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New IRS chief asks for patience over targeting probe

By Tom Cohen, CNN
updated 10:19 AM EDT, Tue June 4, 2013
STORY HIGHLIGHTS
  • NEW: Conference costs have been slashed since 2010, IRS says
  • The IRS is accused of targeting conservatives and wasting money
  • New commissioner says restoring public trust in the tax agency will be "a difficult process"
  • White House spokesman Carney laughs off, ignores Issa's "paid liar" insult

Washington (CNN) -- In the middle of his first congressional hearing as the new head of the embattled Internal Revenue Service, Daniel Werfel was asked Monday how he would restore public trust in the agency after revelations that conservative groups seeking tax-exempt status were targeted for extra scrutiny.

"It is going to be a difficult process," acknowledged Werfel, a career public servant appointed by President Barack Obama last month to clean up the mess that is dominating news headlines early in his second term.

Werfel described a process of identifying what happened, who was responsible and steps to ensure it can never happen again to address what Republicans depict as politically motivated harassment that abused constitutional rights of conservative groups.

'Liar' charge a step too far for some Republicans

Democrats, while expressing outrage over the IRS targeting, reject Republican inferences that it was a broad political conspiracy reaching as high up as the White House.

Acting IRS Commissioner Daniel Werfel, left, testifies before the House Financial and General Government Subcommittee with Treasury Inspector General for Tax Administration J. Russell George, right, on Capitol Hill on Monday, June 3, in Washington. Acting IRS Commissioner Daniel Werfel, left, testifies before the House Financial and General Government Subcommittee with Treasury Inspector General for Tax Administration J. Russell George, right, on Capitol Hill on Monday, June 3, in Washington.
Key players in the IRS scandal
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In addition to the targeting uncovered by a Treasury inspector general, a second audit coming out this week described improper spending on IRS conferences to buttress GOP portrayals of big government gone wild under Obama.

The IRS spent close to $50 million on 225 conferences between 2010 and 2012, according to briefings given to the House Oversight and Government Reform Committee by the inspector-general overseeing the IRS. One of those, an August 2010 meeting for 2,700 employees in Anaheim, California, cost $4 million, and the agency spent $50,000 to produce two videos that were shown at the event, including one with a "Star Trek" theme.

In a response to the new audit, obtained by a congressional source, the IRS says it has cut training costs and reduced spending on meetings by 87% since 2010.

"The expenditures related to this 2010 meeting are not reflective of the current spending environment at the IRS or the spending that has occurred over the past several years," wrote Pamela LaRue, the agency's chief financial officer.

But LaRue defended the need for large-scale conferences at the time. Nearly a third of managers in the division under scrutiny were inexperienced, and the agency faced added concerns about security after a Texas man crashed his plane into the IRS office in Austin, killing himself and two other people.

"Although the average cost per employee was reasonable, the IRS recognizes that a number of less significant costs warranted additional scrutiny and were not the best use of government resources," she wrote.

IRS faces new battle on overspending

Rep. Hal Rogers, the chairman of the House Appropriations Committee who sat in on his panel's Financial Service's subcommittee on Monday, made clear that he would assess the effectiveness and commitment by Werfel to uncover the source of the wrongdoing when considering IRS funding for next fiscal year.

"The power of the purse rests in the Congress, and we're prepared to use that purse to get to the truth," the Kentucky Republican said.

Two more congressional hearings are scheduled for this week as Republicans seek to keep up the pressure on Obama and Democrats over the controversies.

They follow three previous hearings by House and Senate panels, and the matter also is under investigation by the Justice Department, the Treasury inspector generals office and Werfel in his new capacity.

A former Office of Management and Budget official, Werfel took over from former IRS Commissioner Steve Miller, who resigned under pressure after news of the targeting emerged. He described himself Monday as a fixer of problems in government.

"The IRS is an agency in need right now," Werfel said, adding that he took the job "because I thought it could be helpful."

That didn't impress some Republicans on the Financial Services subcommittee, who expressed frustration with the lack of answers to their main question -- who ordered the targeting?

Issa: Cincinnati IRS employees say direction came from Washington

Werfel said he also was frustrated and urged patience to allow the various investigations underway to work through the process.

Both Werfel and J. Russell George, the inspector general who conducted the audit that revealed the IRS targeting, repeated past assertions that the findings so far indicated gross mismanagement rather than political malfeasance.

Read IRS watchdog's report

Meanwhile, White House spokesman Jay Carney sought to tone down the rhetoric over an increasingly bitter dispute with congressional Republicans over the issue.

Asked by reporters about an accusation by House Oversight Committee Chairman Darrell Issa that he was a "paid liar," Carney at first jokingly feigned ignorance, answering: "I hadn't heard that. That's amazing."

As laughter erupted in the briefing room, Carney took a more serious tone.

"I am not going to get into a back-and-forth with" Issa, he said, adding that the White House focus was on finding out what "inappropriate activity" occurred, hold responsible those at fault for "inappropriate, outrageous activity" and ensure it never happens again.

It was a diplomatic effort to avoid prolonging headlines about harsh statements Sunday from Issa and a former White House official that escalated the controversy into a full-fledged Washington political imbroglio, including name-calling and references to decades-old allegations of wrongdoing.

Carney brushes off Issa remark

Appearing on CNN's "State of the Union," Issa said Sunday that the White House was misleading the public about the full magnitude of the IRS targeting, in which some conservative groups seeking tax exempt status were singled out for extra scrutiny.

In particular, he called Carney a "paid liar" and claimed that interviews with IRS officials in the Cincinnati office that considered requests for tax-exempt status showed that Washington officials were involved.

However, he stopped short of providing proof of his claim, saying only that further investigation would reveal "the whole truth."

In response, former White House adviser David Plouffe, a Democratic strategist, denied any political motivation in the IRS targeting.

In a tweet posted later Sunday, Plouffe referred to Issa's comments as "strong words from Mr Grand Theft Auto and suspected arsonist/insurance swindler."

By the Numbers: Internal Revenue Service

The tweet also called Issa "loose ethically today," adding a link to a story about Issa's appearance on CNN.

Plouffe's tweet referred to allegations from 1972 and 1982 against Issa, the former owner of a car alarm company.

In 1972, then-19-year-old Issa was arrested under suspicion of stealing a car, but charges were ultimately dropped. Issa's brother, on the other hand, is a convicted car thief.

In 1982, the office and factory of two companies Issa had purchased -- Quantum Enterprises and Steal Stopper International -- caught fire.

The insurance company's investigation found "suspicious burn patterns" and company officials noted that in the month before the fire, Issa had increased his insurance from $100,000 to $462,000. Again, no criminal charges were filed.

IRS investigation takes nasty turn

CNN's Dana Bash, Ashley Killough and Jake Tapper contributed to this report.

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