Broke no laws, IRS official says - then takes 5th

WASHINGTON -- At the center of a political storm, an Internal Revenue Service supervisor whose agents targeted conservative groups swore Wednesday she did nothing wrong, broke no laws and never lied to Congress. She then refused to answer lawmakers' further questions, citing her Fifth Amendment right not to incriminate herself.

In one of the most electric moments since the IRS controversy erupted nearly two weeks ago, Lois Lerner unwaveringly -- but briefly -- defended herself before the House Oversight and Government Reform Committee. But she would say no more, citing legal advice in the face of a federal investigation.

Members of Congress have angrily complained that Lerner and other high-ranking IRS officials did not inform them conservative groups were singled out, even though lawmakers repeatedly asked the IRS about it after hearing complaints from local tea party groups.

The Justice Department has launched a criminal probe of the murky events over the 2010 and 2012 election campaigns, saying it is looking into potential civil rights violations. Top IRS officials say Lerner didn't tell them for nearly a year after she learned agents working under her had improperly singled out conservative groups for additional scrutiny when they applied for tax-exempt status.

Under unrelenting criticism -- most forcefully from Republicans but also from Democrats and people outside politics -- administration officials from President Barack Obama on down have denounced the targeting as inappropriate and inexcusable.

Lerner, who heads the IRS division that handles applications for tax-exempt status and first disclosed the targeting at a legal conference, has said the same. But she also spoke up for herself Wednesday, sitting stern-faced at the committee witness table.

"I have not done anything wrong," she said. "I have not broken any laws, I have not violated any IRS rules or regulations, and I have not provided false information to this or any other congressional committee."

By one lawmaker's count, Lerner was asked 14 times by members of Congress or their staffs without revealing the groups had been targeted. On Wednesday, lawmakers didn't get a chance to ask Lerner again.

Nine minutes after she began speaking, Lerner was excused, though committee Chairman Darrell Issa, R-Calif., said he might recall her. He and other Republicans say they believe she forfeited her Fifth Amendment privilege not to testify by giving an opening statement in which she proclaimed her innocence, but several law professors were skeptical they could make that stick.

Issa later said he would consult with others -- including her lawyer and House attorneys -- before determining whether to summon her again, hopefully deciding by the time Congress returns from an upcoming recess early next month.

"She's a fact witness with a tremendous amount that she could tell us," Issa said.

By leaving early, Lerner missed out on a six-hour grilling three other witnesses endured.

The hearing was Congress' third on the IRS controversy in the past week. Taken together, testimony by current and former officials indicates Lerner's actions were consistent with theirs: Once officials learned conservative groups were being targeted, they say they made sure the practice was stopped, but they were slow to tell superiors, if they did so at all.

They also didn't tell Congress, until Lerner herself made it public at a May 10 legal conference.

"Think about it. For more than a year, the IRS knew that it had inappropriately targeted groups of Americans based on their political beliefs without mentioning it," Issa said. "There seemed to be a culture of insulation that puts higher priority on deniability than addressing blatant wrongdoing."

The hearings have been notable for what they have not shown as well as what they have. No evidence has emerged that anyone outside the IRS, including the White House, directed agents to go after conservative groups. And there has been no evidence that anyone outside the IRS was made aware that the groups were being targeted until a few weeks before the inspector general released his report on the situation last week.

Still, Obama's top spokesman said on Wednesday the White House is facing "legitimate criticisms" for its shifting accounts about who knew what, and when they knew it.

Press secretary Jay Carney first said only Obama's top lawyer knew the IRS was being investigated in the weeks before the inspector general's report was released. Later, he said the chief of staff and other top officials also knew.

"There have been some legitimate criticisms about how we're handling this," Carney said. "And I say 'legitimate' because I mean it."

The report said IRS agents in a Cincinnati office started targeting tea party and other conservative groups for additional scrutiny in March or April of 2010. By August 2010, "tea party" became part of a "be on the lookout," or "BOLO" list of terms to flag for additional screening.

Lerner learned in June 2011 that agents in her division were singling out groups with "Tea Party" and "Patriots" in their applications for tax-exempt status, the report said. She ordered agents to scrap the criteria immediately, but later it evolved to include groups that promoted the Constitution and the Bill of Rights.

"After that date, Ms. Lerner had 14 opportunities -- in direct and distinct interactions with the Ways & Means Committee and with this committee -- 14 different occasions where she could have set the record straight, and she chose not to do it," said Rep. Jim Jordan, R-Ohio.

Lerner, 62, is an attorney who joined the IRS in 2001. She expressed pride in her 34-year career in federal government, which has included work at the Justice Department and Federal Election Commission, and she said she oversees 900 workers and a budget approaching $100 million.

She has faced no discipline for her actions, IRS officials said. A new acting commissioner is conducting a 30-day review of the division.

J. Russell George, the Treasury Department inspector general for tax administration, has blamed ineffective management for allowing agents to improperly target conservative groups for more than 18 months.

On Wednesday, he hinted that there may be more revelations to come. He told the oversight committee that his office has since uncovered other questionable criteria used by agents to screen applications for tax-exempt status. But he refused to elaborate.

"As we continue our review of this matter, we have recently identified some other BOLOs that raised concerns about political factors," George said. "I can't get into more detail at this time as to the information that is there because it's still incomplete.

Lerner's supervisors said they, too, were kept in the dark for nearly a year. One of those supervisors was Deputy IRS Commissioner Steven Miller, who later became acting head of the agency. He was forced last week to resign.

Miller said he first learned in May 2012 that conservative groups had been singled out. He promptly told his boss, IRS Commissioner Douglas Shulman.

But for the second straight day, Shulman testified that he didn't tell anyone in the Treasury Department or the White House because he was awaiting the results of an audit by the agency's inspector general. The IRS is part of the Treasury Department.

Shulman stood by that Wednesday, and was pressed once again by lawmakers about why he didn't say anything.

"At the time I learned about this list, I felt I was taking the appropriate actions and that my course was the proper one, and I still feel that way today," Shulman said.

Shulman, who was appointed by President George W. Bush, left in November when his five-year term expired. Miller became acting commissioner when Shulman left.

In the spring of 2012, George told a top Treasury official that the inspector general's office was investigating complaints by conservative groups. George, however, did not reveal any details about what he had uncovered, said Deputy Treasury Secretary Neal Wolin, who also testified Wednesday.

"He told me only of the fact that he had undertaken such an audit, and he did not provide any findings," Wolin testified. "I told him that he should follow the facts wherever they lead. I told him that our job is to stay out of the way and let him do his work."

Wolin said he didn't tell any of his superiors at Treasury or the White House about the investigation.

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AP White House Correspondent Julie Pace contributed to this report.

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