IRS Acting Head Forced to Resign Amid “Inexcusable” Scandal

On May 15, President Obama directed Treasury Secretary Jacob Lew to request the resignation of Acting Internal Revenue Service Commissioner Steven T. Miller, as part of a response to quell an unraveling scandal over the Agency’s admission of selectively screening conservative nonprofit groups seeking tax exemption status under 501(c)(4).  The announcement comes as the administration sought to contain scandals on multiple fronts that may imperil its second-term agenda. That same day Miller penned his resignation, stating, “This has been an incredibly difficult time for the IRS given the events of the past few days.” He added, “And there is a strong and immediate need to restore public trust in the nation’s tax agency.” During an impromptu evening televised appearance at the White House, President Obama stated, “It’s inexcusable, and Americans are right to be angry about it, and I am angry about it,” Obama noted that, “It’s important to institute new leadership that can help restore confidence.” According to the White House, Daniel Werfel, a senior official at the Office of Management and Budget, has been named acting commissioner of the IRS. The issue exploded into a scandal on May 10, when IRS Director of Exempt Organizations Lois Lerner, a mid-level official, acknowledged the practice and apologized. Lerner spoke on the second day of the American Bar Association tax section’s annual meeting – four days before the release of the Treasury Inspector General for Tax Administration (TIGTA) report. The TIGTA report released May 14, uncovered the inappropriate conduct and criteria for identifying organizations to be reviewed for tax exemption, which resulted in substantial delays in processing their applications. The report laid much of the blame for the targeting of the conservative groups on the Determinations Unit officials at IRS in Cincinnati, Ohio —the group charged with determining if organizations receive exempt status and under what category. Read the TIGTA audit report here. Moreover, Attorney General Eric Holder has opened a criminal probe and six separate congressional committees are investigating.  On May 17, former acting commissioner Steve Miller is scheduled to testify before the House Ways and Means Committee in the first congressional hearing focusing on the subject. Information on the hearing can be found at the committee’s website here.  In addition, the Senate Finance Committee will hold a hearing May 21 and the House Oversight and Government Reform Committee will follow on May 22. For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org.