US Congress grills former IRS boss over tax scandal

The political appointee who headed the IRS during the US tax agency's abusive treatment of conservative groups insisted on Tuesday that he was not involved in the scandal.

US senators grilled retired IRS boss Douglas Shulman about what he readily acknowledged was "inexcusable" behavior by agents who, from 2011, singled out right-leaning groups for excessive scrutiny.

The IRS actions have become one of a series of alleged abuses of executive power that have cast a shadow over President Barack Obama's second term, and Tuesday's hearing was not the first into the case.

Last week, House lawmakers questioned outgoing IRS chief Steven Miller, who Obama had forced to resign in the wake of the revelations.

"I was dismayed and I was saddened to read the inspector general's conclusions that actions had been taken creating the appearance that the IRS was not acting as it should have," Shulman told the Senate finance committee.

"The actions outlined in that report have justifiably led to questions about the fairness of the approach taken here."

Shulman, who retired from the IRS in November, described a vast agency tasked with overseeing tax-exempt groups and carefully scrutinizing those applying for such non-profit status.

But, while he said the targeting occurred between 2010 and June 2011, he insisted that "in June of 2011 I was not aware of this."

The Finance Committee chairman, Democrat Max Baucus, blasted the IRS and accused Shulman and Miller of essentially being asleep at the switch.

"The IRS abandoned good judgment and lost the public's trust," Baucus said.

Top committee Republican Orrin Hatch insisted there was "more than a hint of political bias" by IRS agents who put conservative groups with words like "Tea Party" or "Patriot" in their names under burdensome review.

But Hatch expressed frustration with the IRS officials' refusal to say who knew about the centralizing of the groups in its early stages, and how far up the chain of command it went.

"One way or another, we're going to learn the facts about what went on here," Hatch said.

Obama has said he knew nothing about the abuse until the internal IRS report leaked this month.

The White House acknowledged Monday it was told in April that an inspector general was finalizing an audit into Internal Revenue Service abuses, but stressed that Obama aides made no attempt to intervene or influence findings.

Attention turned to portions of tax law that delineate non-profit status, and discrepancies between the federal statute and the IRS regulations in determining what are known as "501(c)(4) organizations."

Such groups, which are not required to reveal their donors, spent millions of dollars to political activity in 2012, with some critics saying they played outsized roles in shaping the presidential campaign.

Baucus noted that under a decades-old federal statute, such groups must "exclusively" be engaged in social welfare or community good, while the IRS regulations say the groups must be only "primarily" engaged in social welfare.

"Clearly a Mack truck is being driven through a 501(c)(4) loophole," Baucus said, arguing that once the immediate scandal clears the law itself should be reformed to make it clearer which groups should qualify.

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