Gregory Korte, USA TODAY
WASHINGTON - Low-level IRS employees will be called to testify before a congressional committee this week, even as Democrats move to challenge the very basis of the investigation into the agency's targeting of Tea Party groups.
Thursday's hearing of the House Oversight and Government Reform Committee - the seventh congressional hearing into the Tea Party affair - may highlight the fracture in the once bipartisan outrage into the scandal. Democrats and Republicans are pushing the investigation of the scandal in two different directions.
Democrats, such as Rep. Elijah Cummings, D-Md., want to know why an inspector general's probe didn't include evidence that liberal groups' applications for tax-exempt status were also given additional scrutiny. Cummings released documents Friday showing key words such as "progressive" and "Occupy" appeared on watch lists for IRS screeners processing tax exemption applications.
Republicans investigating the scandal still want to know how high in the Obama administration the decisions in the targeting went. Committee Chairman Darrell Issa, R-Calif., is asking IRS officials "why decisions to elevate cases to more senior levels of the IRS led to unjust delays and unfair treatment of Tea Party applications."
"Even as dozens of applications for progressive groups were being approved, orders from senior levels within the IRS resulted in inappropriate and disparate treatment for Tea Party applications," he said last week.
A congressional source, speaking on condition of anonymity because the witness list has not been released, said Sunday that three witnesses have been invited to testify. They are Elizabeth Hofacre, the emerging issues coordinator in the IRS's Cincinnati office who handled the Tea Party cases before seeking a transfer in 2010; Carter "Chip" Hull, an IRS lawyer in Washington who advised Hofacre on how to handle those cases; and Steve Grodnitzky, Hull's supervisor.
Hofacre has told congressional investigators that she felt "micromanaged to death" by Hull, and that Grodnitzky had taken the unusual step of asking Tea Party groups to disclose any future contracts they might enter into, according to transcripts of closed-door interviews reviewed by USA TODAY.
Democrats - including many who shared GOP indignation over the IRS targeting two months ago - question why the initial investigation didn't mention that the IRS also looked at liberal groups.
Cummings, the ranking Democrat on the Oversight Committee, wants to bring back J. Russell George, the IRS inspector general, to testify. It was George's May 14 report that first disclosed the extent of Tea Party targeting but was silent on how the tax agency handled liberal groups.
Issa and Cummings have wrangled for weeks over the release of transcripts of closed-door interviews of IRS employees. Friday, Cummings released more evidence that liberal groups were placed on an IRS "watch list" and given secondary screenings for their tax-exempt status.
Those documents show liberal groups - including those affiliated with the Occupy Wall Street movement - were put on an IRS BOLO, or "be on the lookout" list. The notes of a workshop July 28, 2010, in Cincinnati instructed front-line screeners to "err on the side of caution" and mark all potential political groups for more investigation.
Those same notes emphasized a distinction between liberal groups, which were later put on a "watch list," and the Tea Party, which was put on a separate section under "emerging issues." That list effectively put all Tea Party cases on hold until screeners received guidance from Washington.
Cummings also released an e-mail showing the inspector general's office examined 5,500 e-mails of IRS employees and found no evidence of political motivations.
"The e-mail traffic indicated there were unclear processing directions and the group wanted to make sure they had guidance on processing the applications so they pulled them. This is a very important nuance," said a May 3 e-mail from the deputy inspector general for investigations.
Cummings said the newly released documents "raise serious questions" about the inspector general's work, which he said "has been characterized by one-sided and partial information leading to unsubstantiated accusations with no basis in fact."
Michigan Rep. Sander Levin, the top Democrat on the House tax-writing committee, said Friday the inspector general report was "fundamentally flawed and created widespread misperceptions that Republicans seized on in an effort to attack the White House." He made clear that he wasn't excusing "gross mismanagement" at the IRS.
George stands behind his report and has noted that 30% of liberal cases and 100% of Tea Party cases were flagged as political from 2010 to 2012.
Republicans say the newly released documents confirm a double standard was being used by the IRS.
"These documents, once again, refute misleading attempts to equate routine scrutiny of other groups involved in advocacy to the systematic scrutiny of Tea Party groups by IRS officials," said Issa spokesman Frederick Hill.