed, without executive approval? >> that is our understanding? >> the may 2012 criteria are in place today, it states, organizations with indicators of significant amounts of political campaign intervention. the ig report states that in quotes, it more clearly focuses on the activities permitted under the treasury regulations. mr. george, is that correct? >> that is correct, sir. >> i have no, my time is up. >> all right. at this time i

let me ask the question of mr. george. in your report you indicated, that "there appeared to be some confusion by the determination cnet specialist and applicants on one activities are allowed by internal revenue code or by 501(c)(4) organizations. we believe this could be due to the lack of specific guidance of primary activity a 501(c)(4) organization. they should have social welfare as the primary activity of their mission. however, the regulations do not define how to measure whether social welfare is an organization primary activity. the question, could some of these delays have been avoided if there were clear guidance on section 501(c)(4) organizations? and with the primary activity constitutes? >> the direct answer is yes. i should note that the determination to it did seek clarity from washington headquarters and it took months before they received a response. >> that is a great way to leave it to mr. miller. what we have been saying for quite some time, many of us, is that there is not clarity in what is social w

so mr. george, a question. could some of these delays in processing some of these applications been avoided if there were clear guidance on section 501(c)(4) organizations in with their primary at tiffany's constitute? >> the direct answer is yes, sir but i should also note that the determinations unit did seek clarity from washington headquarters and it took months before they received a response. >> and that's a great way to lead to mr. miller. i think what we have been saying for quite some time many of us is that there is not clarity in what is social welfare so you have many people or organizations and nonprofit organizations, the good guys i will call them who are trying to do good work and they are being tainted by some of these organizations out there that are doing nothing more than political at kennedy because the supreme court gave them license now to go ahead and use a nonprofit and nonprofit status to go out there into politics. is the law clear mr. miller in your mind on what is political campaign

mr. george, is that correct? >> that is correct, sir. >> mr. miller, as then deputy, were you aware with the problem with the criteria in june and july of 2011. >> i was not, sir. >> and in 2012 the criteria were changed to again, i quote, organizations involved in limiting expanding government, educating on the constitution of the bill of riggts, and socioeconomic reform movement. the ig's report indicates that this change was again made in the cincinnati determination's office without executive approval. mr. george, is that correct? >> this is correct, sir. >> it was changed without executive approval? >> that is our understanding. >> the may, 2012 criteria are in place today, it states organizations with indicators of significant amounts of political campaign intervention. the ig report states that in quotes, it moore clearly focuses on the activities permitted under the treasury regulations. mr. george, is that correct? >> that is correct, sir. >> i have no further-- my time is up. >> at this time i'll yield

mr. george, you're up first. welcome. >> thank you, mr. chairman. chairman issa, ranking member cummings and members of the committee. thank you for the opportunity to discuss our recent report concerning the internal revenue treatment of groups that apply for tax exempt status. as you noted and as you are chairman, our audit was initiated based on concerns of taxpayers allegations they were subjected to unfair treatment by the i.r.s. the three allegations considered during our review were proven true. the i.r.s. targeted specific groups applying for tax exempt status. it delayed the processing of these group's applications and requested unnecessary information as well as subjected these groups to special scrutiny. it is important to note that the i.r.s. conducted an audit -- rather, that we attempted an audit of the i.r.s. and not an investigation. pursuant to the inspector general act, tigta is authorized to conduct audits and investigations and oversight of i.r.s. programs and operations. audits are generally reviews of i.r.s. programs designed t

mr. george, let me ask you. i think part of the problem is this definition of primarily engaged in social welfare, that seems to be subjected. there is no clear, bright line. i think the irs is trying to further define that for the division in cincinnati, but is there further tightening that would be helpful for the i.r.s. personnel when it comes to review the applications? >> the answer is yes. >> is that something that needs to be done internally at the irs, where is there a role for congress to have some rules when it comes to reviewing social welfare applications? >> it is my understanding that the irs has the authority to do this on its own. >> this committee will be working with the irs to make sure that gets done. otherwise, it will be an inherently flawed human process of subjectively applying this criteria, especially with the huge influx of applications. some of this has been dealt into, and i think it is so important that needs to be reiterated. mr. george, i apologize if you think you made yourself c

so mr. george, a question. could some of the delays in processing of applications have been avoided if there were clear guidance of the section 501c-4 organizations and what their primary activity constitutes? >> a direct answer is yes, sir. but i should also note that that determinations unit did seek clarity from the washington headquarters and it took months before they received a response. >> and that a great way then to lead to mr. miller. i think that what we have been saying for quite some time many of us is that there is not clarity in what is social welfare. so you have many c-4 organizations, nonprofit organization, the good guysly call them, who are trying to do good work, and they are being tainted by some of the organizations that are out there and doing nothing more than political activity, because the supreme court gave them license now to go ahead to use a nonprofit status to go out there and do politics. is the law clear in your mind of what is clear in political activity? >> no, it is very dif

mr. george, that correct? >> that is correct, sir. >> mr. miller, as then deputy, were you aware of the problem with the criteria in june and july of 2011? >> i was not, sir. >> in january 2012, the criteria were changed again to, and i quote, organizations involved in limiting or expanding government, educating on the constitution and bill of rights, and social, economic reform movement. the report indicates this change was made again in the cincinnati determinations office without executive approval. mr. george, is that correct? >> that is correct, sir. >> it was changed without executive approval? >> that is our understanding. >> the may 2012 criteria are in place today. it states organizations with an indicator of significant amounts of political campaign intervention. the i.g. report state it clearly focuses on the activities permitted your honor the treasury regulations. mr. george, that correct? >> that is correct, sir. >> my time is up. >> at this time, y i'll yield t the chair of the committee, dr. bu

specifically, mr. george in , mrs. march of 2012 lerner, we asked her about targeting of tea party organizations or the exempt of the office is that true and in response to that letter and media reports that you started an investigation and reviewing the applications for tax exempt status. is that correct? >> it is correct. we've had conversations with staff of this committee prior to the recept of that letter. >> but you did begin an investigation? >> yes, we did. >> your staff informed us about that investigation, correct? >> that is correct. > mr. shulman, in march of 2012, the i.r.s. began conducting its own intirnal review of the tax exempt division. is that true and did that happen? is that a common occurrence? why did the i.r.s. start its own internal review when you have an i.g. doing its own review? >> i don't have a direct recollection of the time frame but i read the report and saw that in late march, in the report it said that my deputy asked someone to go take a look. i think that is what you're talking ab

let me ask the question of mr. george. in your report you indicated, that "there appeared to be some confusion by the determination cnet specialist and applicants on one activities are allowed by internal revenue code or by 501(c)(4) organizations. we believe this could be due to the lack of specific guidance of primary activity a 501(c)(4) organization. they should have social welfare as the primary activity of their mission. however, the regulations do not define how to measure whether social welfare is an organization primary activity. the question, could some of these delays have been avoided if there were clear guidance on sex 501(c)(4) organizations -- on section 501(c)(4) organizations? >> the direct answer is yes. theould note that determination to it did seek clarity from washington headquarters and it took months before they received a response. >> that is a great way to leave it to mr. miller. what we have been saying for quite some time, many of us, is that there is not clarity in what is social welfare. you ha

. >> mr. george, did you brief mr. miller or any other investigative team briefed mr. miller in may of 2012? >> it was may 30, center, 2012, where at a monthly briefly in which we rightly called with both the commission and his chief deputies that we first raised this as an issue. obviously, it was at the outset of the -- >> esther miller says he's not aware of the practice that was going on in the the aisle. did you brief them on the scope of the investigation? >> i don't believe we went into the detail which may have laid out the scope, center, but we certainly alerted him to the fact that we are conducting this audit because i want to make sure i'm clear. i may have misused the word investigation it was an audit that we are engaging in. >> neal wolin, at my college is buddha, deputy secretary of the treasure was briefed in june of 2012. i've just heard two people at the tables a bit didn't briefing. mr. george, did you brief awarded part of the investigation team briefed the deputy secretary of the treasury? >> i personally, again, they have brought to deputy secret

let me ask the question of mr. george. indicated,ort you that "there appeared to be some confusion by the determination cnet specialist and applicants on one activities are allowed by internal revenue code or by 501(c)(4) organizations. we believe this could be due to the lack of specific guidance primary activity a 501(c)(4) organization. they should have social welfare as the primary activity of their mission. however, the regulations do not define how to measure whether social welfare is an organization primary activity. the question, could some of these delays have been avoided if there were clear guidance on sex 501(c)(4) organizations -- on section 501(c)(4) organizations? >> the direct answer is yes. i should note that the determination to it did seek clarity from washington headquarters and it took months before they received a response. >> that is a great way to leave it to mr. miller. what we have been saying for quite some time, many of us, is that there is not clarity in what is social welfare. you have many se

mr. george, i'm looking at your report and i want to make sure i understand. we are talking about this like it happened in a vacuum, you know, some sinister plot was hatched by normally kind of, you know, colorless bureaucrats in cincinnati, to get somebody for their political beliefs. now, was there a triggering of this that flooded the irs with new applications between 2010 and 2012? >> we have had some difficulty, congressman, hitting a definitive answer as to exactly how this began, the genesis of this program. >> can i just hope you a little bit? i'm looking at your own report, and what seems to be the triggering event is the supreme court rulings citizens united. the number of applications between 2009-2012 for 501(c)(4) come even though mr. shulman points out actually it's sort of redundant, but several, from 1751, to 3003 and 57. that's in your report. >> there's no question that that event, the ruling of the supreme court came down. >> data irs resources expand its did congress rushed to irs aid and say centura flooded with new responsibilities, here'

having said that, let me ask a question of mr. george. in your report you indicate and i think i'm quoting correctly that there appeared to be some confusion by the determinations unit specialists on what activities are allowed by internal revenue code section 501 or allowed by organizations. we believe this could be due to the lack of specific guidance on how to determine the, quote, primary activity, end quote, of a c 4 organization. treasury regulations statet that c 4 organizations should have social welfare as the primary activity of their mission. however, the regulations do not define how to measure whether social welfare is an organization's primary activity. so a question. could some of these delays in processing some of these applications have been avoided if there were clearer guidance on section 501-c 4 organizations or what the primarily activity constitutes? >> the direct answer is yes but that determinations unit did seek clarity from washington head quarters and it took months before they received a response. >> and that i

i knew mr. george's operation was looking at. >> i thought it was an audit? did you referred for criminal investigation? >> i do not refer it. it was being looked into at the time. >> i want to be really clear. the only recourse you have when there is an allegation of this kind of conduct under watch, the only thing you feel comfortable doing is waiting on an inspector general to finish his or her report? tothe general practices to make sure the inspector general will look into it. >> no matter how insidious the conduct? you would wait until mr. george dishes investigation? finishes his investigation? >> i will not answer hypotheticals. if there is an allegation that groups are being discriminated based on their political ideology, will you wait until inspector general finishes his or her report before you seek remedial action? >> when i have a fact but not all the facts, i do not know the scope. >> did you investigate the facts? did you lift a finger to identify the facts? >> inspector general would run down the facts. it would be reported back. >> let the r

audit. >> thank you mr. george. mr. miller, your next. >> thank you for the opportunity to be here today. and fortunately given time considerations the irs it was unable to prepare written testimony. i would note that i've a very brief statement before i take questions. first and foremost, as acting commissioner, i want to apologize on behalf of the internal revenue service for mistakes that we made and the poor service we provided. the effective organizations and the american public deserve better. partisanship or even the perception of partisanship has no place at the irs. it cannot even appear to be a consideration in determining the tax exemption of an organization. i do not believe that partisanship motivated the people who engaged in the practices described in the treasurtreasury inspector geners report. ivory to the treasury inspector general's report and i believe its conclusions are consistent with that. i think that what happened here was that foolish mistakes were made by people trying to be more efficient in

the president happened to grab a tv shot or just read mr. george's report and said you know what? anybody heard about this report? i'm just getting a first look at this. shouldn't somebody be responsible? maybe treasury falls in there i'm not sure we understand how that organizational chart works. i'm really concerned i have got to tell you where you are sitting, you should outraged but you are not. the american people should be outraged and they are. and this committee this has nothing to do with political parties. this has to do with highly targeted groups, this rei don't know firms everything that the american public believes. this is a huge blow to the faith and trust the american people have in their government. is there any limit to the scope of where you folks can go? is there anything at all? is there any way that we could ask you is there any question that you shouldn't have asked? by goodness? how much money do you have in your wallet? who do you get emails from? whose sign do you put up in your front yard? this is a tax question? you don't think that's intimidating? it

mr. chairman, since we're doing the oversight here, the rule, i understand the king's english, and it says the promotion of social welfare does not include direct or indirect participation or invention in political intervention in political campaign. now, how you interpret that to say that that does allow some intervention in local campaigns is beyond it, and if that had been cut off at the pass we wouldn't even be dating to these -- yes, sir. >> the oversight of the level of campaign intervention by 501(c) fours, subsequent shortly. shortly. >> who will be doing that? >> my organization, the treasury inspector general for tax administration. >> well, in conclusion, i would say if we could get the irs to follow the law and the regulation that implemented it, we wouldn't have this problem in the future. >> sender, i agree with you but i also think it's very complicated. and it's unfortunaunfortuna te this issue has not been addressed the last couple of years with any precision, any focus,

we'll start with you mr. george. the committee will have a lot of questions. >> thank you, chairman baucus. thank you for the opportunity to discuss a report concerning the internal revenue service treatment of groups who applied for tax exempt status. our audit was based that certain groups were treated unfairly. there are three allegations one that irs targeted specific groups applying for tax-exempt status. they delayed the processing of these group's applications. the irs requested unnecessary information. our review confirmed all of the allegations. inappropriate criteria used by the irs to target tea party and other organizations based on their names and policy positions. the practice started in 2010 and continued until june 2011. the criteria which we obtained from a briefing in june of 2011 of the organizations names including the tea party or patriots. whether the organization had policy positions of government spending. did the organization intend to provide education to make america a better place to live?

mr. miller said we held workshops for our employees on this target. bill: i don't know how we can look down the road. what is the possibility of a long-term effect. >> reporter: this scandal will drag into the summer and maybe the fall. there may be an independent special prosecutor appointed. it will drag on as the obama-care legislation is being implemented. can you do two things in can you handle these scandals and implement obama-care which is highly contentious and do it all at the same time and stay on schedule in that's in some doubt. bill: stuart varney leading our coverage in new york. martha: let's give you background on lois lerner. she has been the head of the division since 2005 and was responsible for okaying 800,000 tax exempt organizations. she'll be at the big table in the congressional hearing in a little while from now. bill: one of th one of them aske questions. here is how that went with the congressman. jay stop chaffetz. thank you for your time today. if lois lerner

that's born out by mr. george's report. >> what else could you call it? he just said he hadn't found up till now and today's statement was a little more definitive than the one he gave to the house. now, let me just say this, you knew this was going on, you knew we were concerned and knew we had written to you, you had our letters. why didn't you correct the records? why didn't you let us know? we would have solved this a long time ago. >> tigta was looking at the case. >> tigt's responsibility or yours. >> i'm sorry? >> the commissioner relied on you to answer ouu letters and why didn't you answer them and tell us this information at least on the second-- >> i believe i did answer them and i did answer them truthfully. >> thank you, senator hatch. >> next, we're going down the list. senator stabenow. >> thank you very much, mr. chairman. stuart: one development, judge, you're with me. essentially, orrin hatch implied that both of these guys knew about the targeting of conservatives, but did nothing about it, they did not come clean at the time in the mid

. >> yoakley mr. george and the inspector general's office can enlighten us. during your investigations are you aware of the three letters submitted by senator baucus, schumer and durbin written, specifically asking them to give extra scrutiny to the 501c for applications? >> ibm aware of it but i don't know the details, sir speed in the investigation so far in questioning the employee to the irs did you ask them specifically whether or not these letters from the united states senators ought to influence or impact their decisions around these cases? >> i do not believe that was part of the inquiry. >> will you ask those questions in the future? >> as appropriate we will do so if appropriate. >> thank you. >> mr. chairman i am particularly troubled by some in this committee that seem to want to rationalize or justify the inappropriate behavior by the irs in these cases. but the disagreement with the citizens united ruling of the supreme court - we all know that our nation is a nation of law, and we either abide by those or not to our peril. whether we agree wit

mr. george, you're recognized for five minutes. levin.rman camp and as you are aware, the organization i am a part of the, the inspector general, protects the integrity of the federal tax system. this was initiated based on concerns expressed by members of congress because of taxpayer allegation that they were subject to unfair treatment by the irs. the report issued early this week issues 3 allegations. thet, the irs targeted spas groups applying for status. second, they delayed these groups applications, and third the irs request of the necessary and permission from groups they subjected to special scrutiny. all three allegations were substantiated. the irs used inappropriate toteria to target for review party and other organizations based on their name and policy. this started in 2010 and continued to involved. followings inappropriate criteria. let me read to you these criteria from a briefing held by the irs's exempt organizations function. the criteria included the words 912 party, patriot, or roject." another listing criteri

george, we welcome you to the table. we have two distinguished georges in maryland, mr. george russell. so you've got these names transposed here a bit, but i gather you are as distinguished as my two colleagues. [background sounds] >> colleagues, i invited mr. george to testify as i have on my own subcommittee and encouraged other subcommittee chairmen so we have the benefit of thanking the igs. they identify management problems, give us a heads up if we're heading to some technology boondoggles which i know we're worried about, and i just think it's a way to be really, a sense of frugality, smart government and perhaps some reforms that we would even come together. having said that, mr. miller, you're the acting commissioner of irs. you have a big job, and we're going to give you a big opportunity to tell us what you need. would you, please, proceed. >> thank you, chairwoman mikulski, ranking member johanns and the members of the subcommittee. i appreciate the opportunity to testify today. before i give more detail on the proposed budget, if i could, let me report on t

george because you're not going to cooperate with me, mr. miller, and you have been uncooperative during the hearing. >> what day did the conversation take place? >> i would have to look back at my notes. >> you had notes? >> i would have to find them. >> why did you say you have notes if you don't have notes? >> sir, please. >> this is absolutely an overreach and an outrage for all of america. i yield back. >> all right. >> now, tyler, miller is the recently outsted acting chief of the irs. the new acting chief or the incoming acting chief was brought into the meeting room with jack lew, the treasury secretary, who districted him to find a way to restore the confidence in the irs, but we'll see a continuing series of hearings going forward next week and hear from the numberotreasu woland and might get more answers at that point. >> eamon, setting aside what happened in this case, is it a legitimate function for the irs to look into whether a group with a political interest qualifies for tax exempt status? >> absolutely it is. but the critic

chairman. >> mr. george? >> yes. >> in your investigation, in your audit, what is the difference between an audit did and investigation? >> it has been interchangeable throughout this hearing. >> sir, to be precise, under the inspector general act we at tigta are given authority to conduct audits and investigations. audits are review of irs programs to identify systemic problems and identify corrective actions. directed focus on person or persons who, actions were undertaken in response to reports that we've, or complaints that we have received or misconduct that they engaged in. >> so this audit could lead to an investigation? >> yes, it could. >> okay. now your audit didn't look at leaked documents to "propublica" and it didn't look at leaked tax returns filed by the national organization for marriage, and it didn't look at whether personnel within the eoh 4 individual donor list for individual donors, am i correct. >> senator, the internal revenue codes that strict confidentiality provisions in it and i'm

george could not confirm verbally in the hearing that the investigation was continuing. i think that's the impression he left upon all of us in the committee. there is an ongoing investigation. now, the audit occurred. now the investigation occurred. you can draw your own conclusion. so can your viewers. when you listen to the testimony of mr. miller. mr. miller can't even remember his -- the names of the people who are in his chain of command. he can't even remember who he talked to last, what was the conversation about. did he talk to anybody in the secretary of treasury's office? he can't even remember dates, times and places. and finally, he couldn't remember when i asked him, who did you talk to about this? who came up with the criteria? if mr. levin is correct and the i.g. is correct, because he did stipulate this as well, he found this, that there was no evidence of white house influence or obama campaign influence, if that's correct, is this still appropriate of your chairman to keep saying culture of corruption throughout the government and this is an example of

the committee hearing today was that this is an audit, and that the investigation, although the -- mr. george could not confirm verbally in the hearing that the investigation was continuing, i think that's the impression he left upon all of us in the committee. there is an ongoing investigation. the audit occurred, now the investigation occurred, but you can draw your own conclusion, and so can your viewers. >> did they find out who was the one who said look for patriot groups, calling themselves patriot groups, look for groups that have tea party to their names. do we know who that was now? >> i don't think we have all the names. the people who did that were mistaken. it was a serious mistake. but you asked mr. reichert a question. was there any evidence of this hearing to support the statement by chairman camp? and again, i read it. it was part of a culture of cover-up in this administration. there was no evidence whatsoever at this hearing. the i.g. when asked said it was not politically motivated, and there was no outside influence, and there is no evidence of corruption. >> mr. l

we'll start with you mr. george. the committee will have a lot of questions. >> thank you, chairman baucus. thank you for the opportunity to discuss a report concerning the internal revenue service treatment of groups applied for tax exempt status. our audit was based that certain groups were treated unfairly. there are three allegation. one that brs targeted specific groups applying for tax-exempt status. they delay the processing of these group applications. brs request -- the irs requested unnecessary information. our review confirmed all of the allegations. inappropriate criteria used by the irs to target tea party and other organizations based on their names and policy positions. the practice started in 2010 and continued until june 2011. the criteria which we obtained from a briefing in june of 2011 weren't the organizations names including the tea party or patriots. whether the organization had policy positions of government spending. did the organization and tend to makede education america a better place to

mr. george, i apologize if you think you have made yourself clear on it. according to your report, you found no bias or partisanship for selecting applications. is that right? >> that is correct sir. we did find gross mismanagement. >> that is correct. >> thank you. thank you, esther chairman. i will recognize doctor price for five minutes. >> i think that if i am sitting at home trying to figure out what is going on here and listening to the testimony and the remarkable revelation some of these questions, you get some snickers after some of them, but you have the federal government asking what books you read, you have whether or not you know anybody in the organization that will run for political office. this is chilling stuff. this is very, very serious. mr. miller, two you accept the findings of the ig report. >> we do, sir. one of those findings is that groups were targeted. do you accept that finding? >> i would not characterize it as targeting. >> you can understand why they would believe that groups were targeted. >> i think that groups that were pu

tomorrow we'll have mr. schulman, mr. george, mr. miller. i think all the people who knew or should have known need to come before the committee, tell us what they did know, try and lead us on the path that gets us to the original authorization for the violation of the civil rights or the privacy, if you will, of these taxpayers in america. >> sir, democratic representative kay hagan was on "morning joe this morning." take a listen. >> one thing i'm focused on is jobs. some of our counties have 17% unemployment rate. we have to come together, democrats and republicans, take action, work together, negotiate, take difficult votes but get it done. >> there is a report out today that a house immigration deal has been reached. do you know anything about that? do you expect the senate immigration bill to potentially come out of committee this week? >> it's supposed to come out at the end of this week or at the very latest the beginning of the first week of june when we come back. there have been eight days of amendment and eight days of debate. i

george because my time -- you're not going to cooperate with me, mr. miller and have been cooperative. who who was responsible? you're the commissioner. >> i don't have that name. >> why don't you have the name? have you asked anybody? >> yes. >> who tide you -- did you ask? >> i -- >> you don't have the name either. >> let him answer the question. >> it's washington state's time. >> who did you ask? >> i asked the senior technical adviser. >> what is his name? >> nancy marks. >> what did nancy tell you? who is responsible? >> that i don't remember. >> you don't remember again? all right. >> greg: he couldn't get out of there fast enough. as soon as he hearing was over one of our producers says the irs chief rushed into a waiting car. in fact our team had to sprint to catch up with him. mike, who is in good shape, is on capitol hill weapon heard from the watchdog who committed the irs report. what did he say? >> the inspector general was not a headline grabber. he had a very mellow personality but his purpose was to lay out the report that he issued on

mr. george. you're up first. welcome. >> thank you, mr. chairman. chairman isler, ranking members of the committee. thank you for the opportunity to discuss the recent report concerning the internal revenue service treatment of groups that apply for tax exempt status. as you noted and as you are aware, mr. chairman, our audit was initiated based on concerns that you expressed due to taxpayer allegations that they were subjected to unfair treatment by the irs. the three allegations considered during our review were proven true. the irs targeted specific groups applying for tax exempt status. it delays the processing of these group's applications and requested unnecessary information, as well as subjected these groups to special scrutiny. it is important to note that the irs conducted an audit that -- rather, that we conducted an audit of the irs, and not an investigation. pursuant to the inspector general act, tinter is authorized to conduct audits and oversight of irs programs and operations audits are generally -- >> all right. we're going jump out

mr. george, we would also like to hear from you not. >> thank you, madam chair. madam chairwoman mikulski, ranking member johanns and senator udall, thank you for the opportunity to testify on the irs fiscal year 2014 budget request. our recent work religion a significant of issues currently confronting the irs and the fiscal year '14 budget request for the treasury inspector general protection administers and also referred to as ticket. the proposed irs budget request appropriate resources of approximately $12.9 billion. this was an increase of slightly more than $1 billion for fiscal year 2012 enacted levels. the affordable care act also known as the aca contained an extensive array of tax law changes that will present many challenges for the irs in the coming years. the irs's fiscal year 2014 budget request includes additional funding of $440 million for the aca. while the department of health and human services will take the lead in developing the policy provisions of the act the irs will administer the laws numerous tax provisions. the development and implem

>> fact, mr. george, who was the inspector general for the treasury, who produced a report, who was a bush appointee himself, said there were no outside influences, this was all contained wholly within the irs. >> and this is a bush appointee? >> yes. he said it's not remotely linked to the white house and yet the chairman of the committee, my friend, said that it's all about the white house. it's all emanates somehow from the white house. they are desperate to find a smoke gun, reverend al. there simply isn't one. >> they don't even have smoke. melissa, when you look at the right-wing heritage found dags sent a letter to the republicans, to focus on sk scandals rather than focusing on laws, keep on digging for scandals, keep linking it where it doesn't link. >> what is important here, we're not being an apologist for a scandal late in president. that's not what is happening here. there is very little scandal at all happening. the one scandal that might be going on is the question about the doj an

george found more than a year later. >> think about it. for more than a year the irs knew that it had inproeappropriy targeted groups and without mentioning it and in fact without honestly answering questions that were the result of this internal investigation. many people believe that the irs is an independent agency. nothing can be further from the truth. we define it deliberate low as less political. it has two appointees and carefully skr lly skrut noised are protecting american people's rights. in fact the commissioner, former commissioner who is with us today will tell us he reports to the deputy of treasury. he is a subordinate of a cabinet officer. it is not an agency that gets to do what it wants or can't be challenged by treasury. as a result we discover that not only did she know about this, learn about this and participate in the irs's internal investigation, but she also played a role in the ig's report or investigation. we were shocked to find that she participated in virtually every one of the interrogation and interviews an

george because my time -- you're not going to cooperate with me, mr. miller, and you've been uncooperative during this hearing. >> why did you say you have notes if you don't think you had notes? >> sir, please. please. >> do you have notes or don't you have notes? >> i don't know. >> you should be outraged. but you're not. the american people should be outranged and they are. you talked about your horribly run organization. you're on the other side of the fence, you're not giving that excuse. when the irs comes in, you're not allowed to be shoddy, you're not allowed to be run horribly, you're not allowed to make mistakes. you're not allowed to do one thing that doesn't come in compliance. if you do you're held responsible right then. i think the american people have seen what's going on right now in their government. this is an overreach and an outrage for all america. i yield back. >> luke russert joins me live now. what we just played there was sort of emblematic. lots of speechifying. not always a lot of questions being asked. >> reporter: it defin

george, that is not the statute. that is not the statute. this committee last august made it very clear that the statute as written does not give you the ability, or any i.g., to use us as a whipping boy when you want to, and in fact keep us in the dark until an investigation is completed. >> brown: the committee also heard from deputy treasury secretary neal wolin. he said what happened at the i.r.s. was inexcusable, but no one at treasury was involved. today's hearing came to an end after six hours, but there's is no end in sight to the three congressional investigations under way. more hearings are expected after the memorial day recess. even as these hearings unfold to find out exactly what happened at the i.r.s., there's continuing confusion about the tax laws and regulations at the heart of the matter: who qualifies for tax-exempt status? how is that determined? and other questions we'll try to get at now with duke university law school professor richard schmalbeck. he's a former tax attorney and kim barker. she's a reporter with pro p