[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE IRS RESPONSE TO THE TARGETING SCANDAL
=======================================================================
HEARING
before the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
MARCH 26, 2014
__________
Serial No. 113-114
__________
Printed for the use of the Committee on Oversight and Government Reform
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Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia PETER WELCH, Vermont
THOMAS MASSIE, Kentucky TONY CARDENAS, California
DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan Vacancy
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
C O N T E N T S
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Page
Hearing held on March 26, 2014................................... 1
WITNESSES
The Hon. John Koskinen, Commissioner, Internal Revenue Service
Oral Statement............................................... 8
Written Statement............................................ 10
APPENDIX
Chart - Exempt Organizations Recommended Actions Ending Feb. 24,
2014, submitted by Rep. Cummings............................... 76
E-mail from Cindy Thomas, submitted by Rep. Mica................. 77
Memo from the Offfice of General Counsel, U.S. House of
Representatives, submitted by Chairman Issa.................... 78
Article in Washington Post, Elijah Cummings: ``Case is solved''
on IRS......................................................... 100
Response to questions to Mr. Koshinen from Rep. Turner........... 102
EXAMINING THE IRS RESPONSE TO THE TARGETING SCANDAL
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Wednesday, March 26, 2014,
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 9:30 a.m., in Room
2154, Rayburn House Office Building, Hon. Darrell E. Issa
[chairman of the committee] presiding.
Present: Representatives Issa, Mica, Turner, Duncan,
Jordan, Chaffetz, Walberg, Lankford, Amash, Gosar, DesJarlais,
Gowdy, Farenthold, Lummis, Woodall, Massie, Collins, Meadows,
Bentivolio, DeSantis, Cummings, Maloney, Norton, Tierney, Clay,
Lynch, Connolly, Speier, Davis, Lujan Grisham, and Kelly.
Staff Present: Molly Boyl, Majority Deputy General Counsel
and Parliamentarian; Lawrence J. Brady, Majority Staff
Director; David Brewer, Majority Senior Counsel; Sharon Casey,
Majority Senior Assistant Clerk; Steve Castor, Majority General
Counsel; Drew Colliatie, Majority Professional Staff Member;
John Cuaderes, Majority Deputy Staff Director; Adam P. Fromm,
Majority Director of Member Services and Committee Operations;
Linda Good, Majority Chief Clerk; Tyler Grimm, Majority
Professional Staff Member; Frederick Hill, Majority Deputy
Staff Director for Communications and Strategy; Christopher
Hixon, Majority Chief Counsel for Oversight; Caroline Ingram,
Majority Professional Staff Member; Michael R. Kiko, Majority
Legislative Assistant; Jim Lewis, Majority Senior Policy
Advisor; Mark D. Marin, Majority Deputy Staff Director for
Oversight; Ashok M. Pinto, Majority Chief Counsel,
Investigations; Katy Rother, Majority Counsel; Laura L. Rush,
Majority Deputy Chief Clerk; Jessica Seale, Majority Digital
Director; Sarah Vance, Majority Assistant Clerk; Jeff Wease,
Majority Chief Information Officer; Meghan, Berroya, Minority
Counsel; Aryele Bradford, Minority Press Secretary; Susanne
Sachsman Grooms, Minority Deputy Staff Director/Chief Counsel;
Jennifer Hoffman, Minority Communications Director; Adam
Koshkin, Minority Research Assistant; Julia Krieger, Minority
New Media Press Secretary; Elisa LaNier, Minority Director of
Operations; Juan McCullum, Minority Clerk; Brian Quinn,
Minority Counsel; Dave Rapallo, Minority Staff Director; and
Donald Sherman, Minority Counsel.
Chairman Issa. The Oversight Committee exists to secure two
fundamental principles: first, Americans have a right to know
the money Washington takes from them is well spent and, second,
American deserves an efficient, effective Government that works
for them. Our duty on the Oversight and Government Reform
Committee is to protect these rights. Our solemn responsibility
is to be accountable to taxpayers, because taxpayers have a
right to know what they get from their Government. It is our
job to work tirelessly in partnership with citizen watchdogs to
deliver the facts to the American people and bring genuine
reform to the Federal bureaucracy.
It is now my privilege to recognize the ranking member for
the opening statement.
Mr. Cummings. Thank you very much, Mr. Chairman.
Commissioner Koskinen, I want to thank you for being here
this morning, and I want to thank you, Mr. Chairman, for
calling this hearing. I think it is very important that we look
at what the inspector general for the Treasury recommended and
take a look back at the research that he did.
Nearly one year ago, the Treasury Inspector General for Tax
Administration, Russell George, issued a report concluding that
IRS employees used ``inappropriate criteria'' to identify tax-
exempt applications for review. I want to revisit the findings
of his report.
The IG found that there was ``ineffective management'' at
the IRS. The first line of the results section of the report
said, this began with employees in the Determinations Unit of
the IRS Office in Cincinnati. I didn't say that, the IG said
that. The IG also went on to say that these employees
``developed and used inappropriate criteria to identify
applications from organizations with the words tea party in
their names.'' The IG also said these employees ``developed and
implemented inappropriate criteria in part due to insufficient
oversight provided by management.''
The IG report that former IRS official Lois Lerner did not
disclose the use of these inappropriate criteria until 2011, a
year after it began. Again, I didn't say that, the IG said
that. Although ``she immediately'' ordered the practice to
stop, the IG stated that employees began again using different
inappropriate criteria ``without management knowledge.''
In contrast, the inspector general never found any evidence
to support the central Republican accusations in this
investigation that this was a political collusion directed by
or on behalf of the White House.
Before our committee received a single document or
interviewed one witness, Chairman Issa went on national
television and said, ``This was the targeting of the
President's political enemies, effectively it lies about it
during the election.''
Similarly, Representative Al Rogers, the chairman of the
Committee on Appropriations, stated on national television,
``The enemies list out of the White House that IRS was engaged
in shutting down or trying to shut down the conservative
political viewpoint across the Country, an enemies list that
rivals that of another president some time ago.''
Representative Dave Camp, chairman of the Ways and Means
Committee, said, ``This appears to be just the latest example
of a culture of coverups and political intimidation in this
Administration.''
The inspector general identified no evidence to support
these wild political accusations. The IG reported that,
according to the interviews they conducted, the inappropriate
criteria ``were not influenced by any individual organization
outside the IRS.'' The IG testified before this committee that
his own chief investigator reviewed more than 5,500 emails and
found no evidence of any political motivation in the actions of
the IRS employees.
Rather than continuing this partisan search for non-
existent connections to the White House, I believe the
committee should focus squarely on the recommendations made by
the inspector general. The IG made nine recommendations in his
report last May. As of February of this year, the IRS now
reports that it has completed all nine.
For example, the IG recommended that the IRS change its
screening and approval process for tax-exempt applications. In
response, the IRS ended the end of so-called be on the lookout
lists and developed new guidance and training.
The IG also recommended that the IRS ensure that applicants
are ``approved or denied expeditiously.'' In response, the IRS
made significant progress on its backlog over the past year,
closing 87 percent of these cases.
As I close, I want to thank the commissioner and his
predecessor, Danny Werfel, for their extraordinary cooperation
with Congress. I completely disagree with the chairman's letter
yesterday complaining about the agency's so-called failure to
produce documents and its noncompliance with committee
requests. Nothing could be further from the truth. More than
250 IRS employees have spent nearly 100,000 hours responding to
congressional requests. They have delivered more than 420,000
pages of documents to this committee and they have spent at
least $14 million in doing so.
The chairman's statements simply disregard these facts.
They are also at odds with Chairman Camp of the Ways and Means
Committee, who issued a press release just this month praising
IRS for its cooperation with document requests as a
``significant step forward.''
Commissioner, I wanted to thank you for your efforts during
this investigation and for your exceptional cooperation, and I
want to thank all of those IRS employees who are working so
hard and tirelessly to do their jobs.
With that, Mr. Chairman, I thank you and I yield back.
Chairman Issa. I thank the gentleman.
I am pleased to welcome our witness, Commissioner John
Koskinen. He was appointed by the President to restore trust
and accountability to the IRS. Commissioner, you have a
difficult task ahead of you. The American people do not have,
and my opening statement says any faith, but they certainly
don't have the faith they once had in the IRS to be truly a
nonpartisan, nonpolitical tax collector, and rightfully so.
Does nonpartisan, nonpolitical agency target certain groups
based on their names or political ideology? The IRS did. Does a
nonpartisan or nonpolitical agency conspire to leak the
findings of an independent inspector general report? The IRS
did. Does a nonpartisan, nonpolitical agency withhold documents
requested during a congressional investigation subject to a
lawful subpoena? The IRS does, did, and continues to. Does a
nonpartisan, nonpolitical agency reinterpret laws protecting
taxpayer information when it appears their employees violated
the law? The IRS does. Does a nonpartisan, nonpolitical agency
blatantly ignore a congressional subpoena? Again, the IRS
continues to.
The American people believe the IRS is now a politicized
agency because the IRS is a politicized agency. Our
constituents deserve better than this, Commissioner. You are
the President's man at the IRS. You are one of only two
political appointees. But it is clear that individuals acted on
their politics, and we now have some, but only some, of the
emails to prove it.
You were brought in to do a very hard job, and no doubt you
ask yourself every day why did I get and ask for and accept one
of the hardest jobs anyone could ever have in Washington? And I
appreciate that you are there and that you want to do that job.
One of the ways you could do it is by ordering your people
to simply comply with outstanding subpoenas. The simple fact is
your response to the IRS targeting scandal has been bold by the
ranking member's standard and dismal by my standard.
This committee doesn't count how many documents are
produced, but we do count when documents clearly responsive to
a subpoena are clearly not delivered. The committee has made
document requests almost 11 months ago that are still
unfulfilled. I issued two subpoenas, the second to you
personally, and they are still outstanding, and this is
unacceptable.
Unfortunately, you have been more concerned with managing
the political fallout than cooperating with Congress, or at
least this committee. I requested that you produce all of Lois
Lerner's emails to this committee. She won't talk to us, so
these emails are the next best substitute, and we need these
emails. And you know we are not only entitled to them, but, by
all that is holy, we deserve, and the American people deserve,
access to know why somebody who cites Citizens United; who
cites political gains, including the outcome of Senate
majorities; who cites in a public speech statements about we
need to fix it because the FEC can't do it; who cites they want
us to do it and then takes the Fifth when we ask who they are.
Those emails in their entirety are clearly responsive.
These are easy requests, and ones that were made back in
May but have not been honored, and that request is one that you
said you would work to fully comply. I understand you reached
an agreement with the Ways and Means Committee to produce a
limited subset of Ms. Lerner's emails. Let me make it very
clear. Your agreement with Ways and Means, without a subpoena,
does not satisfy your obligation under a subpoena to produce
all of her emails to this committee.
Commissioner, your objection or your refusal to cooperate
with the committee delays bringing the truth, costs the
American people the confidence they hope to rebuild, and
clearly is running up the cost to the American taxpayer. I know
you want to bring this investigation to a close as soon as
possible, and I do too. But the only way you can do that is to
fully comply with our requests, and I hope you will take that
to heart today.
I yield back.
Chairman Issa. I now recognize the gentleman from Ohio for
his opening statement.
Mr. Jordan. Thank you, Mr. Chairman. I would like to
provide a little context for today's hearing. Let's go back to
January 2010. The President of the United States, in his State
of the Union address, called out the Supreme Court regarding
the Citizens United decision. That same year, 2010, the
President, numerous times, talked about Tea Party groups as
shadowy groups who would hurt our democracy. That same year
Senator Schumer says, we are going to get to the bottom of
this, let's encourage the IRS to investigate. Senator Baucus,
that same year, asked the IRS to investigate (c)(4)
applications and (c)(4) groups. Senator Durbin asked the IRS to
investigate Crossroads GPS.
And then, in that same year, 2010, two weeks before the
election, October 19th, at Duke University, Lois Lerner gives a
speech and she says this: The Supreme Court dealt a huge blow
in the Citizens United decision and everyone is up in arms
because they don't like it; they want the IRS to fix the
problem. The IRS law is not set up to fix the problem; (c)(4)s
can do straight political activity. So everybody is screaming
at us right now.
Who is everybody? Everybody is not everybody. Everybody is
the President and Democrat senators who asked her to do
something. Fix it now, before the election. Lois Lerner says, I
can't do anything right now. She couldn't fix it before the
2010 mid-term election, but what she could do is start a
project to deal with it in the future, and that is exactly what
she did. That same fall she sent an email, again, just weeks
before the mid-term election. Lerner tells her colleagues let's
do a (c)(4) project next year. But she also says we need to be
cautious so it isn't a per se political project. In fact, the
chairman put this email up at our last hearing. Per se
political project means that is code for it is a political
project, we just need to make it look like it is not a
political project.
Then, in early 2011, Lois Lerner orders the multi-tiered
review of (c)(4) applications. Multi-tiered review, you know
what that is? That is code for we are going to delay, we are
going to harass, we are never going to approve these people, we
are going to make it difficult. That is part of the (c)(4)
project.
And then make no mistake, she put Washington in charge.
This email is also one that the chairman put up at our least
meeting, where Lois Lerner said this in February of 2011: Tea
Party matter very dangerous. Cinci should probably not have
these cases. So this narrative about Cincinnati line agents and
Cincinnati doing this is completely false. She ordered them not
to have these cases. And then what happened? Lois Lerner got
caught with her hand in the cookie jar. Tea Party groups came
to us and said we are being harassed. We asked the inspector
general to do an investigation; he did the audit and then
before he can release the audit, unprecedented, before he
releases the audit, Lois Lerner, in a speech in front of the
Bar Association here in this town, with a planted question from
a friend, reveals that, yes, targeting was taking place. And
what does she do? She throws the Cincinnati people under the
bus. The very people she said shouldn't have the cases, good
civil servants, she throws them under the bus.
And here is the real kicker: Lois Lerner, who did this
project from the pressure from the President and Democrat
senators, who did this project, she won't talk to us. She won't
talk to us and our witness today won't give us her emails, even
though we subpoenaed them over six months ago.
Mr. Chairman, Lois Lerner won't talk to us. She will talk
to the Justice Department because she knows that investigation.
She will talk to the people who can put her in jail, but she
won't talk to us, and the guy who can give us the emails won't
give us the emails.
And here is why today's hearing is so important: the (c)(4)
rule that is being proposed, that got 149,000 comments, would
codify what Lois Lerner put into practice, would in fact
accomplish the goal that she set out to do in 2010. The (c)(4)
rule, we had a hearing three weeks ago, Mr. Chairman. We had a
hearing three weeks ago where we had the ACLU, Tea Party
patriots, the Motorcyclists Association of America, and the
Home School Legal Defense. All four of those groups came to
that hearing and you know what they all said? This rule stinks
and should be thrown out. Think about that. From the ACLU to
the Tea Party, from home schoolers to Harley riders, everyone
knows this rule stinks. Everyone knows except the IRS. And now,
today, we get a chance finally to question the guy in charge of
this rule, running this agency.
Here is the final thing, Mr. Chairman, and I will yield
back. The same people who pressured Lois Lerner to fix the
problem are the same people who picked John Koskinen to finish
the job. That is where we are at. And all we are asking is give
us the emails. Throw this rule in the trash, because everyone
knows--the only people who want this rule are this
Administration and the IRS. Everyone else knows this thing
stinks. Everyone else knows it. And that is why today's hearing
is so important, Mr. Chairman
With that, I yield back.
Chairman Issa. I thank the gentleman.
We now recognize the gentleman from Virginia for an opening
statement on behalf of Mr. Cartwright.
Mr. Connolly. Thank you, Mr. Chairman.
Mr. Koskinen, welcome back. I remember working with you on
Y2K. You did a great job then and I am certainly hopeful you
will do a great job now. I certainly think you are a great
choice to be the new commissioner of the IRS.
In listening to statements from the other side of the
aisle, one might think that the IRS has just stonewalled the
Congress and has been completely uncooperative. And yet, since
the release of the audit report, the IRS has produced 420,000
pages of documents to this committee, facilitated 32 interviews
of current and former IRS employees, and testified at six
separate hearings. That is not non-cooperation.
In addition, on March 7, 2014, Congressman Dave Camp, the
chairman of the Ways and Means Committee, issued a press
release commending the IRS on its cooperation with the
committee and in particular its production of documents. He
stated, ``This is a significant step forward and will help us
complete the investigation.'' That cooperation included an
agreement with the Ways and Means Committee in terms of which
emails in fact would be provided.
The chairman says he shares your goal, your desire to want
to end this investigation, but he needs more cooperation, and I
certainly take the chairman at his word. But one has the
suspicion that some of our friends on the other side of the
aisle, the last thing in the world they would do is end this
ongoing, if you can call it that, investigation, because it
serves their political aims. Mr. Jordan just cited a panel we
had. I was at that hearing, and one had the impression that
this is all feeding the base, it is designed to get certain
groups all riled up in time for a mid-term election.
Mr. Jordan. Would the gentleman yield for a question?
Mr. Connolly. I am going to finish my statement, Mr.
Jordan, as you were allowed to finish yours.
And that the serious purpose of investigation seems to be
lost in the mire and the muck.
This committee, on a partisan vote, decided that a citizen,
who happened to work for IRS, not a heroic figure in this
story, but a citizen protected by constitutional rights, had in
fact waived her rights, a very dubious finding in light of long
case history in the courts, going back to the McCarthy era when
people needed that Fifth Amendment to make sure they weren't
entrapped by their own words, by star chambers, or by people
willing to play fast and loose with facts and with the truth to
make some political point. And the fact that you might be an
unwitting victim, you are a casualty of war.
None of my colleagues on this committee, of course, would
engage in that kind of thing, but to strip an American citizen,
or claim to strip an American citizen, of her Fifth Amendment
right, a right that was enshrined as sacred by the founders,
who had been treated to the tender loving mercies of then
British colonial justice. It stung so much that they wanted to
protect every American citizen from that kind of treatment,
even if they might be hiding something, even if they weren't
heroic figures. Precisely why the Fifth Amendment was there.
So, Mr. Koskinen, there are some of us here who wish you
well and will certainly cooperate with you and try to make sure
yours is a successful tenure. Obviously, to the extent that you
can cooperate even more fully with this committee, that would
be welcome. But be aware that unfortunately this committee has
a habit sometimes of cherry-picking facts and of leaking. I
heard the chairman complain about the IRS actually leaking
documents. My, my, that would be a terrible thing if true;
certainly not something we ever do on this committee. But just
in case be prepared, because that may happen to you, too. So
thank you for your cooperation, but be on your guard, because
there is something else at work here.
I yield back.
Chairman Issa. Members may have seven days in which to
submit opening statements for the record, including extraneous
materials therein.
The chair now welcomes the Honorable John Koskinen, who is
the Commissioner of the Internal Revenue Service. Welcome.
Pursuant to the rules, all witnesses will be sworn. Would
you please rise, raise your right hand to take the oath?
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
[Witness responds in the affirmative.]
Chairman Issa. Please be seated.
Let the record reflect the witness answered in the
affirmative.
You are a seasoned pro at this, but I will remind everyone
your entire statement is in the record and it has been
distributed in the packets, and you may summarize as you see
fit. You are recognized.
STATEMENT OF THE HONORABLE JOHN KOSKINEN, COMMISSIONER,
INTERNAL REVENUE SERVICE
Mr. Koskinen. Thank you. Good morning, Chairman Issa,
Ranking Member Cummings, members of the committee. Thank you
for the opportunity to appear before you today to discuss IRS
activities in regard to the determinations process for tax-
exempt status. I am honored to serve as the IRS commissioner
and to have the opportunity to lead this agency and its
dedicated employees because I believe that the success of the
IRS is vital for this Country.
One of my primary responsibilities as IRS commissioner is
to restore whatever public trust has been lost as a result of
the management problems that came to light last year in regard
to the application process for 501(c)(4) status. Taxpayers need
to be confident that the IRS will treat them fairly no matter
what their backgrounds, their affiliations, who they voted for
in the last election. I am committed to ensuring we restore and
maintain that trust.
I am pleased to report to you that the IRS has made
significant progress in addressing the issues and concerns with
the 501(c)(4) determinations process. First of all, we have
been responding to the recommendations made by the Treasury
Inspector General for Tax Administration. It was the inspector
general's report in May of last year that found applications
for 501(c)(4) status had been screened using inappropriate
criteria.
As of late January of this year, we completed action on all
nine of the inspector general's recommendations. Our actions
have included reducing the inventory of 501(c)(4) applications,
including the group of 145 cases in the so-called priority
backlog, that is, those that were pending for more than 120
days on or before May 2013. As of this month, 126 of those
cases have been closed, including 98 that were approved. Of
those 98, 43 took advantage of a self-certification procedure
re-offered last year.
Also in response to the inspector general, the Treasury and
IRS issued proposed regulations in November that are intended
to provide clarity in determining the extent to which 501(c)(4)
organizations may engage in political activity without
endangering their tax-exempt status. As you know, we have
received over 150,000 comments on that draft. Although I do not
control by myself the rulemaking process, the Treasury and IRS
have a longstanding history of working cooperatively in this
regard, and I will do my best to ensure that any final
regulation is fair to everyone, clear, and easy to administer.
Along with the actions we have taken in response to the
inspector general, we continue to make every effort to
cooperate with the six ongoing investigations into the
501(c)(4) determinations process, including this committee's
investigations. Over the last 18 months, the IRS has devoted
significant resources to this committee's investigation and
requests for information, as well as those of other
congressional committees. More than 250 IRS employees have
spent nearly 100,000 hours working directly on complying with
the investigations, at a direct cost of $8 million. We also had
to add capacity to our computer systems to make sure we were
protecting taxpayer information while processing these
materials. We estimate that work cost another $6 million or
more.
To date, we have produced more than 690,000 pages of
unredacted documents to the House Ways and Means Committee and
the Senate Finance Committees, which have Section 6103
authority, which means they can see taxpayer information. We
have already produced more than 420,000 pages of redacted
documents to this committee and the Senate Permanent Committee
and Subcommittee on Investigations. Last week we were pleased
to announce that we believe we have completed our productions
to the Ways and Means and Finance Committees of all documents
we have identified related to the processing and review of
applications for tax-exempt status as described in the May 8,
2013 inspector general report.
We are continuing to cooperate with this committee, and I
would stress that, we are continuing to cooperate with this
committee and others receiving redacted documents, and we will
continue redacting and providing documents until that process
is complete. As part of that process, it is my understanding
that we will be delivering a substantial number of documents to
this committee later today as part of the ongoing process. In
light of those document productions, I hope that the
investigations of the (c)(4) determinations process can be
concluded in the very near future.
In the event that this committee would, at some point in
the future, decide to investigate other matters pertaining to
the (c)(4) area, such as the rulemaking process or the
examinations process, the IRS stands ready to cooperate with
you.
Mr. Chairman, that concludes my statement. I would be happy
to be take your questions.
[Prepared statement of Mr. Koskinen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Issa. Thank you. I will recognize myself for a
round of questioning.
Did you need to upgrade your computers in order to produce
all of Lois Lerner's emails?
Mr. Koskinen. I am sorry, could you clarify?
Chairman Issa. Did you need to upgrade your computers to
produce all of Lois Lerner's emails?
Mr. Koskinen. We had to upgrade our computers to produce
all of the emails and documents.
Chairman Issa. Commissioner, I appreciate that, and my time
is limited. I recently pulled all of my emails off of the House
computers. It took one person at House Call a part of, a very
small part of a morning to gin it up and produce it. I
understand it takes a while to go through them, but, if I am
correct, in a matter of hours, not after we subpoenaed, but
after we showed interest, your agency had taken all of Lois
Lerner's, all of Holly Paz's, all of William Wilkins's, all of
Jonathan Davis, former chief of staff, all of, or maybe or
maybe not, all of them pertaining to the White House. But the
first four take a matter of minutes to do.
So my question is our subpoena, which is not extensive, for
those four particularly, asked for all the emails that somebody
who has, in the emails we have seen, both Government and non-
Government emails in some cases, acted overtly political in her
speeches and her activities, including what Mr. Jordan quoted.
We asked for all of her emails. Do you have any privilege or
any reason that you can't and shouldn't have delivered that
months ago?
Mr. Koskinen. You seem to have more information about this
than I do. We have 90,000 employees and my understanding of the
process is that to go through all of those emails, which are
millions of emails, to make sure we have not only the outgoing
emails, but the incoming emails, is not a matter of a few
minutes or a few hours. But, in any event, we have provided for
all of those people, or are in the process of providing, all of
the information and all of the emails related to the
determinations process.
Chairman Issa. Commissioner, that is not the subpoena, and
I want to be very clear. We issued you lawful subpoenas because
you didn't cooperate based on letters. Our subpoena says all of
Lois Lerner's emails. Is it your position today that you intend
to give us those responsive to some key search word or you
intend to give us all of Lois Lerner's emails, all of Holly
Paz's emails, all of William Wilkins's emails, all of Jonathan
Davis's emails?
Mr. Koskinen. We are working through the process. We have
never said we would not provide those.
Chairman Issa. Will you provide all of the emails for those
four individuals?
Mr. Koskinen. We will provide you--we are actually trying
to, in an orderly way, conclude the investigation on the
determination process, which is what the IG report reported to.
We have had over 250 people at various times working on this
investigation. We are producing emails. You will get email
copies today, redacted, and you will continue to get them. Our
hope is that you could concentrate on the determination
process. GAO is already, at the congressional request, doing a
review, starting a review on the examination process. As I have
said in my letters to you, if you would like----
Chairman Issa. No, commissioner, you said something and I
want to focus on that. You said your hope is that we would
focus on the determination process.
Mr. Koskinen. I can't tell you what to focus on.
Chairman Issa. Thank you.
Mr. Koskinen. It is up to you to focus on whatever you
would like.
Chairman Issa. We are focusing on those individuals. We
have asked for all of their emails in a legal subpoena. My
question to you today: Will you commit here, today, to provide
all of the emails? Not all the emails you believe are
responsive, not all the emails you choose to give, not all the
emails that are other than embarrassing; all the emails.
Mr. Koskinen. Mr. Chairman, we are prepared to continue to
work with your staff. As you can understand, when you say all
of the emails, you are going to get hundreds of thousands of
pages, irrelevant documents.
Chairman Issa. No, no. No, I am sorry. Lois Lerner is an
individual. We are asking for all of her emails. She obviously
had a limited amount of emails. Quite frankly, we asked for all
the emails. We believe that the emails, for example, where she
talked about the outcome of the Senate races maintaining
Democratic control because of Indiana and other States, the
outcome of the Maryland pro-gay initiative, all of those are
responsive to who she was and why she did what she did.
Therefore, we have asked for, in the case of these individuals,
all of their emails. Holly Paz, for example, said she didn't
know what Citizens United was, while Lois Lerner made it clear
that she was trying to find a way to enforce around Citizens
United at the IRS. And we have already seen the documents for
that.
Will you today commit to deliver all of the emails, not all
that you think are responsive, all the four squares that any
lawyer can read of the subpoena says we are asking for, which
is all the emails for Lois Lerner, all the emails for Holly
Paz, all the emails for William Wilkins, and all the emails for
Jonathan Davis? Now, these are all of the ins and outs from
their mailboxes. It is not difficult. You already have pulled
them. There is no question at all; it is a question of will you
deliver them.
Mr. Koskinen. Mr. Chairman, we are happy to continue to
work with you and we will advise you--I am not aware that we
pulled them all, but to the extent we have, they all have to be
redacted, and we will work with you and advise you as to what
the volume is. The reason the search terms were selected, they
were selected by committee staff here and in the other
investigations so that----
Chairman Issa. No, your people--and my time has expired.
You previously selected search terms, asked us to give
priorities. That is all fine.
Mr. Koskinen. That is not true.
Chairman Issa. The subpoena that was personally delivered
to you, which we expect you to comply with or potentially be
held in contempt, those emails were very specific based on
individuals who have become specific focus on why they did what
they did and what they have said, whether it is true or not, is
critical to this committee's discovery of intent. Will you
commit to deliver all of those emails, redacted only for 6103?
Mr. Koskinen. Yes. As I said, we have never said we
wouldn't produce those emails. The search terms, just to clear
the record, were not selected by the IRS, they were in fact
selected in cooperation with various congressional
investigations on the House and Senate side to try to limit the
volume of material you are going to get. We will be happy to
provide you volumes of material.
Chairman Issa. Okay, my time has expired, but let me make
it clear in closing. It does not take any search terms to
respond to all the emails of Lois Lerner.
Mr. Koskinen. You are going to get a lot of emails, and, as
noted earlier, you may want to have this investigation go on
forever. We have provided you all of the emails relevant to the
IG report. We are providing you Lois Lerner's emails with
regard to issues that you have raised about the examination
process, about the appeals process, and about the regulatory
process.
Chairman Issa. I appreciate that.
The gentleman from Maryland.
Mr. Cummings. Thank you very much, Mr. Chairman.
I think the chairman has asked some very good questions,
and I want to give you an opportunity to respond. So when you
all are going through these emails, the last part of what you
said is very significant. You said something about they have to
be relevant. I mean, where are you getting all of that from?
You remember what you just said, the last part of it? It
sounded like there were certain things that were used, terms
that were used to decide what you think is responsive to the
subpoena. Now, can you explain that to us?
Mr. Koskinen. Yes.
Mr. Cummings. In other words, if she had a personal email
and she was talking about shopping or something, whatever, are
you all separating? Is that part of the process? I don't
understand.
Mr. Koskinen. Part of the process----
Mr. Cummings. You said something about relevance. Can you
explain that?
Mr. Koskinen. Part of the process when this started,
because there are literally millions of emails, was to take a
look at, in agreement with the staffs of the investigating
committees, take a look at 83, ultimately it was originally a
smaller number, the IRS added to the custodians as it were,
that is, the people sending and receiving emails, there are 83
of those that we agreed to look at. The terms in terms of what
would be relevant were determined by congressional committees,
as well as the IRS, to try to limit the volume. As I say,
limiting the volume, you still have 700,000 pages of relevant
documents. To the extent that somebody wants to look at
hundreds of thousands more pages of what the search terms
defined by the Congress would be termed irrelevant, at some
point we are happy to provide those. We will provide those in
the orderly course.
But I will tell you that our experience is it is going to
be an overwhelming volume of materials. They will take us some
significant time to redact taxpayer information, a significant
part of which will have nothing to do with this investigation.
But if that is the way the committee wants to go, we will go
that way. But the other committees, and staff of this committee
in the early determinations, decided that that would be a
fruitless task of overwhelming the investigators, not us,
overwhelming the investigators with thousands of pages of
irrelevant documents. Therefore, they suggested with us and
selected with us search terms of what would be relevant: Tea
Party, examinations, whatever else they picked. There are a
whole series of those terms designed to limit the volume of
materials.
We still have provided a lot of duplicative and probably
irrelevant materials within those search terms, but we have not
determined anything within those search terms. We have said if
those are the terms that will help you winnow it down, we are
happy to work with you. But if the committee wants to get
simply large volumes of personal emails from a lot of different
people, we will go through again, making sure that we redact
those appropriately. As I say, we have provided unredacted
copies of all of this in terms of the relevance determined by
the committees to the other committees, and we provided all of
the redacted information available now and we are continue to
redact it. It cannot be done overnight.
Mr. Cummings. Thank you very much.
I want to go to the recommendations of the inspector
general, because this is Oversight and Government Reform, and I
think the committee ought to take some credit for what you have
said that there were nine recommendations and apparently you
all have been able to address all nine of them. We don't hear
that quite often in this committee, by the way. So the
inspector general's report, which was issued in May of last
year, made nine recommendations. I have a chart here that lists
each one of these nine recommendations from the inspector
general. The title of the chart is Exempt Organizations'
Recommended Actions Ending February 24, 2014.
Mr. Chairman, I ask unanimous consent that this chart from
the IRS be entered into the record.
Chairman Issa. Without objection, so ordered.
Mr. Cummings. Commissioner, in addition to listing each of
the nine recommendations, this chart describes in detail the
status of each recommendation. It describes the work that has
taken place over the last 10 months, as well as the specific
reforms that were implemented, is that correct? Are you
familiar with the chart?
Mr. Koskinen. Yes.
Mr. Cummings. If I am reading this chart correctly, it
appears that all nine of the inspector general's
recommendations have been fulfilled. Is that right?
Mr. Koskinen. That is correct.
Mr. Cummings. Let's look more closely at the status of
these recommendations.
The inspector general's first several recommendations begin
on page 10 of his report. They propose that the IRS change its
procedures for how screeners in Cincinnati classify
applications. All of these recommendations are now marked as
completed.
Commissioner, can you explain what new guidance the IRS has
provided to screeners in Cincinnati about how they should
classify and process these applications in an appropriate way?
Mr. Koskinen. Yes. The criteria for exemption under (c)(4)
are complicated because it is a ``facts and circumstance''
determination. The guidance and the new training has provided
more guidance to those reviewing as to what is appropriate
political advocacy and what is direct political campaign
intervention. It is the campaign intervention that if it
becomes your primary activity, you, in fact, are not eligible
to be a 501(c)(4). There obviously are complicated terms. We
provided better guidance and we have also provided improved and
new supervision for any determination that is going to be
delayed. We also have provided clear lines of authority so if
anyone needs advice or additional assistance they can get that
automatically and easily.
Mr. Cummings. On page 17 of the inspector general's report
he lists another recommendation: ``Provide oversight to ensure
that potential political cases, some of which have been in
process for three years, are approved or denied
expeditiously.'' In response, the IRS chart says that this ``As
of February 21st, 2014, 112 cases in the original backlog, 85
percent, have been closed.''
Commissioner, this is good news, and I understand from your
testimony today that this number has gone even higher, to 87
percent. Can you please explain how this expedited review
process worked? I think I have one minute left on my time.
Mr. Koskinen. The way that worked is Interim Commissioner
Danny Werfel, who I think did a great job as the interim,
established a process for expedited review, and any applicant
who would simply certify that they were not going to spend more
than 40 percent of their time on political activity could be
approved immediately. And that streamlined process continues
for new applicants. Forty-five or so of the existing at that
time pending applicants filed that paper and were immediately
reviewed and approved. Of those that are still pending, they
have decided not to, in fact, sign the affidavit that they
would not spend more than 40 percent of their time on political
activity.
Mr. Cummings. My final question, I understand that the IRS
has now completed all of the inspector general's
recommendations, but, going forward, what additional plans do
you have to ensure that these management problems have been
fully addressed?
Mr. Koskinen. We have agreed with the inspector general
that before any election we will conduct additional training
sessions and try to sensitize all of the people reviewing
applications to make sure that we handle them appropriately, no
matter what the political background of any of the
organizations; and this would apply to people at one end of the
political spectrum or the other. That will be done before every
election as we go forward.
Chairman Issa. Thank you.
Before I call another member, I want to make it clear staff
has informed me, for the record, that early on with the IRS
they did mutually agree to search terms. That was before the
subpoenas were issued. There was never an assurance that those
search terms were being used, and to this day we don't know if
those search terms were actually used, so one of the challenges
is that that was abandoned in favor of subpoenas because of
what they believed to be noncompliance a number of months in.
But there was an initial attempt to work cooperatively but, as
I said, there was a question of whether or not those search
terms ever actually got used. So thank you.
We now go to the gentleman from Florida, Mr. Mica.
Mr. Mica. Well, thank you, Mr. Chairman.
We have had an opportunity to interact in the past and
always appreciate your candor. At the very heart of this matter
is a basic fact that IRS appears to have been used prior to the
election, the presidential election, in a concerted effort to
close down or keep at bay conservative organizations by
targeting them. You are aware of that, sir?
Mr. Koskinen. I am aware, as was noted earlier, that the
inspector general found inappropriate criteria were used to
select organizations for further review. He did not refer to it
as targeting.
Mr. Mica. But you heard one of the principal IRS officials
who was involved with Lois Lerner, who came to the chair where
you are sitting now and took the Fifth Amendment. She is at the
heart of most of this activity. It was pointed out by Mr.
Jordan that she concocted it was almost a Hollywood production
before the inspector general, May 14th, came out with his
report to blame the people in Cincinnati, some rogue IRS
employees who gathered around the water cooler and concocted a
scheme to again target. And I think she laid that out, is that
not correct?
I mean, historically, you know that as a fact. She appeared
before the American Bar Association before the report came out
and made those statements, correct?
Mr. Koskinen. She did make those statements.
Mr. Mica. Okay.
Mr. Koskinen. I would note that because she took the Fifth,
as I said in a letter to the chairman----
Mr. Mica. Again, this committee, it is nice to be here for
a while because you see how people try to throw people under
the bus. Whether it is the chairman, Mr. Cummings said the case
is closed. We started our investigation on June 9th. In May we
started. June 9th Mr. Cummings, the ranking member, said it
appears the case is closed. And then June 9th--well, he said I
see the case is solved. If it were me, I would wrap this case
up and move on, to be frank. So he tries to throw the case
under the bus. He tried to throw the chairman under the bus. He
sent a letter just before that: Your actions over the past
three years do not reflect a responsible bipartisan approach to
investigations.
Now, he has a constitutional and a House responsibility for
investigations and oversight. You have a responsibility to
provide us with information. We have asked you specifically for
about a half a dozen individuals' emails, including Lois
Lerner, is that correct?
Mr. Koskinen. Yes.
Mr. Mica. Okay. And you said, you just testified to us
probably most of--and you said you gave 640,000 to the Ways and
Means and 420 to our committee. But you also said here, and we
can play the tape back, probably most irrelevant material,
right?
Mr. Koskinen. Most irrelevant material.
Mr. Mica. Probably mostly irrelevant material were your
words.
Mr. Koskinen. Of the material we provided.
Mr. Mica. At great expense. IRS and most bureaucracies have
no problem spending lots of money doing things we don't need.
We asked you very specifically for the emails from six
individuals, a half a dozen individuals, and you have not
complied, including Lois Lerner. Is that correct?
Mr. Koskinen. My point was what you are going to get is
mostly irrelevant material.
Mr. Mica. I know. And we aren't interested in it. We are
interested specifically in Lois Lerner and others to find out
who did what. Are you aware of Cindy Thomas's statements? She
was the chief person out in Cincinnati, and she said, May 10th,
with a copy to Lois Lerner, we have a copy of that----
Chairman Issa. To Lois Lerner with a copy to Holly Paz.
Mr. Mica. To Lois Lerner with a copy to Holly Paz. And she
said Cincinnati wasn't publicly thrown under the bus; instead,
it was hit by a convoy of Mack trucks. Are you aware of her
statement as to what took place?
Mr. Koskinen. I am. I am aware of the fact that you already
have a significant number of Lois Lerner emails, obviously,
and, in fact, we have been trying to----
Mr. Mica. But we don't have what we want. And, again, it is
a game of you providing us with probably huge amounts of
irrelevant material.
Mr. Koskinen. That is what you are going to get.
Mr. Mica. And we aren't interested in personal. You could
give us a billion documents. That is not what we asked. We
asked specifically----
Mr. Koskinen. Right. And what you are going to get--and I
would like to----
Chairman Issa. The gentleman's time has expired, but you
may answer.
Mr. Koskinen. Can I answer his question some time?
Chairman Issa. Of course. That is what I said, the
gentleman's time has expired, but you may answer.
Mr. Koskinen. Thank you. First of all, your earlier comment
about your staff being concerned about whether the search terms
were being followed is the first time I have heard that. We
have followed those search terms. No other committee, none of
the other five investigations going on have raised any question
about whether we have in fact followed on those search terms.
So if your staff has that concern, I would appreciate it if
they would let us know, because none of the other five
investigations and none of the other five staffs have raised
that issue; and, as far as I know, we have abided by those
search terms and provided everything that the committee has
requested pursuant to those search terms and with regard to the
determination process.
With regard to Lois Lerner, as I said in my letter to you,
because you have not been able to cross-examine her because she
is not an IRS employee, the first priority we have, we have
already been providing you the emails. In fact, your staff
report cited a number of them that you have had, her emails
with regard to the determination process. You have been able to
cross-examine over 30 witnesses about anything you wanted to
talk to them about, but because you could not talk to Lois, we
are providing you, and they have to be redacted, we are going
to provide you Lois Lerner emails with regard to not only the
ones you have about determinations, but Lois Lerner emails with
regard to the examination process, the appeals process, and, to
the extent there are any, with regard to the development of the
proposed regulations that were issued.
Those were the issues that have been raised, concerns about
what her involvement was. We have committed that we will
provide those to you. We have not said we are not going to
provide you the rest of them. We have prioritized trying to
complete document production so that we would be able to get
you the information that we thought would be appropriate for
the determination process. As I said in my letter to you, if
you now want to actually run an investigation of the other
areas with those employees or others, we are prepared to work
with you. As I say, if you just want all the documents, once
redacted, no matter what they are, we can give those to you,
but I can guarantee you that you are going to go under and it
is not going to further the investigative process. But if that
is way you would like to do it, that will be our next priority.
Mr. Mica. Mr. Chairman, a quick unanimous request. I would
like this email from Cindy Thomas to appear in the record at
this point in the proceedings, and also a copy of The
Washington Post June 9th, Case is Closed article to appear in
the record.
Chairman Issa. Without objection, so ordered.
Mr. Cummings. Mr. Chairman?
Chairman Issa. Yes.
Mr. Cummings. Unanimous request just for a minute.
Chairman Issa. The gentleman is recognized.
Mr. Cummings. He just said something, Mr. Chairman, and I
want to make sure it is clear. It sounds like, Mr. Chairman,
that he has an impression of what is being subpoenaed using
certain lists and we have an opinion, and they don't coincide.
Is that accurate?
Mr. Koskinen. No. I think what has happened is the subpoena
that was delivered to me in February said it wanted all the
emails for a set of people. What we have been trying to do is
all of those people, you have emails from those people with
regard to the determination process pursuant to the search
terms that we have been working with. The subpoena now says we
would like them all for anything. We have now finally
completed, although we are still working on the redaction, all
of the production of documents regarding the determination
process, which is what the IG report focused on. We have said
that that is the first priority we have had. We have never said
we are not going to provide you the rest of the documents, and
in fact, trying to figure out the most efficient way to do it,
we have said we will provide you Lois Lerner emails on
everything with regard to examinations, appeals, and the
regulatory process as it goes forward.
And I have said when we are done with all of that, if you
want to actually get emails, if you want them all, we will give
them all to you, but if you want to actually take a more
focused investigation on the regulatory process or otherwise,
we are happy to work with you to figure how that goes. But in
light of this chairman's view, as soon as we can finish the
rest of these redactions and go forward, we will provide you
volumes of emails, which many of them are going to be
irrelevant, which is what I said in Congressman Mica's comment.
Not that the materials you have are irrelevant; the ones you
are likely to get in volume are irrelevant. And if you want it
without any selective process, we will redact them. There are
going to be thousands of pages and we are happy to provide them
to you, but it is not going to expedite the conclusion of this
investigation and, as I say, a significant part of it is going
to be irrelevant.
Mr. Cummings. Thank you very much, Mr. Chairman.
Chairman Issa. For the gentleman, because it is a good
question, one of the reasons that we requested all is that,
back when we were in the minority, we began digitally
evaluating this kind of information, and when we have all, and
the ones that the commissioner is talking about, if they are
irrelevant, then, quite frankly, there is no redaction because
if they don't have 6103, there is no redaction appropriate. If
that is the case, we do search terms and we look at only what
we need to look at. But we can constantly search and research
to try to get to the bottom of it.
As you can imagine, we would not have found Lois Lerner
talking to her daughter about overtly partisan political
activity if we had only looked for determination. It wasn't
relative to determination, but it was relative to possible
motivation. The IG, as you know, was not aware of the speech at
Duke University in which it was clear that Lois Lerner was
saying in pretty plain terms that she was going to act on what
the FEC couldn't act on. So this is part of the investigation;
it is the reason we have asked for all. And, quite frankly, it
takes a lot less time to just go through and view these things
and say, oh, that has no 6103, and you just start sending it.
And that is what we had hoped for when we issued the subpoenas
for all, because these are people, as you know, who have said
things before our committee, or failed to say things in some
cases, in which they become what law enforcement might call a
person of interest; and Lois Lerner and Holly Paz and so on,
and the other individuals, are people of interest because of
their possible role.
Mr. Cummings. So, in other words, any email with anybody,
talking to their daughter, if there is any relevance
whatsoever, if they say I just don't like Democrats, I mean, in
any way you could connect that with an investigation, and they
are talking to their daughter.
Chairman Issa. I appreciate that, but remember----
Mr. Cummings. I am just trying to make sure I understand.
Chairman Issa. I just want to make sure of the context.
These are Government emails from a Government account, back in
and out. This is the use of IRS assets to communicate. We would
presume that the majority of it is not shopping online. As a
matter of fact, in the case of Lois Lerner, she did her
shopping online in a Hotmail account, which she also did 6103
material on. So, in a normal case this would not be something
you would look through. And the Department of Justice, if they
are actually doing the investigation they claim to, we have an
obligation to look and figure out whether we can opt out these
communications, which in this case were always the product of
the Government, always available and, as you know, it is a
given that communication on Government computers is in fact
open to Government review.
Mr. Cummings. I just wanted to make sure the public
understands that.
Chairman Issa. Thank you.
Mr. Connolly.
Mr. Connolly. Thank you, Mr. Chairman. I would say to the
ranking member it sounds like his understanding is correct. And
I would hope we would do the same with, oh, I don't know, the
IG, Mr. Russell George. I would like to see all of his overt
partisan political emails. I would like to see if he has
emailed relatives, if he has emailed staff members of this
committee. I think that would be relevant to putting in context
his findings and to determining whether he, in fact, is an
objective source of information and analysis. But that is a
different matter.
Mr. Koskinen, as I read the Declaration of Independence, it
is written largely initially, the first draft, by Thomas
Jefferson, but it was subject to an editorial committee. He
didn't like that; he thought his words were pretty good. Among
those words were Americans were entitled to life, liberty. Now,
here the editorial committee did not act. He said and the
pursuit of happiness. But it sounds like some people would
substitute for that an unfettered and unquestioned access to
501(c)(3) and 501(c)(4) tax exempt status. Do you read that in
the Declaration of Independence, Mr. Commissioner?
Mr. Koskinen. I never thought of it that way, but I don't
read it that way, no.
Mr. Connolly. No, it doesn't read that way. So it is not
really an explicit entitlement or right; it is a process you
have to qualify for, is that correct?
Mr. Koskinen. Correct.
Mr. Connolly. There are many different ways of trying to
figure out how somebody qualifies and whether they qualify, is
that correct?
Mr. Koskinen. Yes.
Mr. Connolly. And, by and large, historically, IRS has had
a standard operating procedure for determining that status,
either 501(c)(3) or 501(c)(4) or other status, is that correct?
Mr. Koskinen. Correct.
Mr. Connolly. In this particular case, what we are all
excited about is that a filter was created in a regional office
that seemed to target people for their political views, both
right and left, but apparently mostly right, is that right?
Mr. Koskinen. As noted, the inappropriate criteria used
primarily the name of the organization to select them for
further review.
Mr. Connolly. Now, one of the problems we have here is an
adverb. The word used in the statute is exclusively; a social
welfare exclusively devoted to that purpose, is that correct?
Mr. Koskinen. That is correct.
Mr. Connolly. And yet, despite the fact that Congress wrote
that adverb into the law, IRS took upon itself, long before
your tenure, to actually interpret that meaning primarily, is
that correct?
Mr. Koskinen. That is correct.
Mr. Connolly. Now, if I said to my spouse, honey, we have
an exclusive relationship, and I mean by that 49 percent, I
would probably have problems in my relationship. To her and to
me exclusively means just you all the time, 100 percent. So how
in the world did we get to a situation where the IRS, on its
own, outside of statutory authority, decided to interpret this
as primarily? Because, to me, that is part of the problem.
Exclusively ought to mean exclusively. And if Congress wants to
change that, we should change the law. But I don't remember
Congress investing IRS with the authority to actually decide to
interpret it radically different, not just kind of a little
fudge factor here. This is radically different. And it seems to
me therein is the problem, because clearly some of these
organizations are not exclusively social welfare agents, I
mean, clearly, they are largely designed to be political,
partisanly political, that concern the chairman has, overt
partisan communication, and I share that concern. And all too
many of these organizations hide under the umbrella of social
welfare when in fact what they really mean is partisan
political activity. Can you address this dilemma for me, how
the IRS could possibly take the word exclusively and
reinterpret it to mean mostly, sometimes, just shy of 50
percent, primarily?
Mr. Koskinen. Needless to say, I wasn't around in 1959,
when that regulation was given to the IRS.
Mr. Connolly. Which is stipulated.
Mr. Koskinen. One of the reasons, in response to the
inspector general's recommendation that clarification be
provided, that the draft regulations were issued for comment
was to in fact solicit discussions about what the definition of
political activity ought to be, how much of it ought to be
allowed before you jeopardize your tax exemption or are
ineligible for tax exemption, and to which organizations in the
501(c) complex should that be applied. The 150,000 comments
address all three of those issues. The proposed draft was
designed to in fact review and revisit with the public and with
comments and with Congress exactly that issue, what should
exclusively really mean.
Mr. Connolly. Thank you. My time is up.
Mr. Chairman, I certainly hope, after all the storm and
drum of this issue, we actually might come together in a
bipartisan basis.
Chairman Issa. I certainly hope so, and I hope the
gentleman remembers that 501(c)(4)s are not tax exempt to the
contributor, so they really are no different than any
corporation that spends all of its money doing anything. But it
is an interesting question of what social welfare was in 1959
and whether promoting a reduction in smoking or something else
would have been considered political prior to the creation of
the Federal Election Commission.
Mr. Connolly. And you know, Mr. Chairman, if I may, to your
point, we may even decide, frankly, look, let's just have a new
category. You want to be political and you want to hide who
your donors are, hopefully you don't, there is this category,
so that we are not playing, frankly, with words and, in the
sense, all being complicit in this disingenuous exercise. So I
take the chairman's point and would add to it. Thank you.
Chairman Issa. I thank the gentleman.
We now go to the gentleman from Ohio, Mr. Jordan.
Mr. Jordan. Thank you, Mr. Chairman.
Mr. Koskinen, what part of all don't you and the IRS
understand? You have said like ten times now if you give us all
Lois Lerner's emails, we are going to get irrelevant
information. Frankly, with all due respect, we don't care what
you think is irrelevant. The committee has asked for every
single--I asked for it clear back in August from Danny Werfel
and he told me the same thing you did; we are trying, we are
hoping, we are going to get there someday, sometime. We want
them all. Because if you limit it to what you said earlier, to
determinations, appeals, exams, and rulemaking, just those
categories, what if there is an email to Lois Lerner from the
White House that says, Hey, Lois, keep up the great work, we
appreciate what you are doing? What if there is that kind of
email? That wouldn't fit under the categories and the search
terms that you are talking about. When we say all, we want
every single email in the time period in the subpoena that was
sent to you, plain and simple.
Now, let me ask you this. You agree with the TIGTA audit
report that came out, you agree there were problems and you are
trying to comply with the TIGTA audit report, is that accurate,
Mr. Koskinen?
Mr. Koskinen. That is correct.
Mr. Jordan. All right, I would like to put up slide one.
[Slide.]
Mr. Jordan. These are inappropriate criteria and questions
that were sent out to Tea Party groups that TIGTA identified as
going too far, inappropriate things asked: issues that are
important to the organization, things asked that the
organization indicate positions regarding such issues, type of
conversations you have in your meetings. Inappropriate
questions you concede that are highlighted there.
Second slide.
[Slide.]
Mr. Jordan. This is Judith Kendall, email that she sent to
Holly Paz. Judith Kendall, Senior Technical Advisor to Lois
Lerner. Same list, talking about how these were inappropriate
questions that were asked of Tea Party groups.
Now we move to the proposed rule that has got so much
controversy. I think approximately 150,000 comments, more
comments than any other rule that the IRS has ever proposed, is
that accurate, Mr. Koskinen?
Mr. Koskinen. Actually, if you take all the comments for
the last seven years and double them, and you get to that
number.
Mr. Jordan. Yes. And is it fair to say the vast majority of
those comments are negative?
Mr. Koskinen. I have no idea; they are being analyzed right
now.
Mr. Jordan. Based on what we have heard, based on the
hearing we had just a few weeks ago, where we had the ACLU and
the Tea Party all saying this thing stinks and we shouldn't
have it, vast majority of those, I am going to hazard a guess,
are negative comments.
If we could go to the third slide now.
[Slide.]
Mr. Jordan. Now, this is a newsletter that came out just
three weeks ago. IRS Exempt Organization Newsletter, March 4,
2014. Are you familiar with this newsletter that goes out from
the Exempt Organizations Division of the Internal Revenue
Service?
Mr. Koskinen. I do not see those.
Mr. Jordan. Okay. Well, this is put out by the Exempt
Organizations Division, same division where all these problems
took place over the last three years. It came out, again, just
five days after the comment period on the proposed rule ended
at the end of February, and I want to just highlight a few of
the questions that are asked. So there is a category that says
what if the IRS needs more information about your (c)(4)
application? New sample questions. So if we could put them up
side-by-side.
Now, the first slide are the targeted questions that TIGTA
said were inappropriate and that you agree are inappropriate,
Judith Kendall agreed are inappropriate. Those are those
questions. And now, just five days after the proposed rule
comment period ends, you issue a newsletter from the Exempt
Organizations Division highlighting the new questions you are
going to ask, and I just want to look how similar the two
questions are.
Let's just take the second category, whether an officer or
director, etcetera, has run or will run for public office. The
new question says this: Do you support a candidate for public
office who is one of your founders, officers, or board members?
It is basically the same. This reminds me of when I was in
grade school and the teachers told us you shouldn't plagiarize,
so you change a few words and basically plagiarize. This is the
same thing.
So here is what I don't understand. If you are trying to
comply with the TIGTA report, if the new (c)(4) rule is a way
to deal with what the audit said and not as what I believe is a
continuation of the project Lois Lerner started, why are you
asking the same darn questions?
Mr. Koskinen. As I noted, I haven't seen that and can't
read it on the chart. I would be delighted to sit down and go
over all of those questions with you and with the exempt
organizations. All of the TIGTA report didn't blanket say you
should never ask questions about this. Thank you for the chart.
Mr. Jordan. Let me read from your testimony, Mr. Koskinen.
Page 7 of your testimony that you submitted to the committee
yesterday, talking about our notice of proposed rulemaking is
consistent with the TIGTA recommendations. You said this in
your testimony you gave the committee.
Mr. Koskinen. Well, okay, I am just----
Mr. Jordan. And yet consistent with TIGTA recommendations.
TIGTA said these kind of questions are inappropriate, and now,
just three weeks ago, Exempt Organizations Division issues a
newsletter where you are asking almost verbatim, a few word
changes so you don't look just like you are totally
plagiarizing or doing the exact same question, almost
verbatim----
Mr. Koskinen. I don't think they are exact----
Mr. Jordan.--the same darn questions.
Mr. Koskinen. I don't think they are--the first question
says, Provide a list of all issues that are important to your
organization and indicate your position regarding those. The
new question says, Describe how you prepare voter guides.
Mr. Jordan. What do you think voter guides are about? They
are about issues. They are about the issues important to
organizations. It is the same thing.
Mr. Koskinen. I think----
Mr. Jordan. Have you ever seen a voter guide? I have. I
would be able to answer those questions.
Mr. Koskinen. I would submit and I appreciate----
Mr. Jordan. As a candidate, I have answered those.
Mr. Koskinen. I would submit and I appreciate having a copy
of this, that if I look at the first question and the revision,
the revision is very different than the----
Mr. Jordan. Very different.
Mr. Koskinen. Very different.
Mr. Jordan. Oh, yeah, right.
Mr. Koskinen. Look at the third question: What type of
conversations and discussions did your members and participants
have during the activity? That is now, Describe how you
determine what questions to ask of candidates. It doesn't say
anything about what discussions or conversations your member
had, including the scope of the----
Mr. Jordan. You think they don't discuss it?
Mr. Koskinen. It doesn't ask for your conversation. It
doesn't say what your participants are.
Mr. Jordan. Okay, you defend that.
Mr. Koskinen. It specifically says----
Mr. Jordan. You defend that and you defend the statement
that you are complying with the proposed rulemaking is
consistent with the TIGTA recommendations. I don't think it is.
Mr. Koskinen. That is fine.
Mr. Jordan. What I know is the same day this comes out, you
send me a letter, our primary goal, same day, March 4, 2014,
letter to me, you responded to a letter we had sent to you; one
of my primary goals and responsibilities is to restore whatever
public trust has been lost over the course of the last several
months, and yet you are asking almost, almost the same
questions that your people said were inappropriate to ask Tea
Party groups when all the targeting took place. And now, as a
response to the new (c)(4) rule, oh, we have changed the
questions a little bit.
Mr. Koskinen. I think if you ask an organization
independently which are the questions, have there been changes,
I think that these are new questions; they do not probe the
discussions you had, the conversations you had, they didn't
disclose your position on the issues. These are in fact new
questions. Now, we may have a difference----
Mr. Jordan. I think we disagree.
Mr. Koskinen. That is fine.
Mr. Jordan. And I think the vast majority of people who
were harassed over the last three years would agree with my
position.
Mr. Chairman I yield back.
Mr. Koskinen. I am happy to have this in the record and let
the public decide whether or not we have responded
appropriately.
Mr. Jordan. Oh, let me ask you one other question.
Chairman Issa. The gentleman's time has expired. I
apologize.
We now go to the gentleman from Missouri, Mr. Clay.
Mr. Clay. Thank you, Mr. Chairman.
Commissioner, Chairman Issa wrote a letter to you
yesterday, complaining that you were guilty of a failure to
comply with the committee's demands for documents. He also
said, ``Your continued noncompliance with these requests also
contravenes your pledge to fully cooperate with congressional
investigations.'' So even though you have already produced more
than 400,000 pages to the committee, even though you have 250
employees working on producing more, he accuses you of
violating your pledge and frustrating congressional oversight.
I think this is shameful and it is even more so when you
actually look at the unbelievably broad demands the chairman
has made.
Lets look at just one of these demands. Number 8 in Mr.
Issa's letter, it demands the following: ``All documents
referring or relating to the evaluation of tax-exempt
applications or the examination of tax-exempt organizations
from January 1, 2009 to August 2nd, 2013.'' Let me read that
again: All documents from 2009 to 2013, nearly four years,
referring or relating in any way to tax-exempt applications.
Mr. Commissioner, how broad is this request?
Mr. Koskinen. That request will get you not thousands, but
probably millions of documents. The chairman has been focusing
on emails, but you are exactly right, the full sweep of the
subpoena will mean that we will be at this for months, if not
years, collecting that information, redacting it, and then
providing it.
Mr. Clay. Let me ask you this. The evaluation of tax-exempt
applications is the function of the Exempt Organizations
Division of the IRS. It is my understanding that about 800
people work in the Division, is that correct?
Mr. Koskinen. That is correct.
Mr. Clay. So the chairman has gone on national television
and threatening you with contempt unless the IRS produces every
document produced by 800 people over nearly a four-year time
period. Mr. Commissioner, even if you wanted to comply with
this demand, how long would you estimate that it would take the
IRS to complete this document production?
Mr. Koskinen. We have already spent 10 months, $15 million,
and add 100,000 hours and 250 people working to produce the
documents that we in fact agreed with the committee would be
relevant. This is a much broader, more sweeping request to all
of those documents, and I have continued to press our people,
because I am anxious to get documents to the committees and
investigators as fast as possible, how long it would take even
to complete the redaction, and I cannot get a clear answer
because it is a very complicated, difficult process. My guess
is there is no way we would get you this information totally
before the end of the year.
Mr. Clay. Wow. To me, this shows how our committee has
moved from government oversight to government abuse. These
ridiculous demands are not only over-broad and irrelevant, but
they will force the IRS to continue wasting its precious staff
and financial resources.
This is about being reasonable and demanding documents
within reason, and I don't get that sense from this committee
that we are going in that direction. I think we are going in
the opposite direction. To me, this is a partisan witch hunt
which has already cost the IRS more than $14 million, and
compliance with these outrageous requests will only cause that
number to continue to grow, and it certainly doesn't reflect
good oversight, Mr. Chairman, and I am really appalled that
this investigation has gone to this level.
Chairman Issa. Would the gentleman yield?
Mr. Clay. I certainly do.
Chairman Issa. Do you feel that asking for all of Lois
Lerner's emails so that we can search through to see whether or
not she inappropriately was in fact actively doing more than we
already know? Do you think that is inappropriate?
Mr. Clay. I don't have a problem asking for Lois Lerner's
email, but I do have an issue with asking for 800 people's
emails. I mean, are all 800 connected to this investigation?
Chairman Issa. Well, like I say, we haven't received all of
Lois Lerner's emails, which is one of the things we asked for.
Mr. Clay. Can we be more specific about what we are looking
for for Lois Lerner, from her emails?
Chairman Issa. No, we cannot. The gentleman's time has
expired.
We now go to the gentleman from Utah, Mr. Chaffetz.
Mr. Chaffetz. I thank the chairman.
Commissioner, thank you for being here. I have a copy of
the subpoena that you were issued. You did receive this
subpoena, correct?
Mr. Koskinen. Yes.
Mr. Chaffetz. The date on this is February 14th.
Mr. Koskinen. Correct.
Mr. Chaffetz. You understand what it means? Is there any
question on what it means?
Mr. Koskinen. I don't think so.
Mr. Chaffetz. Do you believe it was duly issued by the
House of Representatives?
Mr. Koskinen. I am assuming that. I have no independent
basis for determining that.
Mr. Chaffetz. The schedule, which is just eight items, all
communications sent or received by Lois Lerner from January
1st, 2009 to August 2nd, 2013. Is there any ambiguity in your
mind? Do you have any doubt as to what that means?
Mr. Koskinen. No. If you want to go through all eight, I
have no doubt what any of them mean. As noted, some of them
mean you are going to take months or years to get the
information and it is going to be voluminous. But there is no
doubt about it.
Mr. Chaffetz. So you have no ambiguity about what it means.
You believe it has been a duly issued subpoena.
Mr. Koskinen. Right.
Mr. Chaffetz. And you have not complied with it, is that
correct?
Mr. Koskinen. There is physically no way anyone could have
complied between February 14th and now. We have never said we
won't comply. We have said, in fact, we are----
Mr. Chaffetz. Are you going to comply or not?
Mr. Koskinen. We are complying. And I will tell you to
comply with this----
Mr. Chaffetz. No, no, no.
Mr. Koskinen.--you will be next year, you will be next year
still getting documents.
Mr. Chaffetz. Commissioner, what email system do you use
there at the IRS?
Mr. Koskinen. What email system do we use?
Mr. Chaffetz. Yes. It is Outlook?
Mr. Koskinen. Yes. We have, actually, Microsoft. At least I
have Microsoft Office.
Mr. Chaffetz. So you have Microsoft. So you go on there and
you want to find all the items you sent under your name. How
long with that take?
Mr. Koskinen. Well, it would take a while because they are
not all on my computer, they are all stored somewhere.
Mr. Chaffetz. Okay. But your IT specialists, how long do
you think it takes, of the 90-plus thousand employees there at
the IRS, how long would it take to find all the emails that
included her email address?
Mr. Koskinen. Just Lois Lerner's alone?
Mr. Chaffetz. Just Lois Lerner. Just Lois Lerner.
Mr. Koskinen. It would take a while. We would have to----
Mr. Chaffetz. Like how long?
Mr. Koskinen. Well, there are millions of emails.
Mr. Chaffetz. Minutes?
Mr. Koskinen. Minutes? I don't know, but I don't think it
is minutes.
Mr. Chaffetz. I mean, that is one of the brilliants of the
email system, is you go in and you check the Sent box and the
Inbox, and you suddenly have all the emails, correct?
Mr. Koskinen. Right. They get taken off and stored in
servers, and you have 90,000 employees and you have people----
Mr. Chaffetz. I know, but I am not asking you to search; I
am asking you to find one. They type in her email address.
Mr. Koskinen. We could find and we in fact are searching.
We can find Lois Lerner's emails.
Mr. Chaffetz. In how long? How long would that take?
Mr. Koskinen. I have no idea how long.
Mr. Chaffetz. Would it take a day?
Mr. Koskinen. I just said I have no idea.
Mr. Chaffetz. Well, I just don't understand. You have a
duly issued subpoena. If you were in the private sector and
somebody was issued a subpoena and you didn't comply with it,
what would happen to you?
Mr. Koskinen. For this subpoena, the court would actually
rule that it is far too broad----
Mr. Chaffetz. Oh, so you are going to make the
determination.
Mr. Koskinen. You asked the question. Let me answer the
question. In a court of law, if you provided that subpoena, a
judge would not enforce it because it is----
Mr. Chaffetz. Wait, wait, wait. Now, stop, stop, stop right
there. So you are going to be the judge.
Mr. Koskinen. I am not being the judge; I am just telling
you what would happen.
Mr. Chaffetz. Yes, you are.
Mr. Koskinen. You asked me what would happen.
Mr. Chaffetz. You have a duly issued subpoena. Are you or
are you not going to provide this committee the emails as
indicated in this subpoena, yes or no?
Mr. Koskinen. We have never said we weren't----
Mr. Chaffetz. I am asking you yes or no.
Mr. Koskinen. We are going to respond to the subpoena----
Mr. Chaffetz. No, no. Sir----
Mr. Koskinen. Yes, we are going to respond to the subpoena.
I am just telling you to respond fully to the subpoena, we are
going to be at this for years, not months. That is the only
thing I would like to----
Mr. Chaffetz. And I don't understand that. Just specific to
item one, Lois Lerner----
Mr. Koskinen. Lois Lerner's emails----
Mr. Chaffetz. Sir, are you or are you not going to provide
this committee all of Lois Lerner's emails?
Mr. Koskinen. We are already starting----
Mr. Chaffetz. Yes or----
Mr. Koskinen. Yes, we will do that.
Mr. Chaffetz. Yes. And then by when? When could we have
that?
Mr. Koskinen. I can only tell you it is going to take me,
my group, I asked this question the other day, just to get you
the Lois Lerner emails, redacted, because you have to get them
redacted, for examinations, appeals, and----
Mr. Chaffetz. No, no, no, no.
Mr. Koskinen. You asked the question.
Mr. Chaffetz. Is that what the subpoena says?
Mr. Koskinen. Would you like to hear the answer to the
question?
Mr. Chaffetz. No. I would like to know if you are going to
fully comply with the subpoena; not your version of the
subpoena, the actual subpoena.
Mr. Koskinen. You asked me how long it would take to
respond to the Lois Lerner emails. I am explaining to you why
it is going to take time just to respond to the
categorization----
Mr. Chaffetz. I don't want you to redact it. I don't want
you to take the certain categories that you want. That is not
what this duly issued subpoena says.
Mr. Koskinen. I am telling you just to supply the Lois
Lerner emails, which we are going to supply for examinations--
--
Mr. Chaffetz. No, no, no, no, no.
Mr. Koskinen. Can I answer the question?
Mr. Chaffetz. That is not--no, sir. When it says all
emails, why are you qualifying them? Under what authority do
you change this subpoena?
Mr. Koskinen. I was not qualifying. You were asking how
long it was going to take and I was giving you an example of
why it is going to take a long time, because we have to redact
out of those emails all of the 6103 information. We are working
very hard to get you the Lois Lerner emails. It is going to
take you several weeks to get you the Lois Lerner emails for
examinations, appeals----
Mr. Chaffetz. Wait, wait, wait. Why are you getting us just
for--it would be easier to just give them to us all, right?
Mr. Koskinen. No, it would just take a lot longer because
we have to redact the rest of them. We actually selected those
because in a letter from the Ways and Means Committee also
saying they need help, they focused on what they are looking
for is those categories, so prioritizing we said we would
provide both committees with those categories.
Chairman Issa. The gentleman's time has expired.
Mr. Koskinen. We are happy to provide you the rest of
them----
Mr. Chaffetz. I am yielding back, but this commissioner has
no intention of fully complying with this duly issued subpoena.
That is the case. That is where both of us, on both sides of
the aisle, need to stand up for the integrity of the House of
Representatives.
Mr. Cummings. Mr. Chairman?
Mr. Chaffetz. When you have a duly issued subpoena, you
comply with it. It is not optional.
Mr. Cummings. Mr. Chairman?
Mr. Koskinen. May I----
Chairman Issa. The gentleman's time has expired.
The gentleman from Maryland.
Mr. Cummings. I ask unanimous consent just for a minute.
Chairman Issa. The gentleman's unanimous consent for one
minute.
Mr. Cummings. Mr. Chairman, I never heard the commissioner
say that he was not going to obey the subpoena. As a matter of
fact, that is all he has been saying.
Chairman Issa. Actually, if the gentleman would yield, he
has, on every single question, failed to say, yes, I will give
you all the emails. He has gone into the ones that he is
prepared to give, the ones that he could give to Ways and Means
in an hour, because once you do the search you just dump it to
them. And even then he said that those would take--the ones
that he says he is going to give us he said it would take a
couple weeks and, of course, the subpoena is many months old.
Mr. Cummings. Well, reclaiming just for a second. I just
want us to be clear. I mean, time is precious, money is
precious. Just tell us. I mean, you talk about relevance. You
said if a lawyer were to see this subpoena, they would have
some concerns. I just want to be clear. I mean, it sounds like,
again, I am saying what I said before, you seem to have an
understanding and we seem to have an understanding, and they
don't seem to be the same. So are you going to provide the
documents for Lois Lerner?
Mr. Koskinen. Yes.
Mr. Cummings. That were subpoenaed.
Mr. Koskinen. Yes.
Mr. Cummings. And how long will that take?
Mr. Koskinen. I do not know. It know it is going to take us
several weeks, I asked that question yesterday, simply for the
categories we are already working on, and I was told that to
redact those will take us several weeks longer. It will take us
much longer than that, but we will provide them. And I have
said with regard, notwithstanding the congressman who has now
departed view that we are not going to comply, we are going to
comply. We never said we wouldn't comply. We are simply trying
to help refine the search so that, in fact, we could get this
done sometime in the near future, that is, this year. But at
the rate we are going, as noted by an earlier question, if you
want all the categories of all the applications of everybody
who has been through the (c)(4) process for the last four
years, we can do that, and we will do that, but it is going to
take years.
Mr. Cummings. Very well. Thank you.
Chairman Issa. I thank the gentleman. I thank you for your
questions, but hopefully we all understand that asking for all
the emails, the ones that you seem to be least willing to put
first are the ones that probably have no 6103. They are very
quick to go through and somebody simply looks and says, oh, she
is talking to an outside entity; by definition, there can't be
any 6103 there, right?
Mr. Koskinen. Correct. All the ones that are easy are easy;
the ones that are difficult are difficult. And there are more
of the difficult ones than we would all like.
Chairman Issa. Of course, the ones that the gentleman was
asking for before he had to leave were the ones that were not
being given, which, by definition, very often are easy.
Mr. Koskinen. Right. And I would just note for the record
that all of the Lois emails we are talking redacting have been
provided already to the House Ways and Means Committee and the
Senate and Finance Committee, because they don't have to be
redacted. So there has been no question there about, in fact,
the fulsome response.
Chairman Issa. Thank you.
The gentleman from Massachusetts, Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman.
Commissioner, just to take this from the top, the probative
depth of our inquiry usually depends on the importance of the
information that we seek and also the danger that we are trying
to expunge, and I have to admit there is a deficit of trust
here between the Congress, many of its members, and the IRS on
this issue, and that is because, on its face, there has been an
admission here that the IRS, a very, very powerful Government
agency, has inappropriately targeted United States citizens for
enhanced scrutiny, some would say harassment and denial of
statutory and constitutional rights based on their own
political views. That is why my colleagues are after this
information. That is why many of us on this side are after this
information, so it is incredibly important. So when we say we
need all of the emails, in a normal circumstance, in a normal
case you might have a judge say that is overly broad, but in
this case, in this case, whether the taxpayer was a Tea Party
or was occupy whatever, a progressive group, the fact that the
IRS, a very powerful agency with a lot of information on a lot
of individuals here, is now targeting or has been targeting
U.S. citizens, that is serious stuff, and I think that
justifies the scope of this committee's inquiry and the urgency
that we get to the bottom of this.
Now, that is not just good for Republicans, that is not
just good for Democrats; that is good for our democracy here.
So this is a very, very serious issue. You know, in his seminal
work, Congressional Government, President Woodrow Wilson
described the oversight function of Congress as follows. He
said, Quite as important as legislation is vigilant oversight
of the administration. It is the proper duty of a
representative body to look diligently into every affair of
Government and talk much about what it sees. It is meant to be
the eyes and the voice, and to embody the wisdom and will of
its constituency.
In fulfillment of this solemn duty to inform the American
people, it is imperative that we as legislators and members of
this committee conduct robust oversight when we receive reports
that a powerful Government agency has subjected American
citizens to excessive scrutiny based on unwarranted and unjust
criteria. Certainly no American citizen should have their
constitutional and statutory rights withheld by the Government
on the basis of their political affiliation, or simply because
they criticized the way that the Government is being run, and
any reports to that effect clearly warrant meaningful
congressional oversight.
And that is why I have, in the past and today again,
supported the extensive investigation conducted by this
committee and to the targeting of certain applicants for tax-
exempt status.
Now, regrettably, this investigation has thus far been
guided primarily by politics and partisanship, rather than a
genuine commitment to fully inform the American people as to
how these troubling events at the IRS unfolded. In particular,
the chairman has routinely released to the American public only
partial excerpts of the transcripts from transcribed interviews
conducted by both of our staffs with the relevant IRS
officials, and most recently the chairman again released a
staff report on the committee's investigation without first
soliciting input from our side of the aisle, after denying a
request by our ranking member to share the report with
Democratic members and minority staff prior to its release.
So I understand the importance of this inquiry, I really
do. I think it is incredibly important. But I also think that
we have missed the opportunity here because of the chairman's
very partisan and one-sided approach to this hearing, and I
think it has hurt the American people because I think it is
incredibly important that we get to the bottom of this, but
because it is being fumbled, this opportunity is being fumbled,
we are not getting the answers that we need. But I do support
the idea that our inquiries necessarily have to be very broad
and deep because of the danger we are trying to excise here. We
want to send a message to the IRS that you don't do this to our
people. You do not do this to American citizens. You do not
target people because of their political views or because they
complain about the Government. I complain about the Government
and I am part of the Government. So that is a precious freedom
that we need to protect, and the IRS, in its recent approach,
is threatening that very freedom and that is a danger that we
have to be together in opposing on both sides of the aisle.
I yield back the balance of my time.
Chairman Issa. I thank the gentleman.
We now go to the gentleman from Michigan, Mr. Walberg.
Mr. Walberg. I thank the chairman.
Mr. Koskinen, are you aware that your predecessor, Doug
Shulman, in a testimony to Congress in March of 2012, gave very
strong assurances that the IRS was not targeting conservative
tax-exempt applicants?
Mr. Koskinen. I am aware of that.
Mr. Walberg. Just for the record, his statement where he
testified, ``First, let me start by saying yes, I can give you
assurances. As you know, we pride ourselves on being a
nonpolitical, nonpartisan organization, and so there is
absolutely no targeting. This is the kind of back and forth
that happens when people apply for 501(c)(3)(4) status.''
That was what he said. Do you think that Mr. Shulman's
testimony was accurate?
Mr. Koskinen. I don't know what Mr. Shulman knew, what his
relationship to the Exempt Organization Department is, so----
Mr. Walberg. But was his statement accurate?
Mr. Koskinen. The statement may have been very accurate
from the standpoint of what he knew. From the standpoint of the
improper use of improper criteria, obviously, as the inspector
general noted, in the determination process inappropriate
criteria were used.
Mr. Walberg. Was it complete and forthcoming as it should
have been?
Mr. Koskinen. Again, I don't know what Mr. Shulman knew.
What I have done is I----
Mr. Walberg. From your perspective right now.
Mr. Koskinen. From my perspective, I have no way of knowing
what he knew or didn't know.
Mr. Walberg. From your perspective, was the information
accurate? Not what he thought, but what you know right now.
Mr. Koskinen. From what I know right now, as a result of
the IG report, I know that inappropriate criteria were used to
select organizations for review in the determination process.
Mr. Walberg. Can you give assurances--and I refer back to
my colleague, Mr. Jordan from Ohio, when he listed a number of
agencies and entities that have great concern about what has
gone on with IRS that we know now took place, such as home
school--I am a home schooler, my family; I am a life member of
the American Motorcyclists Association; I am a member of HOG,
Harley Owners Group; I am an NRA charter member, Tea Party
caucus member here in Congress, member of Right to Life. And I
could go on with organizations, but my question is can you give
us assurances here and now that the IRS is no longer targeting
conservatives or treating conservative groups differently than
any other applicants?
Mr. Koskinen. I can give you assurances that I am committed
and I am confident the agency is committed to not
discriminating against any organization or any individual no
matter what their organizational capacity, what their political
beliefs are, who they voted for in the last election. If you
deal with the IRS, you have a right, and I agree with the
earlier comments, you have a right to assume and you need to be
protected to assume that you are going to be treated the same
way everyone else is treated----
Mr. Walberg. Absolutely. And our concern is that Mr.
Shulman gave us that same certainty in his testimony in front
of us.
Mr. Koskinen. I don't know how he ran the organization. I
have just been to 16 of the largest 25 IRS offices. I have
listened personally to over 7,000 employees, and my message to
them has been that, going forward, we need to have information
flow from the bottom of the organization to the top, and if
there is a problem I need to know about it because we will fix
it.
Mr. Walberg. Great. Let's go with that. Let's go with that,
that testimony that you took.
Mr. Koskinen. Let me just tell you, just to make you
comfortable, if there is a problem, I don't know about it, then
that is my fault, because that means I haven't created a
culture where problems and issues get raised from front-line
workers and go easily and freely----
Mr. Walberg. What is the morale of the front-line workers
now, Cincinnati and other places?
Mr. Koskinen. Morale actually is surprisingly better than I
would have expected in light of what has happened to Federal
employees for four years and the IRS for the last year. I have
found professional, dedicated, energetic employees focused on
the mission of the agency. Their overriding concern is we don't
have enough people to allow them to provide the services to
taxpayers that they feel taxpayers prefer.
Mr. Walberg. Well, they ought to feel that way, because
they were asked and they were put in situations that didn't
allow them to do the job that they are expected to do but,
rather, to target conservative groups. I would be a low morale,
and I am glad to hear you say that it is coming up, but we have
spoken with several IRS employees during the course of this
investigation. They have told us that Lois Lerner's
announcement that low level people in Cincinnati were
responsible for the conduct was a nuclear strike to them, and I
would assume that you would agree, from what you have heard.
Mr. Koskinen. It clearly is. As I told you, my view of
running an organization, if there is a problem, it is my
problem, it is not somebody else's problem; we will work on it
together. And my sense would never be that it is not my
responsibility. Everything that happens in that organization is
my responsibility.
Mr. Walberg. I am glad to hear that. Then I just again
question, with the difficulty in getting information, what are
we hiding at the IRS.
Mr. Chairman, I yield back.
Chairman Issa. I thank you.
You answered the question partially, but the gentleman
asked you essentially was it Cincinnati or was it Lois Lerner
in Washington. Did you reach a conclusion on whether this was
in fact low level people in Cincinnati or, in fact, Lois Lerner
and possibly others in Washington that were responsible for
what effectively became targeting?
Mr. Koskinen. I haven't done an independent investigation;
I have reached no conclusion about that. I am looking forward
to the reports from the various investigations----
Chairman Issa. But you agree with the IG's report which
found that essentially it wasn't low level people in
Cincinnati?
Mr. Koskinen. I agree with the IG report in terms of the
recommendations. In fact, in response to the earlier ones, I
would stress to this committee that we have, in fact, adopted
all of the IG recommendations. My commitment to people applying
for applications now, whether it is a (c)(4), (c)(3), (5), (6),
or (7), is that they will be treated fairly no matter who they
are. It goes back to the earlier question. Whatever your
political beliefs, whatever the name of your organization, you
deserve to be treated fairly and on the same basis of everyone
else.
Chairman Issa. If only that were true.
Mr. Davis is recognized for five minutes.
Mr. Davis. Thank you very much, Mr. Chairman.
And thank you, Commissioner. I know that we have hashed and
rehashed and gone over and under the whole issue of the
document requests, but I want to make sure that I understand as
well as I can what the issues are here. The chairman says that
he wants all of Lois Lerner's emails, not just the ones related
to (c)(4)s, not just the ones related to tax-exempt
applications, but all of her emails. Obviously, this would
include emails that have absolutely nothing to do with our
investigation. In other words, the committee is going to what I
would call the mat, and even threatening contempt for what
everyone agrees are irrelevant emails.
I don't think this makes any sense, and this is not what
the Ways and Means Committee did. The Ways and Means Committee
worked with you to identify the emails that are relevant to our
investigation, is that correct?
Mr. Koskinen. That is correct.
Mr. Davis. And if you are required to produce all her
emails, you have to examine each and every email for private
taxpayer information covered by 6103.
Mr. Koskinen. That is correct. That is why we were able to
provide the Finance Committee and Ways and Means Committee with
all those emails last week, and why it is going to take us
several weeks to be able to provide the committee with her
emails going forward.
Mr. Davis. And, of course, you cannot provide this
committee with that information, and you would have to redact
it.
Mr. Koskinen. That is correct.
Mr. Davis. If I understand this, by definition, the
Internal Revenue Service would be wasting time and money
producing documents that will not fulfill any investigative
purpose. Would you say that is correct?
Mr. Koskinen. That is what we have been concerned about.
Mr. Davis. You know, I kind of grew up with the idea that
you don't ride or you don't get much from riding a dead horse
to death; that if he has already died, if everything that you
can get out of him has been gotten, then you are wasting time
to continue. I think that we should reconsider this misguided
approach. We should go back to standard investigative
procedures and develop search terms that are relevant, instead
of this other method, which appears to be nothing more than a
fishing expedition trying to connect some decisions to the
White House or to some place that did not exist.
I was very pleased to hear you indicate that the morale
among IRS employees is at a level beyond which one might have
expected. What would be the best utilization of your time to
make sure that it stays where it is and goes up, rather than
being bowed down with an irrelevant investigation?
Mr. Koskinen. Well, I think one of the most important
challenges we have, and we have been trying to do it with the
six investigations going on, is to try to produce information
as quickly as we can in an order that will allow the committees
and the investigators to conclude their investigation, because
I think one of the important things for not only restoring
public confidence in the IRS, but employee morale, would be to
come to closure on these issues.
Whatever I have said from the start, whatever the facts are
that each of the investigators find, we will review, we will
respond appropriately to and move forward. No one has more
interest in concluding these investigations promptly and in an
orderly way than I do and than the employees of the IRS, which
is why we will continue. We have tried to provide information
and work with the staffs of each of the investigators to
provide the information they need in the most appropriate
order, but ultimately, as I have said, whatever information the
committee wants, they have a right to get. The question is how
long is that going to take and can we get you the most relevant
information at the front end so you can in fact do your work.
Mr. Davis. Thank you very much, and I yield back, Mr.
Chairman.
Chairman Issa. I thank the gentleman.
Recognize the gentleman from Tennessee.
Could I have just 10 seconds of your time?
Mr. DesJarlais. Yes, Chairman.
Chairman Issa. I might note for the record that, in the
case of Lois Lerner, we delayed bringing her back in hopes that
we would get all the emails, and obviously we didn't have them.
She took the Fifth ten more times and we were very
disappointed. We made that very clear, that when you have
somebody who has taken the Fifth, I can't imagine a law
enforcement agency or a judge saying that a subpoena relative
to that person's government communication would be irrelevant.
I thank the gentleman.
Mr. DesJarlais. Thank you.
Commissioner, thank you for being here today. We have had
several commissioners in our presence since this story has
broke. Commissioner Shulman, Commissioner Miller were two that
would not acknowledge that wrongdoing had taken place and they
would not apologize to the American people for what had
happened. Danny Werfel did say that something wrong has gone on
here and apologized to the American people. So I was encouraged
to hear you say that what you know now, that you do believe
that inappropriate criteria were used to target specific
organizations. So at least we are to the point that we do
acknowledge that something did go wrong, correct?
Mr. Koskinen. Yes. Inappropriate criteria were used. I
don't think I used the word target, but I do acknowledge that
applications were delayed unnecessarily and for too long.
Mr. DesJarlais. Okay. Just a housekeeping item. I was back
home in the district last week and Rachel Killibrew, who is a
treasurer of the McMinnville Breakfast Rotary Club, is sending
a letter to the IRS to ask for a 501(c)(3) organization, which
will, among other things, help alleviate childhood hunger. I
can tell her with confidence that you don't think their group
will be targeted or delayed?
Mr. Koskinen. I can guarantee them they won't be--
inappropriate criteria won't be used in any way. Delays are a
different issue. One of our big challenges is, as a result of a
lot of other things going on, we built a backlog in the (c)(3)
area that we are aggressively dealing with. Our goal
ultimately, especially for smaller, local organizations, is to
have a streamlined process that will be up and running by June.
So I can guarantee she will get appropriate consideration. I
wish I could promise her right now it would be very quick.
Mr. DesJarlais. All right.
Mr. Koskinen. By the end of this year we are going to be in
much better shape in processing (c)(3)s.
Mr. DesJarlais. I will pass that along. I am sure they will
be happy to hear that.
Our colleague, Mr. Clay, earlier called this a political
witch hunt. Do you agree with that?
Mr. Koskinen. I have made no judgments about any of the six
investigations going on. I think it is important for the public
to feel satisfied that there have been thorough investigations.
Mr. DesJarlais. Okay.
Mr. Koskinen. I would like to see them concluded earlier,
rather than later----
Mr. DesJarlais. Sure.
Mr. Koskinen.--but we will play the hand we are dealt.
Mr. DesJarlais. Okay, what do you think, does it kind of
handicap this process when officials from the Justice
Department announce that there would not be any criminal
charges in this investigation, and this, of course, was before
any of the witnesses had been questioned, or that the President
goes on TV on Super Bowl Sunday and announces that there is not
a smidgeon of corruption within the IRS? Can you agree with
either of those things, knowing what you know now and
depending, I guess, how you define inappropriate tactics being
used?
Mr. Koskinen. As I have noted in the past, I haven't done
any independent investigation of what went on. There have been
people across the political spectrum, in Congress, outside of
the Congress, in this committee and other committees, making
conjectures and judgments about what happened. My view is I am
waiting for the investigations to be completed; we will respond
to the facts and we will proceed.
Mr. DesJarlais. You heard my colleague, Mr. Jordan, in his
opening statement, he played out a pretty good timetable I
think for anyone listening about how this has gone down. Do you
understand the timetable that he gave and does that give you a
lot of concern?
Mr. Koskinen. I understand the timetable he gave. There is
other information. You have volumes of documents. What the
purpose of a final report is is that you would have a committee
report, you would come up with facts as you found them. There
may or may not be a bipartisan report, there might be
dissenting reports; we will have several investigator reports.
When they are done we will know what the consensus is is what
happened. More importantly, as I have said, it is important for
the public to know we have adopted all of the IG
recommendations, so whatever the management failings were that
existed have been resolved.
Mr. DesJarlais. I think we are getting a little gun-shy on
this committee because this scandal, the Benghazi scandal have
been referred to as phony scandals. We know inappropriate
targeting went on. I am afraid if Hillary Clinton were sitting
out there, she would probably look us in the eye and say the
President has always been re-elected; at this point, what
difference does it make. You are not going to be that way, are
you?
Mr. Koskinen. I have never said it doesn't make any
difference. My position is that this was a serious issue, it
deserved to be treated seriously; the IRS has done that, I
think, as a general matter, the investigators are doing that.
As I say, again, my hope is that, as soon as possible, we can
come to closure on it; agree on what the facts were. If there
are additional things that need to be done, we will do them.
Mr. DesJarlais. All right. Well, please get us the
subpoenaed information and we can probably wrap this up much
more quickly, and I thank you for your time.
Mr. Jordan. [Presiding.] The gentlelady from California is
recognized.
Ms. Speier. Mr. Chairman, thank you.
Commissioner, thank you. You give me great confidence in
the work that will be transpiring relative to this evaluation.
I must say, though, that when I think that $10 million has
already been spent responding to inquiries by this committee, I
am curious at how much fraud could be unearthed within the
persons within this Country that don't play by the rules. No
one likes the IRS. No one likes paying their taxes, but we do
it. Most people follow the rules, but some people don't, and
that is why you have an enforcement unit that for every dollar
you spend there you return $9.00 to the taxpayers of this
Country. Just speculating that if you had taken the 100,000
hours and 250 personnel that have devoted all their time to
complying with the endless requests by this committee, we might
actually be doing some good in terms of the coffers that we are
all so concerned about.
But let me move on to the inspector general's report. We
have studied you to death over the last year. The inspector
general made a number of recommendations. My understanding is
that you have complied with all of them. You have said that in
this hearing a number of times. One of the concerns the
inspector general did have was that IRS employees did not have
enough training and guidance to properly handle politically
sensitive applications for tax exemption, and I am curious,
from your standpoint, what kind of training has now been
provided to all of these personnel to make sure that they are
properly trained?
Mr. Koskinen. Well, we have provided training trying to
give them better understanding about what is advocacy, which is
allowed for social welfare organizations, and what is political
intervention, which is only allowed to a minor amount so you
don't jeopardize being primarily a social welfare organization.
So there have been more cases developed, more examples
developed so that people could understand better what is the
dividing line between advocacy and political activity.
I would note there are thousands of 501(c)(4) organizations
that aren't advocacy or political organizations, they are
garden clubs and civic associations and a lot of other types.
So the vast majority of (c)(4)s, in fact, aren't involved in
this discussion. But the question has been for the training,
especially for new employees or relatively young employees, to
try to give them a better roadmap as to what fits into which
categories and how they should be approaching any application,
no matter what the political level of activity is.
Ms. Speier. So is this training also going to be provided
to the screening agents?
Mr. Koskinen. Yes. It is actually provided across the board
and, as the IG recommended, we will renew that training before
every election so that, again, as political activity gins up
before a campaign and election, people will have as clear a
roadmap under a very foggy area as possible as to what is
social welfare allowable activity and what is political
activity, which, if you engage in too much of it jeopardizes
your tax exemption.
Ms. Speier. So this training has already taken place?
Mr. Koskinen. The preliminary training has already taken
place, but the bulk of it will take place as we get closer
again. So you will get training if you are a new employee now
or an existing employee that training has taken place, but as
we get closer to the election, we will do it again.
Ms. Speier. Mr. Chairman, I just want to reiterate what I
believe is the real problem here. The law that passed said that
if you wanted to be a 501(c)(4), you had to exclusively be
associated with a social welfare activity. The word was
exclusively. Then the IRS, back in the 1950s, if I am not
mistaken, came up with a regulation that said that if you
wanted to be a 501(c)(4), you have to be primarily focused on
social welfare. Now, that violated, in my view, the statute. It
violated what Congress passed. How can you go from being
exclusively to primarily? So now we have expended millions upon
millions of dollars trying to figure out whether or not
something is primarily or exclusive. If we said the 501(c)(4)s
should be exclusively for social welfare purposes, we wouldn't
be having these hearings, because none of the political
activity, whether it was advocacy or political, would be
relevant because it wasn't exclusively for social welfare; and
that is what 501(c)(4) should be about. And I think that if we
went back to redraw this, we would say the regulation did not
meet the standard of the statute and we wouldn't be having
these hearings.
Mr. Issa. Would the gentlelady yield?
Ms. Speier. I certainly would. My time has expired, though.
Mr. Issa. I want to ask you just a quick question, because
I agree with the gentlelady that we should try to clarify it.
One of the challenges that I face looking at it, and it is not
our committee's primary jurisdiction, it belongs to Ways and
Means, but one of the things that I think we have to ask
ourselves, for example, is if a 501(c)(3) like the American
Lung Association, if they endorse a California initiative
related to smoking and so on, which they did, is that at least
a nuance of political, even though it is not partisan? And, of
course, the answer is no; they are promoting social welfare.
One of the challenges with 501(c)(4)s and Tea Party
specifically is these folks are walking around handing out
constitutions and wanting to promote the Constitution. Many
would say that is political, but, if we go to evaluate it, is
it political to say that this what the First Amendment says and
means? Is it political to say this is what the Second Amendment
says and means? Or in the case of the NSA's activities, the
Fourth Amendment. That is the challenge that hopefully the
gentlelady and I can work on.
Of course, the question of whether 501(c)(4)s were targeted
because of their political views is in fact a different
question, and that is what is before us today with the
commissioner.
I thank the gentlelady for yielding.
Mr. Jordan. The gentleman from South Carolina is
recognized.
Mr. Gowdy. Thank you, Mr. Chairman.
Commissioner, Lois Lerner sat where you are sitting right
now and said, I have broken no laws, I have done nothing wrong,
and I have violated no IRS rules or regulations. Now, as a very
highly accomplished attorney like yourself, you would have to
concede that is pretty broad testimony, wouldn't you?
Mr. Koskinen. That is a statement. Whether it is broad
testimony and what its relationship is to the----
Mr. Gowdy. No, it is broad. Your scope of cross
examination, if we had been in trial, would have been
unlimited. You mentioned a judge earlier, what a judge would do
with this subpoena. Let me tell you what a judge would do with
that testimony. You could ask just about whatever you wanted to
ask. When a witness says I have done nothing wrong, that is
tantamount to saying I have done everything right. I can't
think of any testimony broader than that. So, necessarily, our
line of inquiry would also want to be broad, wouldn't you
agree?
Mr. Koskinen. I think your line of inquiry ought to be what
it is no matter what people----
Mr. Gowdy. Well, no. You said a judge would throw our
subpoena out, and I can't help but note you haven't moved to
quash our subpoena, but you think a judge would throw our
subpoena out as being overly broad.
Mr. Koskinen. If we were in the private sector, which we
are not, the judge----
Mr. Gowdy. Well, I want to make it easier for you. How long
will it take you to produce Lois Lerner's emails that don't
involve 6103 material from January of 2010? Could we have that
by Friday?
Mr. Koskinen. Absolutely not.
Mr. Gowdy. Why?
Mr. Koskinen. Because there is no way physically we can get
it by Friday.
Mr. Gowdy. January of 2010. That is one month, no 6103
material, just one month.
Mr. Koskinen. Just one month?
Mr. Gowdy. Just one month. When can we get that?
Mr. Koskinen. Well, we have to go through each of those
emails to make sure it has no 6103 material.
Mr. Gowdy. Well, how long is that going to take? Can we
have it by Friday?
Mr. Koskinen. I have no idea.
Mr. Gowdy. Just one month, commissioner. Just January of
2010, no 6103. And let me tell you why I am interested in it.
Mr. Koskinen. Well, I will tell you today is Wednesday. I
would be happy to ask the people who do the work and get back
to you as to whether we could do it by Friday.
Mr. Gowdy. All right, let's do January of 2010 and then
let's get ambitious and do February of 2010. And then let's go
March 2010. And I think you know why I am doing 2010,
commissioner. When the President likes 5-4 Supreme Court
decisions, he calls that subtled law, like the ACA. When he
doesn't like 5-4 Supreme Court decisions like Citizens United,
he attacks it, which is what he did in January of 2010. And
that is why the time line is so important, commissioner. The
jury is never entitled to know the motive, but they always want
to know the motive. You don't ever have to prove why somebody
did something, but the jury always wants to know why did this
happen. And if you start in January 2010 with the President's
State of the Union Address and then you move through Lois
Lerner's emails that have nothing to do with 6103 material, you
begin to see a motive develop.
Mr. Koskinen. Great. You are going to get 20,000 pages of
documents this afternoon. Some of them may well be January
2010. But I will check with our people, because if you would
like us to stop that production of Lois Lerner emails and go
January 2010, I will go and find out exactly how long it will
take to get it for you.
Mr. Gowdy. What I want is this: I want the subpoena
complied with. I want it complied with in a timely fashion. And
you and I both know that if there is no 6103 material, whether
or not you think we need something or we ought to have it, or
that we are on a wild goose chase, frankly, I could care less
what you think about that. Our subpoena is our subpoena. If you
don't like it, move to quash it. Otherwise, comply with it.
Because you noted that our search was overly broad. I want you
to tell me what search you would use to find an email when IRS
employee responded Yoohoo when she was told that a Democrat won
a special election. What search terms would you recommend that
we use to find that email?
Mr. Koskinen. We have worked from the start of this
investigation----
Mr. Gowdy. What search terms would you use to find an email
where the response was Yoohoo when a Democrat won a special
election.
Mr. Koskinen. We might actually work together to see if
there are search terms that would involve political campaigns,
elections, political party.
Mr. Gowdy. What search term would you use when Lois Lerner
responded that a GOP Senate would be worse than a GOP
President?
Mr. Koskinen. I would actually, if you wanted to, we would
go through and say look at political parties, look at
references to elections, GOP and Democrat----
Mr. Gowdy. Or we can do this: just give us all of the
emails she sent or received in January of 2010 that don't
involve 6103 material and we will decide what we think is
relevant and not, because she said I have done nothing wrong, I
have broken no IRS rules or regulations, and I have broken no
laws. That is pretty broad, Mr. Commissioner.
Mr. Koskinen. Now, if I could just have a moment. This is
exactly the discussion we have been having for the last year
and we would be delighted to have, which is out of the
universe, what is it that you think would be most important? We
will give you the universe but, as I say, that will take you
more than this year. If we could figure out----
Mr. Gowdy. I just told you it is January of 2010, because
that is when the Supreme Court issued its opinion in Citizens
United; that is when the President of the United States
famously, to their faces in the State of the Union, criticized
that; and that is when Lois Lerner began to say IRS can't fix
it, we need a plan, we need to be cautious, we need to make
sure it is not per se political. Let's start with January 2010.
Can we have that by Friday?
Mr. Koskinen. And as I would say, I am delighted, and it is
this kind of discussion, for instance, where----
Mr. Jordan. Mr. Koskinen----
Mr. Koskinen. Could I just respond? With a four years worth
of applications of (c)(4)s, we might be able to say, well,
which ones would you like so that we don't spend three years at
it. January 2010 is a perfectly understandable definition, and
we will actually respond to you as quickly as we can.
Mr. Gowdy. Commissioner, you need to understand our
perspective, though.
Mr. Cummings. Mr. Chairman?
Mr. Gowdy. Maybe this started off as an investigation into
the targeting of (c)(4)s, but when you have people who are
supposed to be apolitical responding the way that she has
responded, Tea Party dangerous, maybe the FEC will save the
day, we have to make sure it is not per se political, when you
have people in positions of authority and responsibility that
are expressing overtly political commentary on Government
email, I think we ought to be entitled to all of them, and that
is why we asked for them.
Mr. Cummings. Mr. Chairman?
Mr. Koskinen. I would just simply note that, for the
record, that you already have all those emails, which is why
you have all of that information.
Mr. Gowdy. If we don't know what we don't know, Mr.
Commissioner----
Mr. Jordan. Mr. Koskinen----
Mr. Gowdy. We know the ones we have.
Mr. Cummings. Mr. Chairman, I asked for----
Mr. Jordan. I got it, I got it.
Mr. Koskinen. We will go to January 2010.
Mr. Jordan. Mr. Koskinen, here is the point. There are
2,400 employees in the chief counsel's office of the IRS. A
bunch of those people are lawyers. Mr. Lynch said this, not
Republicans. Mr. Lynch said this is about First Amendment free
speech rights, political speech rights. This is so important.
What Mr. Gowdy is saying, what we all have been saying is take
some of those lawyers, of that 2,400, a bunch of them are
lawyers, take some of those lawyers, get every single email
that Lois Lerner sent. Start with January 2010, go through
those as quickly as possible and get them to this committee.
And it is not just Republicans who want that; Mr. Lynch has
said he wants that, Mr. Cummings, the ranking member, said he
wants that. Make it a priority. We asked a year ago; we asked
in May of 2013 get us Lois Lerner's emails. Then we subpoenaed
them and you are still telling us it is going to take forever,
we can't do it. We don't want the excuses anymore. Prioritize
it. Put more lawyers on the job. There are 2,400 in the chief
counsel's office. Assign someone to do exactly what Mr. Gowdy
has asked for.
Mr. Koskinen. This has been a priority; that is how we have
selected and produced 690,000----
Mr. Jordan. But we are talking about the First Amendment.
You are not working fast enough, it is that simple. You are not
working. This is fundamental. Mr. Lynch said it. Mr. Cummings
has said it. We have all said it. Get on the job. Put some more
lawyers on this.
Mr. Cummings. Mr. Chairman?
Mr. Koskinen. We are on our job. We have 89,000 employees
having nothing to do with this doing very important work for
the Government. We have 10,000 fewer employees than we had four
years ago. So it is not a question of just pushing----
Mr. Jordan. We have to move on.
Mr. Cummings. Mr. Chairman, I just need one minute.
Mr. Jordan. The gentleman is recognized for one minute.
Mr. Cummings. Please. I just need a minute.
Mr. Jordan. You got it.
Mr. Cummings. Okay. You know, the gentleman, the
commissioner has said he is willing to produce the documents.
We have almost every member now asking for documents. One of
the things that I am saying is that we need to be very clear,
at the end of this hearing, that we do what you apparently have
done with Mr. Camp, Chairman Camp and others, to make sure that
we are all clear on what we want, because different people are
saying different things. No, no, listen to me. Or we will end
up right back where we are right now. So we need clarity. The
chairman wants certain things, Gowdy wants certain things, I
want certain things.
So some kind of way we need to come so that we have a
meeting of minds of exactly what we are trying to get. That is
all I am saying, Mr. Chairman. I mean, that is reasonable. And
I think one of the mistakes that we are making, we are beating
up on him and he is clearly trying to cooperate and trying to
give us what we want, but, again, he has his own restrictions.
So I want to make sure that he is saying to you he is willing
to give us what we want. We now have to be clear on what we
want. That is all.
Mr. Jordan. I would just say to the ranking member I think
we have been.
Mr. Cummings. Well, apparently we haven't been.
Mr. Jordan. No, no, no, no. All means all. All means all.
Because if we let any type of restriction happen, any type of
parameters be set, then they are determining what we get and
the American people aren't going to be able to see everything.
That is why we subpoenaed all.
Mr. Cummings. So, therefore, and hopefully this will be
helpful. So do you understand that? And I see that the chairman
of the full committee, I guess he is in agreement with what was
just said. Do you understand that, as to what we want?
Mr. Koskinen. What they want is something that is going to
take years to produce, not just the emails. What they want is
documents. And, again, our point is not that we are not going
to give it; we are just telling you it is not going to happen
overnight. We have tried to prioritize. First you got 690,000
to Ways and Means. Tried to prioritize that to Lois Lerner
emails. We said we would provide them. We said the first
priority is we will get them that say this. We have to redact
them. We have given them to Ways and Means. To the extent I
said it was very helpful if you say the months that we are
really interested in are these, thous, and those, we can
prioritize those. It doesn't mean we won't give you the rest of
the months, but this doesn't happen overnight. It is not a
question of showing up with another 150 people who become 6103
experts overnight. We have a team. We aren't a document
production team organization, but we have created one.
Mr. Issa. If the gentleman would yield. For the foreseeable
future there is only one person you have to work with on
priorities, and that will be the people working for the
committee, and I will work with them. When Mr. Gowdy said he is
very interested in January, so am I. I want to attach my
comments to the ranking member here to the greatest extent
possible. We do not want to be overly burdensome. We do, Mr.
Lynch and others, think that certain individuals we want all of
their emails. I would note for the record that of your six
investigations there are only two that you have to do 6103 for.
You don't 6103 for the TIGTA, you don't do 6103 for Senate
Finance or Ways and Means. And I am assuming the Justice
Department has a way to fast-track getting what they want.
So of the two entities, us and our counterpart in the
Senate, one of the challenges is we have watched Ways and Means
negotiate to get less than all of Lois Lerner's emails, when in
fact, six months ago, you could have pumped out all of Lois
Lerner's emails and dumped them in one fell swoop on Senate
Finance and Ways and Means. You did not do that. They
eventually negotiated, to my consternation, a subset of all of
her emails. I find it less than helpful and I find your talking
about redaction and time inappropriate, when you could have
given Ways and Means all Lois Lerner's emails in a matter of
seconds. It really is that simple. You have already gathered
them and I assume that TIGTA has access to them.
So I appreciate that we will have to work with you to
prioritize, and we will and we always have. In the case of any
parts of the document production in which there are massive
numbers of potential documents, we will particularly
prioritize. For today, for the record, on behalf of people on
both sides that have spoken, Lois Lerner's emails, all of Lois
Lerner's emails is the highest current priority of this
committee, and it will remain so as long as I am chairman. So I
am not going to get into January, because I believe that if
your team had been actively working in a matter of days you
would have been able to give us substantially all of Lois
Lerner's emails, and within a matter of a couple weeks have
given us the ones that required 6103 redaction. And I know this
based on how long it took my people to hand-read the emails we
got.
Mr. Koskinen. Right. I would just say that that is not the
information I have.
Mr. Jordan. The gentlelady from New Mexico is recognized.
Ms. Lujan Grisham. Thank you, Mr. Chairman. I am going to
take something the chairman said, and I hope he doesn't mind,
and use it out of context. So all means all. I am going to go
back to none means none. And I want to talk about the
exclusivity requirements of 501(c)(4)s and the fact that we
don't do that, and I am going to do what other members have
done, and I hope you will take me back through these baselines
again.
So, commissioner, your agency administers how 501(c)(3)s or
charities are treated under the tax code, correct?
Mr. Koskinen. Correct.
Ms. Lujan Grisham. And under Federal statute, charities
cannot engage in any political activity, correct?
Mr. Koskinen. That is correct.
Ms. Lujan Grisham. How much did charities spend on partisan
political campaign activities in the last presidential
election?
Mr. Koskinen. I assume none.
Ms. Lujan Grisham. I hope that is true. I am assuming that
it is zero dollars as well.
Now, you also administer social welfare organizations,
501(c)(4)s.
Mr. Koskinen. Correct.
Ms. Lujan Grisham. And under Federal statute, laws that
Congress passes--we get very excited when the administration
and others don't follow the laws and the rules that Congress
passes--we said, Congress, that social welfare organizations
must operate exclusively for the promotion of social welfare,
correct?
Mr. Koskinen. Correct.
Ms. Lujan Grisham. And political campaign activities are
not a (c)(4) social welfare, not part of their mission,
correct?
Mr. Koskinen. Campaign activities, with regard to
supporting individual candidates, are not social welfare
activities.
Ms. Lujan Grisham. That is exactly what I mean. I
understand that they can do advocacy, and I might even ask that
again. So we are creating our baseline.
How much did social welfare organizations spend on
political candidate campaign activities in 2012?
Mr. Koskinen. Quite a bit. I have no idea what the final
number is.
Ms. Lujan Grisham. Well, let me tell you that it is pretty
close to a quarter billion dollars. A quarter billion dollars
on political campaign activities in 2012.
Do social welfare organizations have to disclose their
donors behind this quarter billion dollars?
Mr. Koskinen. No.
Ms. Lujan Grisham. So social welfare organizations must
exclusively promote social welfare under Federal law but,
instead, they are spending hundreds of millions of dollars on
political campaign activity while keeping their donors secret.
Mr. Koskinen. Correct.
Ms. Lujan Grisham. Social welfare organizations are
blatantly violating Federal law. Doesn't make sense to me, and
I don't think it makes sense to most of the people who are
here. What will it take for the IRS to enforce Federal statute
for social welfare organizations, just as you have successfully
done for charities, so that social welfare organizations are
exclusively promoting social welfare agendas and not their
partisan political agendas? Does it take another act of
Congress?
Mr. Koskinen. Well, at a minimum, it would take a new set
of regulations under 501(c)(4) because, as you know, the
present regulations adopted in 1959 provide that a social
welfare organizations only has to be primarily involved in
social welfare activities.
Ms. Lujan Grisham. And I have to tell you I don't
understand that because the law is clear. We have a reg that,
in my mind, is completely in violation, and I am a little
worried, although I have a bill that proposes to do just that,
require the IRS to follow the Federal law and not make
decisions after the fact, subsequent to that, that are some
interpretation that, I have a dictionary, exclusive means
exclusive, none means none. I need to know that another act of
Congress would actually be taken seriously and be followed
exactly as the law says. If we pass another law, will the IRS
follow that law?
Mr. Koskinen. We will follow that law, although the IRS and
the Treasury Department always issue regulations for
interpreting and applying the law in a way that seems to be
most effective.
Ms. Lujan Grisham. And I certainly don't want to push you
into--you didn't, I think, come up with this regulation on your
own, but in fact I don't understand how any regulation would be
interpreted to allow up to 49 percent when the law says you
must do exclusively social welfare. Because my bill clarifies
that that is what we should do because I want to ensure that
political money is disclosed in the way that it is supposed to
be.
I can't believe, really, that we are here, but I am
encouraging the IRS, because I don't think that we should be
doing the regulatory work because I think exclusively means
exclusively, but given the reality that we are there, that this
did occur, I encourage you to implement a regulation that
complies with the Federal statute, ensures that the social
welfare groups do not engage in political activities, instead
of continuing to debate how you would go about identifying what
constitutes political activity and continue on a debate like
this about what might have gone wrong, if it went wrong. I
would suggest that you go back to what the law said you must do
and go back to exclusive, and not allow social welfare
organizations to engage in any partisan campaign activities.
Mr. Koskinen. Well, as I noted, the draft regulation asks
for public comment on three issues. One is what is the
definition of political activity; two, how much of it should
you be allowed to do without jeopardizing your tax exemption;
and, three, to what organizations should it apply. So we have
comments and we will have a public hearing, and the issue about
how much is appropriate will be available for comment, and any
final regulation will have to deal with that.
Ms. Lujan Grisham. Thank you very much. And I realize I am
out of time. I disagree that there ought to, still, be any
effort not to hold them accountable based on what the Federal
law says.
With that, Mr. Chairman, I yield back.
Mr. Jordan. The gentleman from Arizona is recognized.
Mr. Gosar. Mr. Commissioner, I am a dentist, I am not an
attorney, so I want to talk about the leadership and how we do
things efficiently. So I have a patient, and when they come in
I want to make a diagnosis, so I kind of want to know the
storyline, true?
Mr. Koskinen. I am sorry, you want to do what?
Mr. Gosar. I want to do a diagnosis. I have a problem. I
want to do a storyline, I want to figure out what the story is,
right? In your world it is called discovery?
Mr. Koskinen. Yeah. We actually would want to do--if you
are interested in finding out what a problem is, you would
actually go find what the----
Mr. Gosar. So it makes sense that you would create this
storyline from where it started and move it back, don't you
think?
Mr. Koskinen. Actually, if you----
Mr. Gosar. One of the lines of my colleague over here, Mr.
Gowdy, asked----
Mr. Koskinen. Well, I am not quite sure. If I were doing an
investigation, I would actually want to know what the facts
were before I developed the storyline.
Mr. Gosar. But you base the facts off of the inquiry about
documents, like all of this stuff that has all these redacted
comments. But if you want to start at the beginning of the
storyline, you don't want to start in the middle. I mean, most
authors will start at the beginning of an instance and move
forward, right? And it takes leadership to direct troops or
direct people within the IRS to do so, wouldn't you think?
Mr. Koskinen. It certainly takes leadership to direct the
employees.
Mr. Gosar. And I guess that is my point. If I am doing my
job, I want to create a storyline to facilitate this oversight
committee, true? Make it easy.
Mr. Koskinen. I am not sure what you mean by a storyline.
Mr. Gosar. Well, you want to make sure that you are
presenting this to us in a rational manner that allows us to do
our job.
Mr. Koskinen. Yes. I have made it clear to our employees,
a, that a priority is to cooperate with the six investigations,
get the documents as quickly as we can to them, and, to the
extent that they are voluminous, try to figure out with them
what the priority is in terms of providing them.
Mr. Gosar. I am going to catch you right there because it
is the comments I keep hearing here. It is the storyline. I can
tell all my employees, okay, I need an x-ray of this, this,
this, and this, and they can just go off on tangents; and it is
not efficient in giving us the documentation in which we want
to learn, true?
Mr. Koskinen. Again, if we give you heaps of documents----
Mr. Gosar. But once again I am going back to a storyline,
because it seems like----
Mr. Koskinen. I am not sure where the storyline----
Mr. Gosar. Well, the storyline starts at the beginning of
the story, right? You want to go back. Mr. Gowdy asked don't
you think it is important that we start in January. Doesn't
that make sense? I mean, you rationally put this together and
you want to have oversight from this committee, so you
rationally want to put this storyline together in a rational
manner. I mean, you can do all you want, throw stuff at us, and
it is going to take us a lot of time. But it seems like more
efficiently, from a director of your position, that you would
direct employees to say let's start at the beginning or what we
think is the beginning. We are going to start giving you all
this information starting in January of 2010.
Mr. Koskinen. No, we didn't do that and we wouldn't do
that. We actually sat down with the committees and their staffs
and said what documents do you want, how should we search them,
what issues are you looking for; and we took the storyline from
you all.
Mr. Gosar. And you took it from oversight that when we said
we want Lois Lerner's, all of her emails, the comment from you
would have been, then, if I am logistically thinking as
somebody that is choreographing this story, you want me to
start in January? Where would you like me to start.
Mr. Koskinen. For the Lois Lerner emails, as I said, with
Lois, the idea is if January is a good place to start, that is
fine. Ultimately, as I said, we have provided already, and you
will get more this afternoon----
Mr. Gosar. You are running around and around and around. I
am from the private sector and this makes no sense.
Mr. Koskinen. I spent 20 years in the private sector.
Mr. Gosar. Well, then you should know better. You should
know better in producing a storyline that makes sense, to say,
listen, you are here to serve, right? Because I am here to
serve. How do I make this easier for you to have oversight?
So I am going to stop there and let's go to something here.
Mr. Koskinen. All right.
Mr. Gosar. Since Lois Lerner didn't comply with our
questions, we need all those emails. And I want to make sure
you are willing to provide them, like we said.
Mr. Koskinen. Correct.
Mr. Gosar. Okay. And would you be interested in
choreographing them start, finish, kind of in bulk?
Mr. Koskinen. Yes. We already have a search going on for
examinations, appeals, and the regulatory process because that
was determined to be the storyline that would be most helpful.
We have added now, the next thing we are going to do is January
of 2010. And, in fact, if we can do that first, because if it
were easy, I would be happy to comply with that request. But
the storyline is, thus far, of her emails, which will take us
weeks still to redact, the suggestion and request wasn't--
because we try to deal with all investigators the same day,
start with exams, appeal, and regulatory process.
Mr. Gosar. I got you. I have one more question to ask. Is
it true the IRS has given the same documents to the White House
and to Congress that had different redactions? It is my
understanding that may have occurred.
Mr. Koskinen. I have no understanding that we redacted
differently for anybody. There are those who have no
redactions, and those who get redactions get 6103 redactions,
and they are redactions for 6103 apply to everybody.
Mr. Gosar. I would want to make sure that that is followed
up and----
Mr. Koskinen. That is fine. If you have other information,
again, we would be delighted to know it.
Mr. Gosar. Thank you.
Mr. Jordan. Mr. Koskinen, if I could, real quickly, while
Ms. Holmes Norton is talking to the chairman, prior to being
nominated, did anyone from the White House approach you, ask
you, talk to you about the proposed (c)(4) rule?
Mr. Koskinen. No.
Mr. Jordan. Did anyone in the course of before you were
officially nominated, anyone from the Administration talk to
you about the proposed (c)(4) rule?
Mr. Koskinen. No.
Mr. Jordan. And I am just curious of your mind-set. Do you
view your role as commissioner of the Internal Revenue Service,
do you view that as an independent role, or are you part of
Treasury and part of the Administration? How do you view your
role as commissioner of the IRS?
Mr. Koskinen. The IRS is a division of Bureau of the
Department of Treasury, but it runs independent as far as tax
administration. And, as I said, I view it as a critical issue.
Randolph Thrower died recently who set a standard that the IRS
should be independent, should not be----
Mr. Jordan. You view the IRS as an independent agency even
though it is housed within Treasury.
Mr. Koskinen. And not a political agency at all.
Mr. Jordan. And when you prepared your testimony, did you
and the people at the IRS prepare that, or did someone from the
Administration or the Treasury help you prepare that testimony?
Mr. Koskinen. Testimony for today?
Mr. Jordan. Testimony you submitted.
Mr. Koskinen. I prepared it.
Mr. Jordan. Came from you and the IRS.
Mr. Koskinen. Right.
Mr. Jordan. If I could real quickly, I want to put up a
couple slides here. I want to start with slide 1.
[Slide.]
Mr. Jordan. This is a letter that Chairman Dave Camp
received one month ago from--okay, I will wait.
Ms. Norton was talking with the chairman and I thought I
would use the time, Mr. Ranking Member, to get some important
information.
Mr. Cummings. Can we get equal time?
Mr. Jordan. I would be happy to. If you let me go, I would
be happy to give additional time.
Ms. Norton. I would just like to go because I have
something at 12:00, if I could.
Mr. Jordan. The gentlelady is recognized.
Ms. Norton. Thank you.
I wanted to come because John Koskinen is a good and should
I say an old friend because we were in law school together, and
he turns out to be the man who, if there is a job in the
Government that can't be done, they call on John Koskinen. So I
think this is one of those jobs.
Mr. Koskinen. Eleanor started law school as a very young
person; I was older.
Ms. Norton. I do want to say that the committee's obsession
with Lois Lerner I think could have been avoided. The committee
asked her attorney would he be willing to engage in a proffer;
a proffer would have said what she would have testified. And
then I think all that, a lot of what is in the emails would
have come out in an attorney's proffer. If the point is to find
out the truth, it seems to me at least we could have gotten
through a lot of that here.
But I do want to clear up something about these so-called
lists. And I looked at what the IG had found and I am intrigued
and I think the record needs to show this. It is clear that the
IG found that they had used inappropriate lists for these so-
called BOLO lists, the Be-On-The-Lookout lists. But he also
found, is it not true, that high level management was not
involved. Apparently, IRS people do these kinds of things all
the time. They did not know, only first-line management knew
about the references that trouble us, to Tea Party. And so this
just stayed in place, is that not the case?
Mr. Koskinen. That was the IG's report, yes.
Ms. Norton. Then the IG later found that Lois Lerner, who
has been the obsessive subject of these hearings, didn't even
learn about it, these inappropriate criteria, until a year
later; and then she immediately ordered the BOLO lists to be
eliminated. And again, and isn't this interesting, for lack of
proper, I think, oversight, perhaps, these workers just went
back to it because they couldn't figure out a way to deal with
the issue that has been discussed earlier in these hearings,
which is how do you know which are primarily and which are not,
so they went back to the lists. And when the IRS learned that
their subordinates were again using this criteria, they then
said you will have to have executive approval.
Well, what impressed me was that your predecessor has gone
beyond the notion of getting executive approval and he said
there is to be no more use of these Be-On-The-Lookout lists,
these BOLO lists. Is it correct, commissioner, that the IRS no
longer uses these Be-On-The-Lookout lists for anybody at any
time?
Mr. Koskinen. That is correct.
Ms. Norton. So they have gone further. The IRS has gone
further than the IG asked to go. As I understand it, the IRS
has now complied with or is in the process of complying with
all of the recommendations of the IG, is that correct?
Mr. Koskinen. That is correct.
Ms. Norton. I must tell you, John Koskinen, if we want to
find out anymore, I think what I would do, rather than trouble
you to go through thousands more emails, is to take the
agreement, apparently, of Lois Lerner's attorney to offer a
proffer so that we could find out what she would have
testified, and then we may get closer to the truth and
eliminate some of the need for some of the emails.
Thank you very much for coming forward and thank you for
agreeing to do this job.
Chairman Issa. [Presiding.] Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman.
A lot has been said about emails, when you produce them,
and we are going to talk about that in a minute, but I think
one of the issues that really hits at the heart here of people
not understanding when it is portrayed and it is put out that
the IRS has done something that was wrong, that was misguided,
the terms that I have heard you use today, this is what has
drawn the parallel of looking at Government and not trusting
it, and heightened it even more. So if we started off with a
bad taste, now we are getting worse, and then when it seems
like we are obfuscating and we are keeping back and we are
hiding behind requests and defining all and every and what are
these definitions, people don't get that. And to come to this
committee, for either one of us, and to say simply, well, we
are going through them, we are working that out, people don't
get that. And both sides. This is actually from a hearing we
just had a few weeks ago. Groups on the left and the right are
tired. They don't get this and they don't understand why the
IRS acted this way.
But I do have some questions. You officially took over
when?
Mr. Koskinen. I started on December 23rd.
Mr. Collins. So you started December 23rd. Are you familiar
on the date that the first subpoena was issued to the previous
commissioner?
Mr. Koskinen. The first what?
Mr. Collins. The first subpoena for documents for these----
Mr. Koskinen. The first subpoena actually went to the
secretary of the Treasury.
Mr. Collins. And do you know what date that was?
Mr. Koskinen. That was in August.
Mr. Collins. Yes, it was. You came in in December. You were
issued a subpoena on February 14th, correct?
Mr. Koskinen. Correct.
Mr. Collins. At what stage did you find what we will just
say is the compliance to the first subpoena when you took over
in December?
Mr. Koskinen. I was not familiar with it and wasn't focused
on the first subpoena; it went to the Treasury Department.
Mr. Collins. Okay. When it was being worked on the IRS to
get to when you get the subpoena on February 14th, are you
saying, then, that basically we just started over to answer the
subpoena that you got?
Mr. Koskinen. No. Actually, it turns out we had already
provided and have provided significant information on all of
the categories of the subpoena.
Mr. Collins. Significant. Okay, but the February subpoena
asked for what?
Mr. Koskinen. The February subpoena asked for all emails,
all documents related to 501(c)(4)s.
Mr. Collins. Okay. And does significant mean all?
Mr. Koskinen. No. We actually have not provided all, we
have provided----
Mr. Collins. And I think we----
Mr. Koskinen. And we have said we are going to continue to
work with the committee to provide the other documents.
Mr. Collins. And this is where it gets to the point of
understanding, because this has not been discussed in the last
three months. It has not been discussed since December. This
has been going on for coming up on a year now. It has been
discussed and understood and has been talked about, and
especially as it got targeted around several individuals, Lois
Lerner being one of them, that there seems to be--this is what
I think previously was talked about--a storyline or however you
want to put it. It is not a storyline, it is the fact that
there is information wanted, there has been information
requested, and that--you made a statement earlier and you said
that the public needs to feel satisfied about what is going on.
Do you feel they are satisfied right now?
Mr. Koskinen. I think the public will be very satisfied
when this committee issues its report.
Mr. Collins. Okay. But one of the issues that they are
right now, that they are being satisfied, is they feel like
they are not getting--wouldn't it be--you said you wanted to
get this as soon as possible. I agree with what I believe the
chairman said earlier and others. Make this a priority. Get
this off the table. Wouldn't it seem to me that if you want to
provide all, and you said and I take you at your word that you
want to provide all, that this would be something that you
would go ahead and get off the table as quickly as possible?
And I am not sure we buy the fact that it is going to take this
in redaction, because you have already said most of it might
not even need redacting.
Mr. Koskinen. No, I did not say that, others have said
that.
Mr. Collins. Okay, so you are saying that every one of them
is going to need redacting?
Mr. Koskinen. No, every one has to be reviewed to see
whether it has to be redacted.
Mr. Collins. Okay. And----
Mr. Koskinen. We cannot give you any taxpayer information,
and every document, every page has to be reviewed.
Mr. Collins. And nobody is asking you to do that. But I
think the problem here is this: You have walked into a position
in which the trust level is zero. And now this committee has
asked for all documents, and it is not a matter of what we are
going to redact, it is just get all. We are asking and you said
we need to do that. But the people don't trust us anymore.
With my last minute, though, I will yield to the gentleman
from Ohio. He had a question. We need to get this off the
table. Gentleman from Ohio.
Mr. Jordan. I thank the gentleman for yielding, but I don't
know if I have enough time to get through the material I wanted
to with the commissioner, so would yield back to the gentleman
from Georgia.
Mr. Collins. With that, Mr. Commissioner, I take you at
your word, but the people that I go home, we don't talk about
hardly anything else when I go home except IRS, Benghazi, these
other issues that the people feel like they are not getting an
answer on, and they are tired of these kinds of hearings in
which we say, well, we are getting to it, we are coming around
to it; and especially when they are asked for it, they are
demanded the answers from the IRS or others when they are asked
for it on a different time line. It is time to get this done.
Chairman Issa. Would the gentleman yield?
Mr. Collins. The gentleman will always yield.
Chairman Issa. I just want to make it clear of one thing.
You know, every time you go back and talk about $6 million of
new computer equipment and the time it takes to redact, I am
reminded that Ways and Means, only a week ago, was still
negotiating to try to get subsets of information when, in fact,
there was no redaction necessary, you could just do a computer
dump on them. So very clearly you did not use that $6 million
of new equipment to grab all the emails and just send them
over, but, in fact, your agency and Treasury was slow-rolling
Ways and Means and Senate Finance exactly the same way as you
are slow-rolling us, but without the excuse for redacting.
Mr. Koskinen. I think that is an improper characterization.
We, with Ways and Means, have been working through the
priorities, trying to figure out how we could get them the most
important, significant information that they think is
significant as quickly as we can. It is going to take time; it
has taken time. There is no higher priority in this agency than
providing the documentation, but oversimplifying how easy it is
doesn't help us very much; it won't make it go any faster. We
are committed to continuing to cooperate. I said earlier, to
the extent we can work with you and identify within the broad
range of the subpoena what you would like first, we are happy
to do it. It doesn't mean we won't give you other stuff later.
With Ways and Means, we have never said that is all you are
ever going to get; with Ways and Means, we have worked with
their staff very productively to say here is where we are, what
else would be helpful to you, what else do you need, and we
have been providing it.
Chairman Issa. Very productively for over a year and they
still don't have it all. That says a lot when there is no
reduction required.
Mr. Meadows.
Mr. Meadows. Thank you, Mr. Chairman.
Commissioner, I want to go to that time frame. If you have
someone where the IRS is requiring documents from an
individual, audit or whatever, is it an excusable excuse to say
that they don't have the time and it is going to take a year or
two to get you the information? Is that a permissible excuse to
not give the IRS documentation?
Mr. Koskinen. In the course of examinations, we have audits
of large corporations and it takes us years.
Mr. Meadows. But me as an individual. Let's say if I came
to you and just said, golly, commissioner, it is going to take
a long time to get it, at what point does the IRS say that that
is not okay?
Mr. Koskinen. We would say that after we understood what
your circumstances were. If there was a legitimate reason it
was going to take time, we would take time. There is no way we
would ask you to something you couldn't do.
Mr. Meadows. All right, so you are saying that it is going
to take years to get us this information, according to your
testimony a few times ago.
Mr. Koskinen. With regard to all of the documentation about
all of the applications for four years, my understanding is it
is going to take years.
Mr. Meadows. We are talking about Lois Lerner, all of her
emails. How long would that take?
Mr. Koskinen. I cannot tell you. All I can tell you is the
redacted version of----
Mr. Meadows. So let me ask you this. Let me change, let me
ask this. At what point should this committee hold you and your
agency in contempt for not complying? I mean, what is the time
line?
Mr. Koskinen. Well, I think the time line is whenever you
think you can actually sustain that in a court. I think we have
a strong case that we have been cooperative, continue to be
cooperative, and anybody looking at the systems we have and the
time it takes would find that we have provided you more
cooperation than in fact might be expected. And I think that,
in fact, arguing and threatening contempt in that situation
without understanding the circumstances is probably not going
to be held up.
Mr. Meadows. Well, I appreciate your opinion. I can tell
you the people that I represent, they believe that you are
stonewalling, and this testimony today is an indication,
because you have gone over and over again of trying not to
answer the questions that many of my colleagues have answered,
you have qualified those.
But let me go on to another point. February 3rd you made an
announcement that you were going to reinstate bonuses to the
tune of $62.5 million and give those back, and go against the
decision that was made on July 29th. On March 5th, Secretary
Lew, I guess testifying before the Senate Finance Committee,
said that the ``senior managers who were anywhere in the chain
of command who exercised bad judgment in the running of the
program are no longer there,'' implying that they would not get
a bonus. Would you agree that they didn't get a bonus? Anybody
who could have been involved in this targeting did not get a
bonus?
Mr. Koskinen. Those people aren't in the pool. This is not
a bonus pool, it is a performance award pool that goes to
bargaining unit employees----
Mr. Meadows. So anybody involved in the targeting--my
question, let me make it specific. Anybody who was involved in
the targeting did not get a bonus, is that correct?
Mr. Koskinen. First of all----
Mr. Meadows. Yes or no? Yes or no?
Mr. Koskinen. I have never said there was targeting. So if
you would let me clarify what the answer is. Nobody----
Mr. Meadows. So today you are saying that there was not
targeting?
Mr. Koskinen. I am saying the IG found that----
Mr. Meadows. I am saying what did you say. You are the one
here testifying.
Mr. Koskinen. I have said that this committee and five
other investigations will tell us what the facts are. I have
made no judgment about what happened because I have made no
investigation.
Mr. Meadows. All right, so anybody who might have been in
what I would call targeting, did they get a bonus? Do you know?
Mr. Koskinen. They would not have been eligible unless they
were in a bargaining unit. I don't know who is in the
bargaining unit and who would have gotten those.
Mr. Meadows. So somebody that was involved in this could
have gotten a bonus?
Mr. Koskinen. There are front-line employees in the Exempt
Organization Division----
Mr. Meadows. What about senior level management employees?
Those bonuses come out to the tune of 10, $20,000 per employee.
Did anybody that potentially could have been involved in these
decisions, in the bad management practices, could they have
gotten a bonus?
Mr. Koskinen. Not to my knowledge; none of them, in fact,
are there.
Mr. Meadows. All right. So let me ask you how do you make
that definitive of a statement if the investigation is not
done? Because we don't know who is actually involved, unless
you are making an assumption of guilt or innocence. So how
would you know that?
Mr. Koskinen. I would know that because you have given us a
list of everybody you think is involved. We have actually gone
through the production of documents. So if there is somebody
who has been involved that isn't on any of those lists and
hasn't shown up, it would be a surprise to all of us.
Mr. Meadows. So your testimony here today is everybody that
we have identified is innocent. That is your testimony?
Mr. Koskinen. No, you asked whether they got bonuses. I
said nobody who is not there got a bonus. Whether they are
innocent or not, I don't know. I am waiting for the results of
the investigations.
Mr. Meadows. Okay, so you can't assure us that they didn't
get bonuses, because you don't know who they are.
Chairman Issa. If I can clarify the gentleman's answer, I
believe, and correct me if I am wrong. If we have identified
individuals as people of our specific inquiry, those names, I
think the commissioner is saying he knows they did not get
bonuses. Is that correct?
Mr. Koskinen. That is correct.
Chairman Issa. Okay. And obviously there may be others
involved, but if we haven't identified them I can see the
commissioner's point.
Mr. Meadows. I thank the chairman. I yield back.
Chairman Issa. Thank you.
The gentleman from Michigan.
Mr. Bentivolio. Thank you, Mr. Chairman.
I have been here all day or all morning listening to you
and the questions being asked, and somehow I feel like you
should have come in here with boots on because we are mucking
out a chicken coop. That is what it feels like. Trying to get
to the truth, the hardest thing to find in Washington. I have
heard you say you made no investigation. You have been here
four months, correct, working for the IRS for four months?
Mr. Koskinen. Right.
Mr. Bentivolio. Made no investigation. Yet you said we have
six investigations going and it is a serious issue. I think
that should have been the first thing on your list. I have
heard the opposing side say we are spending a lot of money on
this investigation, why? And I can't help but think my brothers
and sisters in uniform fought for this Country on the beaches
and jungles and deserts defending the freedoms guaranteed by
the Constitution, and the IRS takes that with, well, it must
not be very important to them. And that is insulting to me. It
really is.
Freedom of speech is very dear to my heart, as is the rest
of the Constitution. I fought in two wars. I don't care how
much it costs to guarantee those freedoms. And I would like to
thank the chairman and the committee for spending so much time
and energy on this.
But I am going to cut through everything, because I don't
really believe you when you say it is going to--20,000 pages
and it is going to take years to get emails.
Mr. Koskinen. I didn't say it about emails. I said it would
take years if you want all of the (c)(4) applications for four
years and all of the documents related to them.
Mr. Bentivolio. Okay, we are just talking about emails.
Mr. Koskinen. If you are talking about emails, I never said
it would take years.
Mr. Bentivolio. Okay. You know what? I know students in my
high school class who could probably go in there for you and
get them done in a morning.
Mr. Koskinen. I bet they couldn't make 6103 determinations.
Mr. Bentivolio. No, that is right, and that is not what we
are looking for. What I am looking for is the emails from Lois
Lerner.
Mr. Koskinen. Emails from Lois Lerner, every page has to be
looked at to make sure there is no 6103 information on them.
Mr. Bentivolio. Maybe we should just get those from the
other committee where you didn't have to do that.
Mr. Koskinen. That is right.
Mr. Bentivolio. And they could do that. And you can just
provide it to them, we can get them from them and redacted.
But, anyway, I have some really quick questions. In four
months you haven't done any investigation, but I know that you
have talked to people in your office. You have asked them some
tough questions that you are not coming forth with us today.
Mr. Koskinen. That is not true. Not true.
Mr. Bentivolio. Well, let me ask you. In your opinion, were
conservative groups targeted by the IRS to stifle opposing
views prior to the presidential election?
Mr. Koskinen. All I know is what the IG found, and he found
that inappropriate----
Mr. Bentivolio. What do you know?
Mr. Koskinen. Pardon?
Mr. Bentivolio. Yes or no, do you believe, in your opinion,
do you believe the IRS has done that?
Mr. Koskinen. I have not taken an opinion on this. My
position is----
Mr. Bentivolio. That is an easy way out. Thank you.
Did Lois Lerner, plan, organize, or target conservative
groups in cooperation with, at the suggestion of, or at the
direction of members of the Senate or White House staff?
Mr. Koskinen. I have no information about that. I am
waiting----
Mr. Bentivolio. You have been there four months? You said
it was a serious issue and there are six investigations. You
would think you would ask your people directly those questions.
Mr. Koskinen. No. What I have asked my people directly is
have we implemented and accepted the IG's recommendation to
solve whatever management problems were in the system to make
sure that whatever happened never happens again. That is what I
think my job is, is to take the organization, manage it going
forward. My job is not to look backwards in time, my job is to
try to make sure that we can assure the American public that
whoever deals with the IRS, no matter what their political
background, their affiliations, what church they go to, who
they voted for are going to be treated fairly. That is what I
think my responsibility is. That is what I think I have an
obligation to the American taxpayers to do.
Mr. Bentivolio. Thank you, Mr. Chairman. I would like to
yield to the gentleman from Ohio.
Mr. Jordan. I appreciate the gentleman yielding.
If we could go back to where we were just a few minutes
ago, Mr. Commissioner. You had indicated that you view your
role as independent from anyone in the White House, the
Treasury, even though you are housed in the Treasury. You had
indicated that your testimony you prepared, you put together,
and you submitted and read from some of that today when we
started the hearing. I want to just point out a couple things
that I find interesting.
Let's go to slide 1, if we could.
[Slide.]
Mr. Jordan. This is a letter from Alastair Fitzpayne,
Assistant Secretary of the Treasury, to Dave Camp from one
month ago. And then we have your testimony from today, March
26th, a month later. Second slide there your testimony, seven
or eight pages, I think in your testimony. And then I want to
go to page 7 of your testimony.
Next slide, if we could.
[Slide.]
Mr. Jordan. Now, this is what I find interesting. This is
your testimony side-by-side from a paragraph that the Treasury
wrote to Chairman Camp, and this language is even closer than
earlier when I asked you about the proposed questions and the
inappropriate questions and the similarity there. This is
basically word-for-word. There have been numerous misleading
reports and public statements regarding post-regulations. Exact
same language from yours. Then you talk about the first draft
regulation does not restrict any form of political speech. Mr.
Alastair Fitzpayne's letter, exact same language. Second, exact
same language. We will give you a copy of this.
Go to the next slide, if we could.
[Slide.]
Mr. Jordan. This is all, again, talking about the (c)(4)
rule, the draft regulation.
Chairman Issa. You are going to have to wrap up.
Mr. Jordan. Okay.
Draft regulation. What I want to know is if you are
independent, if you put together your own testimony, why does
it read word-for-word exactly what the Treasury sent to
Chairman Camp? It seems to me either it is plagiarism or it
contradicts what you told me earlier, that you prepared your
own testimony and that you are an independent agency.
Chairman Issa. The gentleman's time has expired.
Mr. Koskinen. May I respond?
Chairman Issa. Please.
Mr. Koskinen. I respond on my time. I wrote this testimony.
I read Mr. Fitzpayne's letter to Chairman Camp. I did not have
any role in drafting it. I thought the points he raised were
good points and I thought it was important to put them in my
testimony, that, in fact, it is important for people to
understand that these draft regulations are open to public
comment. I have an open mind about them, but it is important
for people to understand that people can engage in political
activity any way they would like. They could become a 527 and
do nothing in an organization but engage in political activity.
Whatever regulation we come up with is not going to be focused
on, and should not be focused on, keeping people from doing
whatever they want elsewhere; it is focused on what should
501(c)(3), (4), (5), (6), and (7)s be able to do or not able to
do, and I thought it was Mr. Fitzpayne's letter to the chairman
seemed to me accurately portrayed the situation and I thought
that, therefore----
Mr. Jordan. So you looked at the letter----
Chairman Issa. No, the gentleman's time--I apologize, but
we are going to go to the gentleman from Florida, Mr. DeSantis.
Mr. DeSantis. Thank you, Mr. Chairman.
So, commissioner, if you, right now, had a stack on the
table there of every email to, from or that copied Lois Lerner
and all the 6103 information was redacted, would you have any
problem just delivering all those emails to us immediately?
Mr. Koskinen. No. If I could get them on a stack on the
table----
Mr. DeSantis. So it is basically about the process and the
burden of getting the emails. You don't have a substantive
objection to the fact that we want this information.
Mr. Koskinen. No.
Mr. DeSantis. Okay. So do you know how long it would take
to just pull those emails that I mentioned? Don't do the 6103,
just get the emails, most likely in electronic form. Do you
have any idea how long just that first step would take?
Mr. Koskinen. I do not.
Mr. DeSantis. Can you find out and report back to us?
Mr. Koskinen. I would be delighted.
Mr. DeSantis. My understanding is that that part would not
take very long. So you have no idea, as you sit here, how many
of these emails involving Lois Lerner even exist, correct?
Mr. Koskinen. I have no idea, that is right.
Mr. DeSantis. So you can't say that going through the
documents for 6103 information would necessarily be burdensome
because we just don't know how many emails we are talking
about, correct?
Mr. Koskinen. That is correct. All I know is the burden of
just trying to get you the redacted versions of her emails
about exams, appeals, and the regulatory process is going to
take several weeks.
Mr. DeSantis. No, I understand, but I mean, for example, we
don't know, there may be 50 emails of her cheerleading
Democrats, criticizing Republicans.
Mr. Koskinen. That is correct.
Mr. DeSantis. There could be 500 of those. So we don't
know.
Mr. Koskinen. Exactly.
Mr. DeSantis. So I think you understand the committee views
Lerner's emails as the highest priority. I think if you could
figure out for us how long it would take just to pull them, and
then once that is done, let us know how many we are talking
about. Because what we don't want is to just see this being
dragged on, dragged on. And that may not be your intent, but a
lot of my constituents don't believe that the IRS has been
forthright, and I think that that is bad going forward
generally.
There is another issue that I get asked about a lot by my
constituents, and you were not the commissioner so this is not
on you, obviously, but Lois Lerner testified last May, she
basically said she didn't do anything wrong, then she took the
Fifth Amendment. Now, obviously, we think that she waved at
some people. Put that aside. Just as an IRS commissioner, if
you have somebody that high-ranking that comes and they are
being asked questions about their official conduct in office,
what do you do if somebody invokes the Fifth Amendment? Now, we
know that that protects them against criminal prosecution, but
just running your organization, what then happens to an
employee going forward if someone is in that situation, where
they cannot discuss what they did in this official capacity?
Mr. Koskinen. Well, as you know, she doesn't work for the
IRS anymore. If an employee takes the Fifth----
Mr. DeSantis. Well, she did at the time, though, and I know
you weren't there, but I am just asking you how do you analyze
that situation. Because we had another IRS official take the
Fifth involving some fraudulent conduct, not related to this
investigation; and it just seems like, when that happens, it is
kind of like, okay, we will reassign somebody and you kind of
go on your day. But a lot of my constituents look at that and
they lose confidence in that official's ability to conduct
their duties.
Mr. Koskinen. Right. And as you know the assertion of the
Fifth Amendment is not meant in any way to cast doubt on the
guilt or innocence of the party or what they would say, so what
we would do in any normal circumstance like that is consult
with our personnel people and our legal people to see what the
circumstances are and what authority we have to take whatever
action we do. But any time anybody exercises their
constitutional rights, if that was grounds for dismissal, it
clearly would undercut the vitality of those rights. So I don't
think you can automatically say everybody who ever asserts the
Fifth Amendment on any issue would automatically have adverse
personnel actions, but we would immediately take a look at it.
Mr. DeSantis. So you think, though, that it could cause you
to reevaluate that individual's position and whether they can
conduct their duties? Because I just think that this is the
public's business. If we can't get answers to some of these
questions, put aside what happens to them criminally, I am not
talking about that. I am just talking about the transparency
that I think the taxpayers deserve, especially given the power
of your institution; that if you do have people who are
misbehaving and targeting citizens, there are few organizations
where that is more detrimental to freedom than the Internal
Revenue Service. So I appreciate your diligence on getting us
the answer on Lois Lerner's emails and I yield back the balance
of my time.
Chairman Issa. I thank the gentleman.
We now go to the dean of the Wyoming House delegation, Mrs.
Lummis.
Mrs. Lummis. Thank you, Mr. Chairman.
Mr. Koskinen, welcome to the committee. Thank you for being
here.
Mr. Koskinen. It has been a wonderful day.
Mrs. Lummis. I am sure.
I would like to ask you if you ever met Lois Lerner, Holly
Paz, William Wilkins, or Jonathan Davis.
Mr. Koskinen. The only person I have met is William
Wilkins, who is still the general counsel of the agency.
Mrs. Lummis. Have you ever spoken to him about tax-exempt
organizations?
Mr. Koskinen. Tax-exempt organizations. I have not talked
to him about specific ones. He has been in on meetings where we
have talked about issues such as responding to the IG's
recommendations.
Mrs. Lummis. Have you ever talked to him about Lois Lerner?
Mr. Koskinen. No.
Mrs. Lummis. Have you ever talked to him about Holly Paz?
Mr. Koskinen. No.
Mrs. Lummis. Have you ever talked to him about Jonathan
Davis?
Mr. Koskinen. No. I should say I have never talked to him
about any of those people in terms of who they are and what
they did. He has been in meetings where we have discussed
trying to comply with the requests for discovery and those
names have been mentioned, but I have never talked to him about
any of those people individually or their role at the agency.
Mrs. Lummis. Do I understand correctly that you are willing
to respond to item 1 in the subpoena prior to responding to
items 2 through 8 in the subpoena?
Mr. Koskinen. Item 1 is Lois Lerner's emails?
Mrs. Lummis. It is.
Mr. Koskinen. Yes. No, as I have said, we understand. We
are going to start with January. We are going to continue,
because we have already started that process and I think it is
important to get you all of the emails in the areas that I
talked about, and then we are going to find out about January;
and we will continue to work with you as to what order and
priority, and we will let, as noted over there, let you know
how many emails there are and what the process would be. We are
delighted to do that.
Mrs. Lummis. Thank you. Are you aware that there is a
deficit of trust on the part of the American people with the
IRS?
Mr. Koskinen. I do not know that personally. I have heard
from a number of people talking about their constituents being
concerned, and I assume and I believe those are accurate
representations. Whether they represent the entire public or
not to me is not important. I think every individual member and
every organization in the Country deserves to feel comfortable
that they are going to be treated fairly by the IRS, so my view
is whether it is the entire Country or only segments or parts
of it is not the question; it is important that everyone feel
confident and comfortable dealing with the IRS.
Mrs. Lummis. And, indeed, when I go home, as other members
have stated, including Mr. Lynch, what I hear is there is a
deficit of trust; that people feel that they are being targeted
not only from the tax-exempt organizations, but from other
entities within the IRS. I have a constituent who has been
involved in an estate matter for years since her husband died,
who has the IRS coming and asking what brand of bedroom
furniture she has. And she has paid $50,000 to accountants to
try to address the questions of the IRS. That seems to me--by
the way, she just happens to be a national committeewoman for
the Republican National Committee and has contributed to
Republican candidates.
I would inform you that there are people that believe that
IRS targeting has gone beyond conservative groups in the
501(c)(4) and into other areas of the IRS. I would like to
inform you that the deficit of trust goes beyond tax-exempt
organizations, and I would like you to know that when 100
percent of those targeted tax-exempt organizations turned out
to be conservative organizations and people start threading
their other problems with the IRS into their Republican
affiliation or conservative affiliation, it begins to create a
connect-the-dots situation that has created an enormous deficit
of trust. And I appreciate your willingness to address what is
coming up.
I do want to yield the balance of my time to the gentleman
from Ohio, Mr. Jordan.
Chairman Issa. And, with that, we are going to give the
gentleman from Ohio two full minutes to conclude.
Mr. Jordan. I appreciate that, chairman.
When do you anticipate completing looking at the comments
and making a decision on the proposed rule relative to (c)(4)
organizations?
Mr. Koskinen. Again, that is difficult to project. We
obviously have a lot of comments----
Mr. Jordan. You are obligated to look at all those
comments.
Mr. Koskinen. We need to review those. We will hold a
public hearing where the public and members of Congress can
testify. If we are going to significantly change, which is
possible, certainly, the regulation, we would probably have to
republish it. So as I have said in the past, I think it is
unlikely we are going to get this done----
Mr. Jordan. Do you have an opinion on the proposed rule
now, prior to looking at the comments? You said you haven't
looked at them. Do you have an opinion on the rule now? Do you
think it is a good rule? Do you think you are going to stick
with it or do you think you are going to change, you being the
head of the IRS?
Mr. Koskinen. Head of the IRS, my position has been that I
am going to keep an open mind about the entire thing so that I
can look at all the comments fresh. I wasn't here when the
regulation was drafted, so I don't have a dog in that fight. My
commitment is that any regulation that comes out ought to be
fair to everybody, it ought to be clear, and it ought to be
easy to administer.
Mr. Jordan. I have 50 seconds. Let me go back to where I
was earlier on your testimony. You indicated that you took this
directly from Mr. Fitzpayne's letter, lifted it from his and
inserted it into yours. Do you view that as plagiarism, Mr.
Koskinen?
Mr. Koskinen. If I were publishing it for credit of one
kind or another I would. In terms of----
Mr. Jordan. Do you think you should have cited where it
came from?
Mr. Koskinen. Pardon?
Mr. Jordan. Do you think you should have cited that it came
from the Treasury Department? I mean, your answer to me earlier
was we are independent, I view my role as independent; no one
talked to me about the (c)(4) rule during the nomination
process, no one at the White House, no one asked me about it
prior to being nominated, going through the confirmation
process; and yet you take directly from the Treasury Department
their exact language regarding the (c)(4) rule, insert it into
your testimony and then come here and say you are independent.
That is our concern.
Mr. Koskinen. If I find a good idea somewhere and I think
it is appropriate to put into the public domain, I am happy to
do it.
Mr. Jordan. I understand that, but you specifically told me
you didn't do that; that you work independent and you put
together your own testimony and you didn't work with the
Treasury, no one influenced you about the (c)(4) and no one
asked you about it when you went through the nomination
process.
Mr. Koskinen. I am independent of this committee. If you
have a very good idea, I am likely to adopt----
Mr. Jordan. You know what? We have a good idea. We have a
real good idea. Give us every one of Lois Lerner's emails as
soon as possible.
Mr. Koskinen. Right. And we are going to work on that
together.
Chairman Issa. I thank you.
We now go to the gentleman from Maryland, Mr. Cummings, for
his close.
Mr. Cummings. Thank you very much. Mr. Chairman, this
hearing has been very helpful in that I think we were able to,
to some degree, focus on an IG report. The IG had nine
recommendations and they have all been met.
And I want to take a moment to say to the IRS employees who
are watching us, and to you, Mr. Koskinen, I just want to thank
you for your service. You all have one of the toughest jobs in
America, collecting taxes. At the same time, you have laws that
you have to make sure are adhered to. And when people get those
letters saying that they are about to have an audit, or they
get anything from the IRS, except a check, their blood pressure
probably goes up a little bit because they are concerned.
And the reason why I say all that is I want to go back to
something that Mr. Lynch said. I think that when you have any
kind of breach of trust, what happens is that it makes
everything suspect; and I know that you have come in to try to
restore that trust, and it is not easy. On the one hand, you
have come in and you have taken up where Mr. Werfel left off;
and I give him a lot of credit, as I know you do.
Mr. Koskinen. Right.
Mr. Cummings. And all those employees who are working hour
after hour, giving their blood, sweat, and tears to try to make
this work. But then, no matter what happens, there is still a
search for what part Ms. Lois Lerner played in this, and she
really brought on some of her own problems, to be frank with
you. So you have the committee trying to get to that and, in
reality, it is relevant to a degree, and that is so that we
figure out what happens so that we make sure it doesn't happen
again. So that is significant.
But I don't want that to take away from what you all have
accomplished, because I know that it has not been easy. And
there has been much talk about the regulations, the proposed
regulation, and I was just looking here at the recommendations
of the IG. He recommended to IRS chief counsel and Department
of Treasury that guidance on how to measure the primary
activity of IRC and 501(c)(4) social welfare organizations be
included for consideration in the Department of Treasury
priority guidance plan. That is what the IG said.
And somebody here, I think it may have been Mr. Jordan,
went on and on and on and on and on and on and on about how
nobody is happy. Well, in my 32 years being in public life and
looking at laws and regulations, I can tell you most people
aren't happy about something in a law. That is the way it is.
So the thing that I want to make sure does not happen is that
there is not a chilling effect on the IRS and the job that they
are supposed to do. I don't want them to be in a position where
they become so paranoid that they don't do what we, the
Congress, had mandated that they do.
So I am hoping that, again, the employees will do their
jobs, will continue to do the very best that they can, use
their best judgment. Hopefully, and I pray that they will,
leave their political hats at the door so that Americans, all
of them, will be served the way that the Congress intends for
them to be served, and that is everybody treated fairly and
equally.
With that, I want to thank you.
Mr. Koskinen. Can I just comment for a minute?
Mr. Cummings. I hope the chairman will give you a second.
Mr. Koskinen. I would have responded to the congresswoman
from Tennessee that even with our restrained and constrained
resources, we will do a 1,300,000 audits this year. Some of
them are going to be Democrat, some of them are going to be
Republican; some are going to be long to one organization or
another; some will go to church, some won't go to church; some
will have been in a meeting two months ago.
It is important for us and critical for the taxpayers to
understand that no matter who you are, what your background is,
at this point, dealing with the IRS, when you get an inquiry
from us, it is because of something in the material you filed,
and you are going to be treated fairly. And if anybody else had
the same information in their material they filed, they would
get an inquiry from us. It may mean we need more information,
we need an explanation, maybe there has been a mistake.
But, across the board I think the point is well taken, if
there is a decline in trust, people are all going to try to
figure out, when they get a letter from the IRS, why are they
getting it; and what I want them to be comfortable with, and it
will take time to reassure them, they get that letter because
of something they filed in their returns. It has nothing to do
with who they are, nothing to do with their political beliefs,
nothing to do with who they voted for in the last election. And
I understand that for some people that is hard to believe right
now, but that is our commitment and that is our goal in the
years going forward.
Mr. Cummings. Thank you.
With that, Mr. Chairman, I yield back.
Chairman Issa. Thank you.
Often, for a chairman it is hard not to bring your past
experiences into Congress. Sometimes it is helpful. When I was
starting in business, my very first year, I was audited on my
income as an Army 1st lieutenant. Went in with the paperwork
and my fledgling new accountant from my new firm, and it turns
out that the auditor was a former military officer and he was
horrified that I had received so much per diem from temporary
duty; and he kept saying, but I never got anything like this,
it is not possible. He wasn't a military expert, he was an IRS
auditor, and he was just angry as hell that I was in TDY
apparently full time except for one or two days a quarter for
years. I was with an experimentation command; we were always
there.
Ultimately, I paid no new taxes and there wasn't a problem,
but it was remarkable to me to realize that he came with a
prejudice. It wasn't a Republican prejudice, it wasn't a
Democratic prejudice; it was a prejudice about the money I got
tax-free as a per diem recipient. That is human nature. We are
dealing with human beings.
This investigation may be about politics or it may be about
human beings, and your charge, of course, is to try to wring
out the wrong behavior in both cases. You are charged not just
with making sure they don't pick on me because I am a
conservative or Mr. Cummings because he is comparatively
liberal, but also the whole question of they audit a lot of
people who make a lot more money than they do. That is not a
get-even time. All of those and more are part of your charge.
But the investigation before us primarily is about some
past conduct, and I want to put into the record--these are from
a previous hearing, but I will put them in at this point for
continuity--July 10th, 2012, two emails related to Lois
Lerner's emails in which it has in it Democrats say anonymous
donors unfairly influence Senate races. It says, perhaps the
FEC will save the day. Now, this includes Holly Paz, Sharon
Light, and Lois Lerner in the train, and it also mentions
Crossroads GPS and a number of other things; and it
particularly says the Obama campaign, and then it is semi-
redacted, filed e similar complaint against Crossroads GPS,
watchdog groups, and so on.
One of the things that we are finding, and it was here
today in testimony that you made, it was definitely on a number
of my Democratic members, Ms. Speier and others, Ms. Grisham,
they have a real problem with the 501(c)(4) not disclosing
their donors. They want 501(c)(4)s to essentially not be able
to do what they do; they want them to be 527, another category,
correct?
Mr. Koskinen. I don't know what they want. The 527 is
another tax category for political organizations.
Chairman Issa. So 527s can do all the activities they want
to do, political; they just have to disclose their donors. That
falls under the Federal Election Commission.
The charge this committee has in Government oversight and
reform includes making sure that we properly allocate resources
and authorities where they are supposed to be. In 1959, more
than 50 years ago, 50 years before Barack Obama was elected
President, the American people made certain decisions on a
501(c)(4), and the ruling that came out of that stood for all
those years, and there was clearly political activity by
501(c)(4)s and they did not report their donors.
When Congress created the Federal Election Commission, and
through Shays-Meehan, McCain-Feingold, and other reforms over
the years, changes were made. I find no record that they made a
decision that the American people, through their elected
representatives, Republicans and Democrats, made any decision
to make 501(c)(4)s report their donors or to limit their
ability beyond the majority decision that had been made and the
rule for decades.
It would appear as though, through these emails and other
activities of Lois Lerner and others, individuals at a very
high level in Washington working for your agency made a
decision that they were going to do what the FEC was charged to
do but use their authority. I believe that it has been well
shown there. I believe that is one of the challenges we face,
beyond the fundamental investigation of the targeting.
If the IRS is allowed to become a wing of the Federal
Election Commission, if you are allowed to create a rule,
modify rules because you, the President, or executives within
the IRS or Treasury believe that it shouldn't be some way, that
they should have to report, and that is the reason for changing
a 501(c)(4), which cannot exclusively do politics, but can do
some amount of politics, even by your own self-declaration
right now, 40 percent, without reporting their donors, that in
fact the IRS is legislating and regulating using authority they
don't have to legislate and regulatory authority they don't
have that the FEC has.
Congress, in its wisdom, and past presidents have, in fact,
provided the rules under which the Federal Election Commission
operates and where the disclosure is. Many members of this
committee have expressed their willingness and their concern
and their belief that the rule should be changed. Whether I
share that or not, my concern, as the head of this oversight
committee, and I would hope all the committees doing oversight,
is that you not take it on yourself, or anyone that works for
you or for the Executive Branch, to legislate a change. That is
the exclusive purview of Congress. And reevaluating an existing
law 50 years ago, quite frankly, belongs to the courts, not to
an agency to conveniently reinterpret something based on who is
using it and how, and whether it is politically acceptable.
So our committee will continue to investigate on behalf of
the American people because we do find the fundamental
evidence, beyond the targeting of conservative groups, that the
decision of Citizens United and the growth of the use of
501(c)(4)s to do some politics, but not exclusive, in fact
appears to be the reason for action by the IRS. It is within
our jurisdiction, it is within our purview to continue that.
So, in closing, I must tell you we do want all of Lois
Lerner's emails. We do want all of Holly Paz's emails. We don't
believe that you have been forthcoming in a timely fashion. We
do believe that you have given us what you believe is
responsive, hoping we would never get the rest, when in fact,
when I issued the subpoena and then reissued a subpoena to you,
I did so to make it very clear that our investigation as to
emails like this one tell us we need to look at all of her
correspondence for why she was doing what she was doing and who
she was doing it with.
Mr. Cummings. Can he respond to that?
Chairman Issa. No, it is a closing statement. And I didn't
ask a question, I made a statement.
Mr. Koskinen. Right. I may not agree with all the
conclusions in the statement, but it is the chairman's right to
make whatever statement he would like.
Chairman Issa. It is only a statement. I certainly let him
answer yours. But this was a statement and I wanted you to
understand where the investigation was going, which is really
what the close was about.
Mr. Cummings, during the course of this investigation, you
raised procedural questions related to Ms. Lerner's conduct
when she appeared before the committee on May 22nd, 2013, and
again on March 5th, 2014. You had a consultant, Mr. Mort
Rosenberg, look into this. He prepared a memo. The Office of
General Counsel in turn prepared a memo to advise the members
of the committee on this topic. I now ask unanimous consent
that that memo be placed in the record. Without objection, so
ordered.
Chairman Issa. Mr. Commissioner, I appreciate you were
treated well in some cases and in some cases our members went
off topic. You handled yourself incredibly well. We do have
disagreements on discovery speed; I am sure we always will. I
do appreciate your being here today and your answering all
questions. I did not weigh in when people went off topic and
you handled yourself very well. I would have weighed in if I
thought that you were sinking. You were not. So I want to thank
you.
Is there anything more, Mr. Cummings?
Mr. Cummings. No, just that we will provide you with our
memo in response to yours, which has 23 experts who agree with
us.
Chairman Issa. We can continue to play the tit-for-tat.
Mr. Cummings. No tit-for-tat, I was just letting you know,
that's all.
Chairman Issa. Okay, very good. Thank you.
Mr. Cummings. Very well.
Chairman Issa. And, Mr. Commissioner, thank you.
We stand adjourned.
Mr. Koskinen. Thank you.
[Whereupon, at 12:45 p.m., the committee was adjourned.]
APPENDIX
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