Cummings Opening Statement for IRS Oversight Hearing
Below is Ranking Member Cummings’ opening statement, as prepared for delivery, for today’s Full Committee hearing on the IRS.
May 22, 2013
Mr. Chairman, thank you for calling this important hearing. The American people expect the IRS to exercise its responsibilities in a fair and nonpartisan manner. When the IRS breaches that trust, it damages the ability of the agency to implement the nation’s tax laws effectively and efficiently.
The Inspector General has called the actions by IRS employees in Cincinnati “inappropriate.” But after reading the IG’s report, I think it goes well beyond that. I believe there was gross incompetence and mismanagement in how the IRS determined which organizations qualified for tax exempt status.
By now, we have all heard how IRS employees used terms like “Tea Party” and “Patriots” to single out conservative groups for enhanced scrutiny. But the IG report also discusses how some cases took more than three years to resolve. IRS staff stopped working for more than a year—from October 2010 through November 2011—while they waited for guidance from supervisors on how to process these applications. This is absolutely unacceptable.
When the IRS finally got to processing applications, employees with little or no oversight sent overly extensive requests for information to many of these groups, which understandably angered them. New processes have been put in place to prevent these abuses in the future, but much more needs to be done.
According to the IG audit, at least part of the reason for this mismanagement is inadequate guidance on how to process these cases. The original statute passed by Congress requires that 501(c)(4) organizations engage “exclusively” in social welfare activities. But in 1959, the Treasury Department issued a regulation that requires these entities only to be “primarily” engaged in social welfare activities. As a result, many groups now believe they can spend up to 49% of their funds on campaign-related activities.
Significant concerns also have been raised about groups that have already qualified for tax exempt status, or whose applications are still pending, and are now openly engaging in campaign-related activities and spending millions of dollars with little or no IRS oversight of their activities. These concerns are not limited to just one political party. For example, good government groups like Democracy 21 and others have written to the IRS about Crossroads GPS, which was created by Karl Rove, as well as Priorities USA, which was created by former Obama Administration officials.
I am encouraged that the IG has already announced that he will be examining this issue in more detail in an upcoming audit. But it is also time to revisit the 1959 regulation and consider returning to the original standard set forth in the statute that bans political activity by these groups altogether, which is what Congress originally intended.
As we investigate the actions of IRS employees, I urge my colleagues to avoid making the investigation into a partisan attack. Mr. Shulman, who was the head of the IRS when all of these actions occurred, was appointed by President Bush, and there is no evidence to suggest that he directed IRS employees to intentionally delay or harass Tea Party groups.
Similarly, the Inspector General and all IRS officials who have appeared before Congress to date have agreed that no one outside the IRS participated in these activities or was aware of them when they occurred. These facts were confirmed again yesterday when the Committee conducted a transcribed interview of Holly Paz, who served as Manager of the Rulings and Agreements Office in Washington D.C., which oversees the Cincinnati unit that processed these applications.
I share the Chairman’s very serious questions about why Mr. Shulman and Ms. Lerner failed to inform Congress about these problems. To me, this is one of their most significant failures, and I do not believe their answers to date have been sufficient.
As the Committee continues in what I hope will be a bipartisan and thorough investigation, I want to make a request of the Chairman. Now that the President has designated Danny Werfel as the new acting director of the IRS, I believe the Committee should hear from him about his plans to address the recommendations in the IG report and other steps he intends to take to restore the public trust in the IRS. As I have said repeatedly, to do our jobs on this Committee, we must focus on oversight and reform. Holding a hearing with Mr. Werfel will allow us to do both.
Finally, Mr. Chairman, I would like to say a brief word about Ms. Lerner. Her attorney has written to the Committee to inform us that she intends to invoke her Fifth Amendment right against self-incrimination. Of course, I am disappointed that we will not be able to ask her questions today. But every Member of this Committee takes an oath to support the Constitution, and this is Ms. Lerner’s right under the Constitution. So I will honor her decision, and I respectfully urge all of my colleagues to do the same.
I ask unanimous consent to place into the record written answers that Ms. Lerner provided in response to questions posed by the Inspector General, as well as similar answers provided by her boss, Joseph Grant. While these certainly do not answer all of my questions, they do provide additional information about what they knew as these events occurred. Thank you again, Mr. Chairman.
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