The new Internal Revenue Service chief said Monday that his agency broke trust with the American people, and he vowed a speedy investigation to expose who approved the program that led to conservative groups being subjected to unwarranted questions while finding out if any other offices have engaged in similar political targeting.
As Congress began another week of hearings on the IRS scandal, more details emerged, including that the employees at the key office in Cincinnati refused to tell investigators who made the decision to put tea party groups under the microscope.
Acting Commissioner Danny Werfel, who President Obama moved from the White House budget office over to the IRS to clean house, said he will push to have the agency finish deciding on applications from dozens of groups still waiting to hear whether they will be granted tax-exempt status — including some that have been waiting for three years.
Mr. Werfel, testifying to a House Appropriations subcommittee, told lawmakers the agency he now leads broke faith with the country, and his chief task is to do what it takes to win back that trust.
“I’m prepared to follow the facts wherever they take us,” he said. “I think it’s the only way to restore the trust.”
Some Republicans questioned why he hadn’t fired anyone, including Lois Lerner, the former head of the division that scrutinizes tax-exempt organizations’ applications. Ms. Lerner was asked to resign but refused and was put on leave.
Mr. Werfel acknowledged Ms. Lerner is still being paid by taxpayers. He said he is awaiting a full review before he decides whether anyone needs to be fired.
The IRS has been reeling since Inspector General J. Russell George issued a report last month finding the agency gave special strict scrutiny to dozens of organizations that appeared to be conservative, targeting them based on their inclusion of words such as “tea party” or “patriot” in their name.
In addition to asking intrusive questions, the IRS also slow-walked many of the applications.
Mr. George said that as of the time of his audit in December, of the 296 applications singled out for review, just 108 had been approved, and another 28 were withdrawn. That left 160 still open — including one application that had been pending for 1,138 days.
The inspector general said it was noteworthy that despite the special scrutiny the IRS had yet to conclude that any application wasn’t worthy of tax-exempt status.
Mr. Werfel said his agency is due to give him a report by the end of this week on how it will work through the backlog it has created.
“I have also made clear that these applications must be examined in a manner consistent with the [inspector general] recommendations, so that the reviews, while thorough, are also fair and impartial,” he said.
Mr. Werfel said there is no need to give the IRS more money to fix the problems — but he may end up facing cuts if some Republicans have their way.
The agency has asked for a funding boost this year to begin to administer parts of the new health care law, which requires Americans to purchase insurance or pay a tax penalty.
Republicans already wary of the IRS said this latest scandal makes them fear how the agency will implement the health care provisions.
“We’re going to have to think very carefully about the amount of money we provide to the IRS,” said Rep. Ander Crenshaw, a Florida Republican who serves as chairman of the financial services subcommittee of the House’s spending panel.
Democrats, though, countered that while targeting groups based on politics was wrong, the agency needs to be funded so it can do its job.
“There are consequences to the fact that we are cutting this budget, your budget, all the time,” said Jose E. Serrano, the ranking Democrat on the subcommittee.
Mr. George, the inspector general, said at the very least it was appropriate for Congress to put conditions on the agency’s funding.
The scandal will continue to brew on Capitol Hill this week, with a hearing Tuesday where some of the targeted groups will get a chance to testify to the House Ways and Means Committee.
Mr. Obama and his aides have denied they ordered the special scrutiny, and Mr. George said he’s found no evidence of White House involvement.
And White House press secretary Jay Carney bristled Monday at accusations he was the president’s “paid liar” — a charge House Oversight and Government Reform Committee Chairman Darrell E. Issa leveled Sunday.
“I hadn’t heard that. That’s amazing,” Mr. Carney replied sardonically when a reporter asked him to respond to Mr. Issa’s characterization. He added, “I’m not going to get into a back-and-forth with Chairman Issa.”
But Mr. Carney said he was only quoting from an independent inspector general’s report when he stated that the IRS’ targeting of conservative groups appeared to be the conduct of rogue employees in the agency’s Cincinnati office. He said the inspector general “found no evidence that outsiders — those outside the IRS — influenced the behavior that took place there.”
“That is the conclusion of the independent inspector general, and we certainly have seen no other evidence to contradict that,” Mr. Carney said. “However, the president is interested in getting all the facts, and that is why he has instructed that the new leadership at the IRS conduct this review.”
Even as it grapples with the political targeting issue, the IRS is preparing to fend off another audit report this week that found employees spent lavishly to host conferences, including a $4 million affair held in California.
Mr. Werfel has called that spending inappropriate and Mr. Carney said Mr. Obama is “concerned” about it.