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Republican targets IRS employees in Tea Party probe

By Kim Dixon and Tabassum Zakaria

WASHINGTON (Reuters) - Republicans investigating the Internal Revenue Service want to question five employees about the tax agency's targeting of the Tea Party and other conservative groups, an effort that a key lawmaker said was part of a fact-finding mission.

"It appears that a number of IRS employees played key roles in carrying out the improper scrutiny," Republican Representative Darrell Issa, head of the Oversight and Government Reform Committee in the U.S. House of Representatives, said in a letter on Wednesday to the IRS requesting interviews with the employees.

A congressional aide said the five workers sought for questioning were chosen based on a timeline from the Treasury Department Inspector General for Tax Administration report that revealed the stepped-up IRS scrutiny and listed the job roles involved in the activity. It was unclear whether these employees had any role in any wrongdoing.

The IRS, which did not respond to a request for comment on Issa's letter, has not released the names of employees who were involved in an effort launched in 2010 in Cincinnati to target Tea Party and other conservative groups for extra scrutiny as they sought tax-exempt status.

The agency has said it will cooperate with any inquiries.

The targeting effort eventually came to the knowledge of top IRS officials in Washington, one of whom acknowledged it and apologized publicly Friday. Faced with a widening scandal, President Barack Obama announced on Wednesday that the acting director of the IRS, Steven Miller, would resign.

In a letter to employees, Miller praised the agency's work and said he was stepping down to restore confidence in the IRS.

CNN has reported that Miller told a lawmaker that the IRS was focusing on two "rogue" employees.

Republicans are looking for bigger culprits.

"The IRS low-level employees who made these egregious decisions need to be dealt with, but we also need to find out who directed them to do it and how high up does it go and who knew about it?" Republican Senator Rob Portman told Reuters in an interview.

FIVE IRS EMPLOYEES SOUGHT FOR QUESTIONING

One of the employees sought by Issa is Holly Paz, the Washington-based director of rulings and agreements for the tax exempt division, who contributed at least $2,000 to the Obama Victory Fund in 2008, according to federal election records.

A congressional aide said there was greater interest in her among the group because she appears to play multiple roles throughout the inspector general's timeline.

According to the inspector general, the director of rulings and agreements learned of the first set of "sensitive case reports" under the controversial checklist in April 2010.

In 2012 Paz announced at a tax conference steps the IRS was taking to question large tax-exempt groups about their political activities.

Paz said at the time that the IRS was looking at whether such groups were complying with the law, which does not allow exemptions for groups primarily focused on political activities, according to the Wall Street Journal, citing her comments at the conference. Paz didn't name any specific groups.

The Journal named Crossroads GPS, the giant organizing committee co-founded by Republican operative Karl Rove, as one group the IRS would examine. Priorities USA, a rival started by Obama aides, is another of the biggest of these groups.

Paz could not be reached for comment.

Another employee Issa wants to question is Greg Muthert, who told Reuters he is a 28-year veteran agent in the Cincinnati office.

Muthert declined to elaborate on his role with the IRS and to what extent, if any, he was involved in the controversial flagging of certain groups. He defended the work of the Cincinnati office.

"I don't know what to think. Something's wrong, but I'm going to speak my piece one time, and that's it," Muthert, who is listed as a "screener" in Issa's letter, said.

Issa also asked to speak with Joseph Herr. A Tea Party group, the Ohio Liberty Coalition, told Reuters that Herr handled its application for tax-exempt status and asked questions the group considered inappropriate. It was not clear why they were deemed inappropriate by the group.

Some Tea Party groups complained to members of Congress about the extensive questioning from the IRS. In letters the groups had complained that the IRS was seeking lists of donors and many documents.

Herr could not be reached for comment at his home in Cincinnati.

The Clear Lake Tea Party of Texas publicly complained about an IRS employee cited in Issa's letter, Elizabeth Hofacre, who handled the group's application. Hofacre could not be reached for comment.

Mary Huls, president of the Clear Lake Tea Party in Texas, told Reuters her group received a letter from Hofacre in which the IRS requested answers to 19 additional questions.

Hofacre's letter shows that the group was asked for a list of speakers and their qualifications for events, resumes for each board member, a list of questions the group asked political candidates at so-called job interviews and a list of who was invited to those events.

"They were personal and they didn't seem to have too much bearing on whether or not we could be tax exempt," Huls said.

The group stopped the process "because then we thought that we would lose our rights of free speech," Huls said.

The fifth employee listed in the letter is John Shafer, who Issa's letter calls a "screening group manager." Shafer could not be located for comment.

(Additional reporting by Nick Carey, Kevin Drawbaugh, Bob Driehaus and Caren Bohan.; Editing by Marilyn W. Thompson, Mary Milliken, Lisa Shumaker and Cynthia Osterman)

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