WASHINGTON — As the Internal Revenue Service’s last two directors struggled to provide answers Tuesday about the agency’s improper scrutiny of conservative groups, a lawyer for another key IRS official said she would invoke the 5th Amendment rather than answer questions about the screening and why she didn’t tell Congress about it.

Lois Lerner, director of exempt organizations for the IRS, will assert her right against self-incrimination during her scheduled appearance Wednesday before the House oversight panel.


The news about Lerner is yet another low point for the IRS and the Obama administration in their struggles to explain how IRS employees in a field office in Cincinnati targeted some groups that had applied for tax-exempt status.

Lerner’s criminal defense attorney, William W. Taylor III, sent the committee a letter saying that he advised Lerner, because of a federal criminal investigation, not to answer questions about the screening or about what the committee said were “false or misleading” responses she made four times to the committee’s earlier queries about the IRS’ actions.


“She has not committed any crime or made any misrepresentation, but under the circumstances she has no choice but to take this course,” Taylor wrote to Rep. Darrell Issa (R-Vista), chairman of the House Committee on Oversight and Government Reform. He asked that Lerner be excused from appearing, but an Issa spokesman said she would be expected to show up anyway.

“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,” spokesman Ali Ahmad said.


That news came as the last two commissioners of the agency, Douglas Shulman and Steven Miller, endured a barrage of hostile questions from members of the Senate Finance Committee about who was responsible and why they didn’t reveal the problems earlier.

And a White House spokesman defended the decision by senior officials not to brief President Obama about the matter. White House spokesman Jay Carney said there was “nothing the president could or should do until that process was completed.”


New details have emerged this week showing that, with an audit by an inspector general nearing release, officials at the IRS, the Treasury Department and the White House started talking a month ago about some kind of preemptive public disclosure about the improper targeting.

In late April, IRS officials reported to the Treasury Department that they were thinking about having Lerner talk about it in a speech, with an apology, according to a Treasury Department official. Treasury officials “expressed some concern” about the idea but “deferred” to the IRS.


About the same time, the IRS floated the idea of having Miller reveal the targeting during congressional testimony. Once again, the Treasury Department said it was the IRS’ call, according to a statement from a Treasury official.

And the Treasury Department also knew in advance that Lerner would reveal the targeting on May 10, answering a planted question during an American Bar Assn. conference. The disclosure quickly turned messy, with Lerner struggling to answer questions during a follow-up call with reporters. The White House knew about the speech idea but not the plan to plant a question, the Treasury official said.


Miller, the acting IRS commissioner forced to resign last week, said he took responsibility for that bungled rollout strategy.

“Did not work out,” he said bluntly. “Obviously the entire thing was an incredibly bad idea.”


Lerner, head of the unit that scrutinizes nonprofits for the IRS, came to the agency from the Federal Election Commission in 2001. In June 2011, according to the inspector general’s report, Lerner learned that employees in Cincinnati were using terms like “tea party” and “patriots” to cull applications from nonprofit groups for review.

Lerner immediately ordered changes, the report says. But in January 2012, someone at the IRS put out another email telling screeners to watch out for groups that used other political terms, including those involved in educating on the Constitution.


The groups raised protests after the IRS sent them letters with a long list of questions, including the identity of their donors and the names of the people invited to their events. Congress started asking questions. But Lerner, along with other senior IRS employees, did not reveal the improper targeting before May 10.

During the hearing Tuesday, senators on the Finance Committee accused Shulman and Miller of deliberately hiding the matter from Congress. “It’s a lie by omission. There’s no question about that in my mind,” said Sen. Orrin G. Hatch of Utah, the committee’s top Republican.


“I did not lie, sir,” Miller responded.

Shulman also said he wasn’t trying to hide anything.


He said he didn’t know about the screenings when he told Congress that no improper targeting had occurred. Afterward, he kept quiet because the audit was still underway. “And sitting there then and sitting here today, I think I made the right decision, which is to let the inspector general get to the bottom of it, chase down all the facts and then make his findings public,” he said.

Miller said he still could not provide the names of the IRS employees who were responsible for the inappropriate screening. The inspector general, J. Russell George, promised further scrutiny.


Shulman, who retired in November 2012 after five years as commissioner, said he regretted that the problems happened on his watch, but he resisted a suggestion by one senator that he apologize to several Texas groups that received long lists of questions during the screening process.

“I didn’t touch individual cases and I certainly didn’t touch cases that involved political activity,” Shulman said.


“The buck doesn’t stop with you,” said Sen. John Cornyn (R-Texas).

“I certainly am not personally responsible for creating a list that had inappropriate criteria on it,” Shulman said.


Shulman and Miller also were taken to task for failing to address the underlying issue that helped create the mess: determining how much political activity is permitted by social welfare organizations that get tax-exempt status. Federal tax law says these groups should be “exclusively” devoted to the public welfare. But the IRS later issued a rule that said politics could not be the group’s “primary purpose,” and neither the agency nor Congress has ever defined that rule.

Since the Citizens United decision in 2010, such groups — which don’t have to report their donors to the public, as do political entities — have been used as vehicles for hundreds of millions in political spending.


Miller agreed that the IRS had done a poor job at providing guidance on what level of political activity was acceptable.

“How long do we wait?” asked Sen. Sherrod Brown (D-Ohio).


“That’s a question that you’ll have to ask my successor, sir,” Miller said.

joseph.tanfani@latimes.com


richard.simon@latimes.com

melanie.mason@latimes.com.


Matea Gold, Michael A. Memoli, Christi Parsons and Jim Puzzanghera in the Washington bureau contributed to this report.