WASHINGTON (Reuters) - Two senior aides to President Barack Obama knew weeks ago about a watchdog report on the U.S. Internal Revenue Service targeting of conservative groups, a spokesman said on Monday, shifting the focus to the White House in a fast-moving controversy.
White House Counsel Kathryn Ruemmler was told on April 24 about an upcoming report by the Treasury's Inspector General for Tax Administration (TIGTA) on the IRS practice, for which an IRS official apologized on May 10, triggering the controversy.
Soon after she learned of the report, Ruemmler briefed White House Chief of Staff Denis McDonough and other senior staff, White House spokesman Jay Carney told reporters at a briefing.
In his remarks about an affair that has become a major distraction early in Obama's second term, Carney shed light on how Obama's inner circle learned of the issue, but not on why low-level IRS employees began the targeting in the first place.
Answers about that core issue may emerge from congressional hearings scheduled for Tuesday and Wednesday where key players are scheduled to testify on Capitol Hill.
The TIGTA report, formally released last week, prompted Democrats to blame bureaucratic at the IRS for the scandal, while some Republicans alleged that the administration abused its power in targeting conservative groups.
The Treasury department's inspector general report found no evidence of that. Carney reiterated that the White House did not attempt to influence the report.
"No one in this building intervened in an ongoing independent investigation or did anything that could be seen as intervening in that investigation," Carney said.
Carney said any White House intervention prior to completion of the TIGTA probe would have been inappropriate. In any case, he said, there was no urgency because the activity in question had stopped about a year earlier.
Last week, Carney downplayed what Ruemmler knew about the report, which found IRS agents had targeted conservative groups for extra scrutiny based on the use in their names of key words, such as "Tea Party" and "Patriot."
But on Monday, Carney gave reporters a more detailed accounting. He said Ruemmler was told on April 24 the report would address "line IRS employees improperly scrutinizing ... organizations by using words such as Tea Party and Patriot."
Carney said: "While we had an indication of the likely findings, until the IG finalizes his report, the findings and conclusions are subject to change."
He added, "That's why we had to wait, appropriately, until the report was publicized or published for the president to be able to review it and respond, as he did very quickly."
Obama fired acting IRS Commissioner Steven Miller on Wednesday and called the inspector general's findings outrageous. The report found no evidence of political motivation for the targeting or of any White House involvement.
There was no White House intervention at any time into the contents of the report, Carney said.
Obama has come under pressure in recent weeks from controversies on three fronts - the IRS scandal, the administration's explanation of last year's attack in Benghazi, Libya in which the U.S. ambassador died and the Justice Department's seizure of Associated Press phone records.
"The White House still can't get its story straight," Brendan Buck, a spokesman for House Speaker John Boehner said.
"Today's admission that senior White House officials were told about the IRS targeting, despite repeated suggestions to the contrary over the past week, is more evidence that this scandal requires a full investigation," he said.
As the Senate Finance Committee and House of Representatives Oversight and Government Reform Committees prepared to hold hearings, some lawmakers were calling for the Obama administration to fire more people linked to the scandal.
Lois Lerner, chief of the IRS tax-exempt unit, was scheduled to testify on Wednesday to a Republican-controlled investigative committee of the House of Representatives, along with other officials. Lerner's apology on May 10 for the IRS targeting at a legal conference in Washington set off the furor.
Representative Sander Levin called for Lerner's resignation on Friday, saying she had recently testified to a House subcommittee and failed to disclose what she knew about the targeting. "This is wholly unacceptable," he said.
Levin is the top Democrat on the House Ways and Means Committee, which writes tax law and oversees the IRS.
Senate Republican Leader Mitch McConnell's office on Monday drew attention to a Washington Post article that questioned Lerner's statements, including her contention that applications for tax-exempt status by groups had doubled during the time period in question.
Republican Vern Buchanan, another member of the Ways and Means panel, last week called for Lerner to be dismissed.
Joseph Grant, acting commissioner for the IRS tax-exempt and government entities division and Lerner's boss, said last week that he will retire.
"I don't see how Lois makes it. It's saddening to me," said Philip Hackney, assistant law professor at Louisiana State University who worked until 2011 at the IRS with Lerner. "She is nonpartisan; I say that with great confidence."
Lerner was set to testify on Wednesday to the Republican-controlled House panel alongside Deputy Treasury Secretary Neal Wolin, former IRS Commissioner Douglas Shulman and Treasury Department Inspector General for Tax Administration J. Russell George. On Tuesday, George, Miller and Shulman were set to testify before the Democrat-controlled Senate committee.
As the IRS scandal as widened, Republicans have focused on what officials knew about the targeting and when they knew it.
The inspector general's report showed that the targeting got under way in mid-2010. In 2011, Lerner was told about how the practice was being handled at a Cincinnati field office. She halted the use of the controversial key words, but lower-level employees by January 2012 had resumed using them.
At a first congressional hearing on the matter last Friday, Republicans made clear they are looking beyond the IRS.
Democratic Senate Finance Committee Chairman Max Baucus and top committee Republican Orrin Hatch on Monday requested documents on possible White House involvement and sought nearly 300 tax-exempt status applications delayed by the targeting.
Baucus and Hatch also asked for documentation of any disciplinary action taken, and whether some lawmakers' calls for the IRS to crack down on tax-exempt groups played any role.
Additional reporting by Nanette Byrnes and Susan Heavey; Editing by Kevin Drawbaugh and David Storey