Tax official at center of scandal won't testify: lawyer

WASHINGTON Tue May 21, 2013 6:36pm EDT

(L-R) J. Russell George, Treasury Inspector General for Tax Administration of the U.S. Treasury, Steven Miller, the acting director of the U.S. Internal Revenue Service, and Douglas Shulman, former commissioner of the Internal Revenue Service, testify before the Senate Finance Committee in Washington May 21, 2013. REUTERS/Gary Cameron

(L-R) J. Russell George, Treasury Inspector General for Tax Administration of the U.S. Treasury, Steven Miller, the acting director of the U.S. Internal Revenue Service, and Douglas Shulman, former commissioner of the Internal Revenue Service, testify before the Senate Finance Committee in Washington May 21, 2013.

Credit: Reuters/Gary Cameron

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WASHINGTON (Reuters) - Lois Lerner, the Internal Revenue Service official at the center of a scandal about the targeting of conservative groups for extra tax scrutiny, plans to assert her constitutional right not to answer questions from a congressional committee on Wednesday.

"She has not committed any crime or made any misrepresentation but under the circumstances she has no choice but to take this course," Lerner's attorney, William Taylor, wrote on Monday to the chairman of the House Oversight and Government Reform Committee that is holding hearings into the IRS scandal.

Chairman Darrell Issa, a California Republican, has accused Lerner of providing "false or misleading" information to Congress about the IRS' treatment of conservative groups seeking tax-exempt status.

At least three congressional committees and the Department of Justice are investigating the IRS targeting.

Lerner's refusal to testify may only heighten interest over exactly which IRS workers in a Cincinnati, Ohio, office created partisan criteria, including search terms like "Tea Party" and "Patriots," to select certain groups' applications for special scrutiny.

Congressional investigators have said Lerner, the chief of the IRS tax-exempt unit, was the Washington-based official who learned in June 2011 that workers in a Cincinnati, Ohio, office were using such criteria and directed them changed.

Top IRS officials, however, have said they did not learn of the practice until nearly a year later.

Lerner also broke open the scandal by apologizing for the activity at an American Bar Association conference on May 10, in response to a planted question.

Lawmakers have criticized that disclosure strategy, and the White House and Treasury Department have said their staff were consulted. A Treasury spokesman said the decision it was ultimately up to IRS.

The rising political storm over the IRS has undercut President Barack Obama's second-term agenda as the president tries to negotiate a budget deal with Republicans and push a comprehensive immigration reform bill through Congress.

A report released May 14 by a Treasury Department internal watchdog said that for roughly 18 months starting in March of 2010, unnamed IRS workers in Cincinnati used the "inappropriate criteria." It also found that the criteria were changed back to include partisan terms in January 2012 after the office was ordered to stop using them in June 2011.

SUBPOENA

IRS spokesman Dean Patterson did not immediately have a comment on Lerner's status at the agency. Outgoing acting IRS Commissioner Steven Miller told the Senate Finance Committee on Tuesday that there were ongoing discussions about discipline for Lerner.

Lerner has secured a high-powered Washington lawyer in Taylor, of the firm Zuckerman Spaeder LLP. The law firm's website cites Taylor's experience with "high-profile civil and criminal matters, often under intense media scrutiny."

He defended Dominique Strauss-Kahn, the former managing director of the International Monetary Fund, against criminal charges related to a sexual assault accusation. The criminal charges were dismissed, and a related civil suit was settled.

Issa's committee on May 17 issued a subpoena to compel Lerner to testify at the hearing on Wednesday, the third such hearing in less than a week since the scandal first erupted.

Taylor said he had advised Lerner to assert her Fifth Amendment right in part due to allegations made by Issa that she had provided false and misleading information on four separate occasions last year.

The Fifth Amendment provides individuals with protection against self-incrimination.

Issa spokesman Ali Ahmad said in a statement on Tuesday that "Chairman Issa remains hopeful that she will ultimately decide to testify tomorrow about her knowledge of outrageous IRS targeting of Americans for their political beliefs."

OTHER OFFICIALS GRILLED

During the Senate panel hearing on Tuesday, top IRS officials testified they were unaware for nearly two years of the agency's targeting of conservative groups and did not deliberately mislead lawmakers about the practice.

Exasperated senators repeatedly asked former IRS Commissioner Douglas Shulman, who led the agency from 2008 to 2012, and outgoing acting IRS chief Miller why they did not reveal the practice earlier. Republican Senator Orrin Hatch of Utah accused Miller of a "lie by omission."

In his first public statements on the growing scandal, Shulman told a Senate hearing he did not have "the full set of facts" about the targeting until the watchdog report was released last week. Miller, who testified at a House of Representatives hearing last week, told Hatch sharply that "I did not lie, sir."

(Reporting By Kim Dixon; Writing by Karey Van Hall; Editing by Tim Dobbyn)

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