US & Canada

US tax officials were 'unaware' of audit bias

Anti-tax protesters outside a government building in West Palm beach, Florida 21 May 2013

US tax officials have told Congress they did not know their agency had targeted conservative groups.

Senators said tax commissioner Steve Miller lied "by omission" when he did not report the practice to Congress.

The Internal Revenue Service (IRS) has apologised for screening groups with words like "tea party" or "patriot" in applications for tax-exempt status.

Conservative activists protested on Tuesday at government buildings across the US to denounce the IRS targeting.

Douglas Shulman, who was head of the IRS from 2008-12 while the list of watch words was in use, said he was "dismayed" to hear what had happened.

'You knew'

But he told the Senate Finance Committee he did not report the practice to Congress when he gave testimony in March 2012 because he did not have all the facts.

Douglas Shulman told Congress he did not have the facts

"The full set of facts around these circumstances came out last week," Mr Shulman said, referring to an inspector general's report.

"What I knew sometime in the spring of 2012 was that there was a list that was being used. I knew that the word 'tea party' was on the list.

"I didn't know what other words were on the list, didn't know the scope and severity of this."

But Senator Orrin Hatch accused Mr Miller, the acting commissioner who resigned over the matter last week, of lying by omission.

"You knew what was going on and you knew that we had asked. You should have told us," he said.

It emerged on Monday that US President Barack Obama's chief of staff knew about the inspector general's investigation and had not informed the president.

In 2010-12, the IRS was inundated with new applications from groups seeking tax-exempt status, after the US Supreme Court loosened restrictions on political spending by organisations unaffiliated with candidates' campaigns.

Pleading the Fifth

During this time period, according to IRS officials and the inspector general's report, staff members at an IRS office in Cincinnati, Ohio, used keywords such as "Tea Party" and "patriot" to select organisations for extra scrutiny.

The Tea Party is a loosely organised movement of anti-tax conservatives, and in the American political lexicon "patriot" can indicate a conservative orientation.

The US Treasury's inspector general for tax matters has said he found no evidence the IRS had acted under political pressure from the White House, and officials have said the practice was an effort to handle the heavy workload.

Two top IRS officials have resigned over the matter, which Mr Obama has denounced as an unacceptable intrusion into citizens' political activities.

The FBI has launched a criminal inquiry. Congress has already held one hearing into the matter and more are planned.

The head of the IRS tax-exempt unit plans to assert her constitutional right not to answer questions, under the Fifth Amendment of the US Constitution, at a hearing on Wednesday.

"She has not committed any crime or made any misrepresentation but under the circumstances she has no choice but to take this course," Lois Lerner's lawyer told House oversight committee chairman Darrell Issa in a letter on Monday.

The attorney said he had advised his client to do so after Mr Issa accused Ms Lerner of providing "false or misleading" information to Congress about IRS practices.

The Fifth Amendment provides individuals with protection against self-incrimination.

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