Senator accuses IRS officials of withholding information in 2012 about agency practices

Two top Internal Revenue Service officials knew that the agency was using a list to scrutinize applications for tax-exempt status that included the phrase "tea party" as early as the spring of 2012, but did not tell lawmakers until this year.

Former IRS Commissioner Douglas Shulman and outgoing Commissioner Steven Miller told the Senate Finance Committee on Tuesday that they knew last year that the IRS had a "Be On The Lookout" list while processing nonprofit applications and that tea party groups were on it. The extent of their knowledge at the time, however, was limited, they said.

The IRS is facing scrutiny after a Treasury Department inspector general report detailed how the agency unfairly targeted conservative groups applying for nonprofit status between 2010 and 2012. IRS officials deny that the practice was politically motivated but have admitted that mistakes were made in the agency's approach to responding to applications.

"What I knew sometime in the spring of 2012 was that there was a list that was being used, knew that the word tea party was on the list," Shulman, who served as IRS commissioner from 2008-2012, said during the hearing. "I didn't know what other words were on the list, didn't know the scope and severity of this, didn't know of groups that were pulled in or groups that would have been pulled in anyway."

Miller, who served as deputy commissioner in 2012 and is acting commissioner until next month, also said he knew of the list in May 2012. Both men emphasized that they weren't made aware of all of the facts surrounding the case until last week when inspector general released a report outlining the IRS practices.

On June 18, 2012, Utah Sen. Orrin Hatch, the top Republican on the Finance Committee, co-signed a letter to the IRS leaders requesting information about whether tea party groups had been targeted unfairly. Hatch received a response from the IRS that did not mention the list.

On Tuesday, Hatch asked Shulman and Miller why they did not provide more information when he requested it at the time.

"You knew this was going on, why didn't you let us know?" Hatch asked during the hearing. "That's what we were inquiring about when we sent these letters to you. ... Nowhere in your responses did you indicate that the IRS was improperly selecting tea party organizations for extra scrutiny. Nowhere in your responses did you indicate that you knew that the IRS was asking improper questions about donor contributions. You just sat on that guilty knowledge."

"That's a lie by omission," Hatch said.

"I did not lie, sir," Miller said.

In March 2012, Shulman testified before two House panels that he was not aware of the IRS "targeting" groups for political purposes.

"This notion that we are targeting anyone, I think, is off," Shulman told a House Financial Services subcommittee on March 21, 2012.