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91–126 PDF 2014

THE IRS’S TARGETING SCANDAL: CHANGING 

STORIES OF THE MISSING EMAILS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ECONOMIC GROWTH, 

JOB CREATION AND REGULATORY AFFAIRS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 17, 2014 

Serial No. 113–145 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON ECONOMIC GROWTH, JOB CREATION AND REGULATORY AFFAIRS

JIM JORDAN, Ohio, Chairman 

JOHN J. DUNCAN Jr., Tennessee 

PATRICK T. MCHENRY, North Carolina 

PAUL GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

DOC HASTINGS, Washington 

CYNTHIA LUMMIS, Wyoming 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY BENTIVOLIO, Michigan 

RON DESANTIS Florida 

MATTHEW A. CARTWRIGHT, Pennsylvania, 

Ranking Minority Member 

TAMMY DUCKWORTH, Illinois 

GERALD E. CONNOLLY, Virginia 

MARK POCAN, Wisconsin 

DANNY K. DAVIS, Illinois 

STEVEN A. HORSFORD, Nevada 

(III) 

C O N T E N T S 

Page 

Hearing held on September 17, 2014 ..................................................................... 1 

WITNESSES 

Mr. John Koskinen, Commissioner, Internal Revenue Service 

Oral Statement ................................................................................................. 7 

Written Statement ............................................................................................ 10 

APPENDIX 

Sept. 5, 2014 PSI Report, submitted by Rep. Cartwright .................................... 44 

June 6, 2013 letter to Daniel Werfel from 26 Democrats, submitted by Rep. 

Horsford ................................................................................................................ 45 

Cause of Action statement for the record .............................................................. 49 

(1) 

THE IRS’S TARGETING SCANDAL: CHANGING 

STORIES OF THE MISSING EMAILS 

Wednesday, September 17, 2014, 

HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, SUBCOMMITTEE ON ECONOMIC GROWTH, JOB CREATION AND

REGULATORY AFFAIRS, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:12 p.m. in room 

2154, Rayburn House Office Building, the Honorable Jim Jordan 

[chairman of the subcommittee], presiding. 

Present: Representatives Jordan, DeSantis, Lummis, Collins, 

Bentivolio, Meadows, Gosar, Cartwright, Connolly, Kelly, Horsford 

and Issa. 

Staff Present: Molly Boyl, Majority Deputy General Counsel and 

Parliamentarian; David Brewer, Majority Senior Counsel; Drew 

Colliatie, Majority Professional Staff Member; Linda Good, Majority Chief Clerk; Christopher Hixon, Majority Chief Counsel for 

Oversight; Michael R. Kiko, Majority Legislative Assistant; Laura 

L. Rush; Majority Deputy Chief Clerk; Andrew Shult, Majority 

Deputy Digital Director; Sarah Vance, Majority Assistant Clerk; 

Jeff Wease, Majority Chief Information Officer; Portia Bamiduro, 

Minority Counsel; Aryele Bradford, Minority Press Secretary; Donald Sherman, Minority Chief Oversight Counsel; and Katie Teleky, 

Minority Staff Assistant. 

Mr. JORDAN. The committee will come to order. 

I want to again welcome our witness, the Commissioner for the 

Internal Revenue Service, Mr. John Koskinen. 

You know how this works, Mr. Koskinen. You have been here a 

few times and we appreciate your coming back. 

We will start with opening statements, as is customary. 

The subcommittee meets today to continue our oversight of the 

IRS and its targeting of conservative groups. 

In an interview in July, Commissioner John Koskinen talked 

about the congressional investigations into the targeting. He said, 

‘‘There are some people who don’t want a straight story; they don’t 

want this to end.’’ 

Commissioner Koskinen went on to say, ‘‘I’m not sure if people 

really want a special prosecutor because that would shut everything down. The special prosecutor then would have sole domain 

over this, so you wouldn’t be holding all these fun hearings every 

week or two.’’ 

We will get to this in my questioning, Mr. Koskinen, but I can 

tell you one thing. We do want a special prosecutor. Every single 

2 

Republican voted for it. It is not some fun and games we are playing here. Twenty-six Democrats voted for the resolution as well. 

It is not about fun; it is not about amusement. We are here because of the constant flood of false and misleading statements 

made by the IRS. The reason the American people cannot get a 

straight story is because the IRS will not give them one. 

In March 2012, then Commissioner Doug Shulman gave assurances to the Ways and Means Committee that the IRS was not targeting conservatives. We now know that was not accurate. 

In April 2012, Lois Lerner told our staff that the way the IRS 

was treating conservative groups was part of the ‘‘ordinary course 

of the application process.’’ We now know that was not true either. 

On May 10, 2013, Ms. Lerner apologized for targeting by responding to a planted question at an ABA conference here in town. 

By planting the question, Lerner tried to downplay the misconduct 

and mislead the public. 

That same day, Lois Lerner blamed ‘‘line people in Cincinnati for 

the targeting.’’ We know that was not true either. We know the targeting went all the way up to Washington, D.C. 

President Obama’s Press Secretary, Jay Carney, blamed the targeting on line employees in Cincinnati. That is not accurate. The 

President, himself, attribute targeting to ‘‘bone-headed decisions by 

Cincinnati employees,’’ also not accurate. 

When we finally got witnesses before the committee in public 

session, the misleading statements continued. When I had the 

chance to question Mr. Shulman, I asked him how many times he 

went to the White House. He said, ‘‘I don’t have a number,’’ but of 

course he did remember that he attended the Easter egg roll at the 

White House. 

Imagine that. The IRS Commissioner has no idea how often he 

visited the White House but what stuck out was the Easter egg 

roll, even though he went to the White House 157 times, unprecedented for an Internal Revenue Service Commissioner. 

Acting Commissioner Werfel testified on August 2, 2013 that the 

IRS would produce every single Lois Lerner email and that he 

would ‘‘ask the team to prioritize that.’’ We now know from testimony of IRS employees involved in document production that there 

was no prioritization of those. 

The IRS has told us that it takes Section 6103, the part of the 

Code that protects confidential taxpayer information, ‘‘very seriously.’’ That is what they say. That is why they say it takes so long 

to get the documents. Yet, we have changing interpretation of 

6103, redacting information when it suits the IRS’s interest, un-redacting that information when it suggests violations of federal law. 

Now we know that in 2010, the IRS illegally sent the FBI 1.1 

million pages of non-profit information, including confidential taxpayer information protected by Section 6103. 

Commissioner Koskinen, during your first appearance here on 

March 26 when asked whether you would produce all of Lois 

Lerner’s emails, you testified, ‘‘Yes, we will do that.’’ Obviously we 

now know you can’t possible produce every single Lois Lerner email 

because you have lost some of them. 

Then Commissioner Koskinen, you told Congress that the IRS 

had confirmed that backup tapes no longer existed, but the IG has 

3 

told us the backup tapes do exist and that the IRS did not search 

760 exchange server drives because you didn’t even know you had 

them. 

Commissioner Koskinen, you testified that you remember being 

told in April about Lois Lerner’s missing emails. You didn’t tell 

Congress, the Justice Department, the FBI, and, most importantly, 

the American people, until June 13 but we now know Kate Duvall, 

Chief Counsel, knew in February. She even told the Treasury Department in April. 

The IRS told its political bosses in the Administration before telling those of us who were investigating the IRS, another effort to 

mislead the American public. 

Commissioner, you testified that the reason you delayed telling 

Congress was that you went to great lengths, great lengths and 

spent ‘‘a significant amount of money to make sure that no email 

was missing,’’ but the Inspector General tells us that emails from 

at least eight employees are missing. 

We learned the IRS does not even archive its office communication messages. We learned that the IRS wiped Lois Lerner’s Blackberry after Congress had started asking questions about this issue. 

We learned from an IRS IT employee that Lois Lerner kept a 

large amount of data on her hard drive and he recommended that 

she back it up. He was told that Ms. Lerner did not have time to 

do that and it was not her responsibility. 

Mr. Koskinen, if the IRS was truly trying to ensure that no email 

was missing, you guys did a pretty bad job. That is why we have 

invited you back here today. There has been an ever changing story 

coming out of the IRS about the targeting of conservative groups 

and missing emails. 

Each time you testified, Mr. Koskinen, we later learn something 

you said wasn’t right. You have refused to give the American people a straight story but we hope today, we hope today that they can 

start to get a straight story, start to get at the truth and not get 

the run around that we have gotten before. That is why we have 

you back today. 

With that, I would yield to the Ranking Member for his opening 

statement. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

Thank you, Commissioner Koskinen for testifying before this 

committee yet again. Your appearance before this committee is becoming quite a recurring event, kind of like the movie Groundhog 

Day around here. 

I am becoming increasingly concerned at this point that committee Republicans are no longer using these hearings for the purpose of investigating what happened to the groups that were the 

subject of the IG’s May 14, 2013 report. 

What we are doing here seems to be something entirely different. 

What is happening here is we have people desperately searching 

for information about the IRS’s response to the committee’s investigation. 

Counting today, Mr. Chairman, Mr. Koskinen has testified four 

times before this committee in the past several months and at least 

seven times before House committees in total this year. 

4 

We all have to agree that the purpose of this committee is not 

publicly to harass federal agency heads. It is to conduct responsible 

oversight on a host of legitimate critical issues within our jurisdiction. 

I believe that these repeated hearings continuing again today are 

not only a badgering of witnesses but an abuse of authority and a 

dereliction of this committee’s duty in its entirety. I think it is 

abundantly clear that Chairman Issa and Chairman Camp are also 

in some kind of a taxpayer-funded foot race to see who can make 

the most headlines about Lois Lerner’s lost emails. 

I also, again, want to address Republican claims that the alleged 

targeting of conservative groups is a government-wide conspiracy 

initiated after the Supreme Court’s 2010 decision in Citizens 

United, a conspiracy involving the President, the IRS, the Department of Justice and every other federal agency. 

This committee has obtained no evidence linking these accusations to what we all now know were inappropriate criteria used by 

IRS employees in Cincinnati to screen applications for tax exempt 

status. 

The IRS has fully cooperated and provided congressional investigations of the alleged targeting with more than 800,000 pages of 

documents. These congressional investigations have cost the IRS at 

least $18 million so far and none of the evidence has shown any 

political motivation or White House involvement. 

Some of my colleagues on the other side of the dais have chosen 

to overlook the funneling of dark money into the political system 

of the United States. Republicans have demanded accountability 

from the IRS but have not demanded the same thing from the corporations who influence our national elections. 

In January 2010, the U.S. Supreme Court, in a five to four decision in Citizens United, ruled that political spending is a form of 

protected speech under the First Amendment and that the government may not prohibit artificial entities from spending money to 

support or oppose a specific candidate in an election, ruling essentially that corporations are not artificial entities, that they have 

First Amendment rights because after all corporations are people, 

my friend. 

Citizens United allowed for profit corporations, unions and nonprofit groups to raise unlimited funds and register for tax exempt 

status under the 501(c)(4) designation and the IRS became flooded 

with applications for this kind of status. Section 501(c)(4) designation is exclusively meant for organizations whose primary activity 

is social welfare defined in the Tax Code as making charitable, 

educational and recreational contributions to a community. 

While 501(c)(4)s are not barred from participating in political 

campaigns, it is stated plainly and clearly that political participation must be ‘‘an insubstantial amount of the group’s overall activity accounting for less than 50 percent of expenditures.’’ 

The IRS’s job was to make sure that these groups were following 

the rules so that they were not taking tax breaks meant only for 

groups contributing to the community, not hiding the influence 

that a select few individuals have on our Nation’s electoral politics. 

I am also deeply concerned by the recent reports from the Senate 

Permanent Subcommittee on Investigations regarding the manageVerDate Aug 31 2005 09:43 Nov 12, 2014 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 C:\DOCS\91126.TXT APRIL
5 

ment failures of the IRS and TIGTA in investigating alleged targeting of 501(c)(4)s. 

While the subcommittee’s investigation found no evidence of IRS 

political bias, PSI found the Inspector General’s exclusion of any 

analysis of how liberal or progressive groups were treated distorted 

the audit’s findings and significantly damaged public confidence in 

the impartiality of the IRS. 

Mr. Chairman, I ask unanimous consent to enter the September 

5, 2014 PSI report into the record. 

Mr. JORDAN. Without objection. 

Mr. CARTWRIGHT. We must shift our focus toward establishing a 

more objective and transparent set of standards for evaluating 

504(c)(4) applicants involved in political activities. 

As I have stated in previous hearings, this is about groups doing 

everything they can do to hide where they get their money, obscure 

their true intentions and have undue influence on the political system of our country tax free. 

Anonymous money in politics is something we do not need in this 

country and something I have repeatedly said disrupts the normal 

and natural democratic process and must be changed. 

With that, Mr. Chairman, I yield back. 

Mr. JORDAN. Will the gentleman yield? 

Mr. CARTWRIGHT. Yes. 

Mr. JORDAN. I would just point out that the report the gentleman 

asked be put in the record, which we did, the Ranking Member of 

that committee disagreed strongly and sort of in an unprecedented 

fashion, did not sign onto the report. That, of course, is Senator 

McCain, who I might add is somewhat well known for the McCainFeingold campaign finance law but yet, he says that report had significant flaws and would not sign onto it as is the custom with that 

committee in the United States Senate. 

With that, I would recognize the gentleman from California, the 

Chairman of the full committee. 

Mr. ISSA. Thank you, Mr. Chairman. 

Commissioner, welcome back. 

It is apparently Groundhog Day and we have a Pennsylvania 

member who knows about these things because he certainly is repeating some of the same tired lines we heard from the beginning 

of this investigation. During questioning, I may ask you some of 

these, but I just want to make a couple of quick points. 

The Ranking Member uses the words tax exempt, but we have 

already made clear that a 501(c)(4) only has an exemption from 

having to take other peoples’ post-tax paid money and pay some 

sort of a tax revenue again. 

Ultimately, if a 501(c)(4) takes $100,000 from 1,000 people, $100 

apiece, and spends it on some common effort and exhausts all of 

it, there really wouldn’t be any difference whether it was a (c) corp 

or a 501(c)(3) or 501(c)(4). At the end of the day, a 501(c)(4) or a 

conventional (c) corporation, a for profit business, ultimately, at the 

end of the day, if it exhausts all the money and has no profit, there 

is no tax. 

It is always amazing to me that people want to pretend that a 

501(c)(4) is a charity. It is not. People don’t get a tax deduction; 

they don’t get a write-off for giving to it. There is no special treatVerDate Aug 31 2005 09:43 Nov 12, 2014 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\DOCS\91126.TXT APRIL
6 

ment and every time we establish that, the Minority wants to continue to act like the taxpayers are funding this. There is no taxpayer funding. 

More importantly, the Ranking Member erroneously, beyond all 

possible evidence, continues to say Cincinnati. Mr. Commissioner, 

you know that Lois Lerner has been referred for criminal prosecution for her role. 

The American Bar Association has to look at her. The IG has to 

look at her because ultimately, she was pivotal to denying these 

501(c)(4)s their rights and her missing emails, although deeply 

wanted, are not completely necessary because the ones that we 

have seen show that she calls conservatives the A word with a hole 

afterwards. 

She refers, with disdain, to conservatives. She is an active liberal 

and it is clear her actions were set out to become to the detriment 

of conservatives. 

You, Mr. Ranking Member, can bash the IG anytime you want 

and you can say Cincinnati as many times as you want, but ultimately it was Lois Lerner who violated the law, went before the 

Bar Association and made a speech where she planted a question 

in order to pre-release and try to mislead people as to what she 

had been doing and try to cast the blame on a group of innocent 

people in Cincinnati. 

This committee has interviewed all of the Cincinnati people. 

Some of them very bravely said these things should have been approved and they recommended that. Some of them said nothing. 

Some of them might even have been, in fact, in agreement with 

Lois Lerner. 

Lastly, this Chairman is sick and tired of a false narrative coming from the Democrats that implies that we keep pointing to the 

President or keep pointing to somebody else. The fact is we have 

followed the trail where it leads and we have seen it lead to Lois 

Lerner, the subject of the missing emails, the subject of the emails 

we have seen and we have made that point very clear. 

No one in my key staff and none of my congressional leaders 

here on the committee has made assertions directly about the 

President. Yes, we are interested in seeing why a commissioner 

would endlessly go back and forth to the White House 100 times 

more than historically reasonable and it was not all for an Easter 

egg hunt. 

We don’t know who he talked to. What we do care about is this. 

There have been bad things happening before your watch, Mr. 

Commissioner, and you came in to help fix it. That includes the 

leakage of information that should not leak out of the IRS. It always claimed to be accidental but it happened. 

It includes that now famous transfer of over a million records, if 

you will, to the Department of Justice under Lois Lerner’s watch, 

clearly, in this member’s opinion, attempting to encourage the Department of Justice to get involved in a prosecution. 

We are deeply concerned with over $1 billion spent and we cannot maintain a few emails reliably. We are concerned with all of 

these areas. 

I would hope at some point, the Minority would quit acting as 

though they ever were part of this investigation, as though they 

7 

ever thought there was any legitimacy, and start recognizing that 

once a false statement made by the Minority has been disproved 

such as Cincinnati was responsible, that they would not expose us 

to Groundhog Day again by bringing up something that is patently 

untrue and disproven. 

Mr. Chairman, I appreciate your continuing to seek the truth. I 

appreciate the Commissioner continuing to come here, sometimes 

not as the witness we call but as a voluntary witness who believes 

he can answer our questions. 

I am concerned that, Mr. Commissioner, you don’t always come 

here with the answers that ultimately seem to be accurate. That 

is not uncommon before this committee. I think the Chairman 

would like to give you an opportunity to correct or further enlighten us in a lot of areas and I look forward to that. 

I know that your job as part of Article II of the Constitution, the 

Executive Branch, is important. Our job, as Article I, is important 

for oversight and appropriation. I, for one, would hope that never 

again from the dais will I hear people who think if the Supreme 

Court rules, it is open to ridicule rather than the recognition that 

they are the final words on what is or is not constitutional. 

With that, Mr. Chairman, I thank you for your indulgence and 

I yield back. 

Mr. JORDAN. I thank the chairman for his statement. 

Members may have seven days to submit opening statements for 

the record. 

Mr. Koskinen, you have done this a few times. Would you please 

stand. Pursuant to committee rules, we swear in witnesses. Please 

rise and raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

[Witness responds in the affirmative.] 

Mr. JORDAN. Let the record show that the witness answered in 

the affirmative. 

Mr. Koskinen, if you will give your opening statement, we will 

get right to questions. Thank you again for being here. 

WITNESS STATEMENT 

STATEMENT OF JOHN KOSKINEN, COMMISSIONER, INTERNAL 

REVENUE SERVICE 

Mr. KOSKINEN. Chairman Jordan, Chairman Issa, Ranking Member Cartwright and members of the subcommittee, thank you for 

the opportunity to update you on the work being done by the IRS 

to cooperate with the investigations into the findings by the Treasury Department and the Inspector General for Tax Administration 

regarding the improper criteria used in processing applications for 

tax exempt status. 

I will also discuss the steps we have taken and continue to take 

to remedy the issues discussed in TIGTA’s 2013 report and in subsequent hearings. The IRS remains committed to cooperating fully 

with the Oversight Committee investigations and we continue to 

make every effort to fulfill information requests from Congress and 

the other investigating entities. 

8 

To date, the IRS has produced more than 1 million pages of 

unredacted documents to the tax writing committees and more 

than 810,000 pages of redacted documents to the House Oversight 

and Government Reform Committee and the Senate Permanent 

Subcommittee on Investigations. 

Related to the IRS document production, I want to take the opportunity to clear up a misunderstanding that has arisen about our 

records retention practices. Recently, there were erroneous press 

reports that the IRS backs up information by sending it to a government-wide data base. 

I want to clarify there is no system outside the IRS, government 

or otherwise, that the IRS uses to store emails. 

I would also like to clear up some confusion about the IRS issued 

Blackberry device used by former agency executive Lois Lerner. 

Ms. Lerner’s Blackberry was replaced in February 2012 with a 

newer model as part of an ongoing Blackberry update that involved 

about 5,000 IRS employees. 

Because the old Blackberry was obsolete, it was disposed of 

under standard IRS recycling procedures at that time. This included erasing any information on the device to prevent dissemination of any taxpayer sensitive information that might be on it. 

The information was not transferred to the new Blackberry because our Blackberrys only display email that is managed by the 

employee’s Microsoft Outlook mailbox which is maintained on the 

IRS’s servers. The replacement Blackberry Ms. Lerner received in 

2012 and used from that point on is in TIGTA’s possession. 

Now that the Permanent Subcommittee on Investigations has released the report of this investigation, we look forward to the conclusion of other investigations in the very near future. We stand 

ready to receive the recommendations of the investigators which we 

believe will help to ensure that the problems that arose never happen again. 

To further guard against such problems as we go forward, the 

IRS has also been implementing managerial and operational improvements in the determination process for tax exempt status and 

more broadly, throughout the agency. 

As part of this work, the IRS has completed action on all nine 

recommendations in the TIGTA report. Some of the actions taken 

include improving employee training in the determinations area, 

creating a new procedure for documenting why applications are 

chosen for further review, and establishing a formal process for employees in the determination unit to request help from our technical experts. 

We have also established an agency-wide Enterprise Risk Management Program. This has involved creating risk management liaisons in each area of our operation and providing for the regular 

identification and analysis of risks to be eliminated and managed 

across the agency. 

We are working to create a culture where employees are encouraged to report any issues or problems that occur. Our goal is to 

have employees understand that the only problems we cannot solve 

are the ones we do not know about. 

9 

As a corollary to that effort, we are encouraging the flow of information from frontline employees up through the organization as 

well to frontline employees from senior managers. 

Another area where the IRS is making improvements involves 

the retention of official records. We have been consulting with the 

National Archives and Records Administration to ensure that we 

are fully aligned with their standards for managing and storing 

emails deemed to be federal records. 

As a first step, we will implement an interim policy that requires 

our executives’ email records to be retained on secure servers rather than on their hard drives. Our next step will be to purchase the 

necessary equipment and technology to allow us to expand this approach to other employees and to extend the secure storage periods 

beyond those stipulated in the NARA standards. 

Finally, our ultimate goal is to ensure that all email records are 

not only securely saved and stored but also easily retrievable. This 

result would require funds we do not presently have but we continue to look for other solutions and we are holding discussions 

with other government agencies with similar challenges. 

This concludes my testimony. I would be happy to take your 

questions. 

[Prepared statement of Mr. Koskinen follows:] 

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Mr. JORDAN. Thank you, Mr. Koskinen. 

Commissioner, I plan to do my round of questioning on the fact 

that you had confirmed there were no backup tapes and we subsequently learned there are backup tapes. You did not tell us about 

the servers. We have learned there are now servers that contain 

this information and a host of other things. 

The staff pointed out to me just recently, just yesterday, and I 

re-read it as I walked in. I want to go to a statement that you 

made in an interview a couple of months ago. In fact, let us put 

it on the screen. 

Mr. KOSKINEN. Do you have a hard copy of that? 

Mr. JORDAN. We can give you a hard copy too, although we have 

a slide that is big enough that we can read. If we could a copy to 

the Commissioner, that would be great. 

Let us go to the highlighted one. Is this a statement that you 

made, Commissioner? Can you look at it and see if you made this 

statement? It is reported that you did. 

Mr. KOSKINEN. Yes, I recognize it. 

Mr. JORDAN. I want to go to the underlines. ‘‘There are some people who don’t want a straight story, they don’t want this to end.’’ 

Who is the ‘‘they’’? Who are you referring to? 

Mr. KOSKINEN. Just talking generally about the fact that a year 

and a half ago, the IG issued a report noting that there were management issues at the IRS that needed to be addressed and since 

then, we have, certainly in the last several months, with regard to 

that basic issue, have not furthered the discussion very far. We 

have, as I said, taken all the actions the IG recommended. 

Mr. JORDAN. You did not answer my question, Mr. Commissioner. Who is the ‘‘they’’? 

Mr. KOSKINEN. It is a general statement. I did not have anybody 

in particular in mind. 

Mr. JORDAN. Let me go back to the one before that. Who is the 

‘‘some people’’ in the sentence before, the clause before—‘‘there are 

some people who don’t want a straight story.’’ Who is the ‘‘some 

people’’? 

Mr. KOSKINEN. That is just a general statement. 

Mr. JORDAN. This is what I cannot understand. What people 

would not want the truth—what straight story? Who are the people 

who don’t want a straight story thereby meaning who are the people who want a false story? Do you know who they are? 

Mr. KOSKINEN. There have been examples. An example would be 

that a claim is made as a result of passing conversation with the 

Justice Department. 

Mr. JORDAN. Mr. Commissioner, look, look, look. 

Mr. KOSKINEN. Can I answer the question? 

Mr. JORDAN. You can answer the question. You cannot just talk. 

‘‘There are some people who do not want a straight story.’’ All I am 

asking you is—you said this, I did not, so you should know who the 

‘‘some people’’ and the ‘‘they’’ are in the two sentences you said. 

Who are these ‘‘some people,’’ who are the ‘‘they’’ who do not want 

the truth? I want to know who those people are. 

Mr. KOSKINEN. They are the people who issue information without a substantial basis that turns out to be erroneous. 

17 

Mr. JORDAN. Is the ‘‘some people’’ in that paragraph—go down to 

the next paragraph where it says ‘‘I’m not sure people really want 

a special prosecutor.’’ Are the ‘‘people’’ in that sentence the same 

as the ‘‘some people’’ in the sentence above? 

Mr. KOSKINEN. Not necessarily, they are two different statements. If you like, I would like to explain the first one. 

Mr. JORDAN. Who are you referring to who do not want a special 

prosecutor? 

Mr. KOSKINEN. I am referring there to the fact that, as I say, 

that a special prosecutor—— 

Mr. JORDAN. Are you referring to the people who actually voted 

for a special prosecutor, is that who you are referring to because 

that is the context of the special prosecutor? Do you think the individual member of the Congress who sponsored the legislation, the 

resolution for a special prosecutor does not want a special prosecutor? 

Mr. KOSKINEN. I think that is right, although I think—— 

Mr. JORDAN. You do not think I want the special prosecutor to 

happen? I happen to be the guy who sponsored the resolution. Do 

you know how many Republicans voted for it, Mr. Commissioner? 

Mr. KOSKINEN. No. 

Mr. JORDAN. Two hundred and twenty-four. Which one of those 

224 Republican members does not really want a special prosecutor? 

Mr. KOSKINEN. I am sure they all think they do. 

Mr. JORDAN. That is not what you said. You said some of them 

do not. I am asking you which ones do not. 

Mr. KOSKINEN. I did not refer to any Republicans. I just said as 

a conceptual matter, there are people—— 

Mr. JORDAN. Let me ask you about the other party then. Do you 

know how many Democrats voted for the special prosecutor? 

Mr. KOSKINEN. There are a whole series of—— 

Mr. JORDAN. Twenty-six, I know. 

Mr. KOSKINEN. Good. 

Mr. JORDAN. Twenty-six of them. Twenty-six of them said it is 

so important, we are willing to go against what our attorney general has recommended. We want a special prosecutor. Are you saying some of those 26 Democrats are the same people who do not 

want a special prosecutor even though they voted for it? 

Mr. KOSKINEN. I am just saying that a special prosecutor would, 

in effect, take total jurisdiction over all of this and that would—— 

Mr. JORDAN. Oh, and that is the point and then your point is if 

there is a special prosecutor, we would not be able to have these 

‘‘fun hearings.’’ That is the part that just bothers me and more importantly the American people. The American people do not think 

this is fun, they want the truth. 

So far, what has happened every single time you have come in 

front of this committee is you have told us something that later 

turned out not to be accurate. You said you could confirm there 

were no backup tapes and the IG says, in fact, there are backup 

tapes. 

Mr. KOSKINEN. Do you want to have a discussion about that? 

Mr. JORDAN. We will but unfortunately, I am out of time because 

we spent so much time on two sentences you made that you cannot 

18 

even tell us who you are referring to. I would love to get into that 

but I am out of time. 

I have to recognize the Ranking Member because you cannot tell 

me who ‘‘they’’ is you are referring to and you cannot tell me who 

the ‘‘some people’’ are you are referring to and you cannot tell me 

who would not want the truth even though you allege that there 

are members of Congress who do not want the truth and do not 

want the special prosecutor they voted for. 

You alleged all those things and you could not tell me the answer 

to any of that and now, unfortunately, I have to recognize the 

Ranking Member. 

Mr. KOSKINEN. Could I just note I cannot tell you because you 

will not let me answer the question. 

Mr. JORDAN. I gave you plenty of time to answer the question. 

Mr. KOSKINEN. I think the record will show I was not given plenty of time to answer the question. 

Mr. JORDAN. The record will show you were given plenty of time 

to tell me who the ‘‘they’’ is in the sentence you said, who the 

‘‘some people’’ were in the sentence you said, ‘‘who doesn’t want a 

straight story, who doesn’t want the truth,’’ you were given ample 

time to answer those and you did not do it. 

The gentleman from Pennsylvania is recognized. 

Mr. KOSKINEN. I would be happy to look at the record with you 

and demonstrate that as I started to answer that question, you 

said, ‘‘I want an answer. I don’t want you to talk on’’ and I was 

going to give you examples and then you cut me off. 

I am happy to have you cut me off but I am not happy to have 

you misrepresent what my statement was. 

Mr. JORDAN. The gentleman from Pennsylvania. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

Once again, I will reiterate that we are not in Washington and 

we are not in Cincinnati today. We are back home in Punxsutawney. 

Let me ask you this, Mr. Koskinen. Would you like to amplify 

your answer to the slew of questions you just got from the Chairman? 

Mr. KOSKINEN. I would appreciate that opportunity. 

Mr. CARTWRIGHT. Go ahead. 

Mr. KOSKINEN. With regard to the statement that I come up here 

and then say things that are not true, for instance, about the 

backup tapes, it is not yet clear whether there are any backup 

tapes that have any information on them. 

In all of my hearings, I have testified at some length about the 

fact that we have disaster recovery tapes and that we keep them 

for six months. We have actually kept them all now since December 2012. Then those backup tapes are recycled. Never did I say 

they disappeared. I said they were recycled. 

I have not talked to the IG. He does not give me regular updates 

about this but I do understand—— 

Mr. JORDAN. Would the gentleman yield just to clarify? 

Mr. KOSKINEN. Do I get to answer or do you want to continue 

talking? 

Mr. CARTWRIGHT. He is still answering the whole raft of questions you gave him so far. 

19 

Mr. JORDAN. Go ahead. 

Mr. KOSKINEN. The IG, as I understand it, and I understand 

some of that from releases out of this committee, the IG has taken 

a series of tapes to see if there is anything on them but the tapes 

he has taken are tapes that, in fact, we have talked about. They 

are the six month disaster recovery tapes that are recycled, stored 

and available until they are not usable. 

There are no new tapes that are out there that the IG has found. 

He is simply looking at that supply of tapes. I have encouraged him 

to do that. I have told him if he can find more emails, that would 

be terrific because we would support that. 

With regard to the issue of the truth, I started to explain that 

there are people who quickly put out information that does not 

turn out to be true that they could have checked. The issue about 

whether the IRS has some participation in some government-wide 

backup system, which immediately led to press reports and comments from other people that there were somehow now emails from 

Lois Lerner that existed that we just did not either want to spend 

the money or the time to go find turned out to be totally untrue. 

Somebody could have called us and we would have made it clear 

to them that whatever the conversation was, which I am not privy 

to obviously, in passing with the Justice Department turning was 

with regard the disaster recovery tapes that we have talked about 

in at least three different hearings. 

Thank you for the opportunity. 

Mr. CARTWRIGHT. Certainly. 

Mr. Koskinen, you were also given a number of questions about 

the remarks you made in July 2014. Do you want to further explain the gist of those remarks? 

Mr. KOSKINEN. Just to those remarks, as I say, there are some 

people who rather than calling us and saying, do you have a government-wide backup system you participate in or you forgot about, 

could have been told, no, we do not have one. The only thing we 

have are disaster recovery tapes that I have provided all the accurate information I can. 

Somebody could have called us and said, do the backup tapes, 

disaster recovery tapes exist and I would have repeated for them, 

sure, we keep them now from December 2012 and the ones that we 

recorded over get recorded over several times, so there is a big 

stack of them. 

I do not know where they are but we have never said that they 

all disappeared. In fact, I had a long conversation and exchange 

with somebody about the fact that we use them over and over until 

they are unusable and then we destroy them at that time. 

The fact that the IG, which we have supported—I have told the 

IG anything you want, you can have and anyplace you can find 

more emails, I would be delighted. The fact that the IG has taken 

some of those is not new news unless you decide you want to put 

it out as new news. 

Mr. CARTWRIGHT. Let me get this straight, Mr. Koskinen. You 

are here trying to comply with all the requests for information, is 

that correct? 

Mr. KOSKINEN. Yes. 

20 

Mr. CARTWRIGHT. You are here to be helpful in this investigation, 

right? 

Mr. KOSKINEN. To the extent we can. 

Mr. CARTWRIGHT. You are also saying that you are willing to be 

helpful and all I have to do is call your office and say, can you clarify this response, can you clarify that, can you give us more information and you are willing to put up with that as well, is that correct? 

Mr. KOSKINEN. It is not putting up. In fact, the chairman was 

very thoughtful and sent me a letter in advance of the hearing with 

some questions that he gave me the opportunity to provide the answers to and I appreciated that. We tried to get it back as quickly 

as we could. 

Mr. CARTWRIGHT. But if they don’t like one of your answers, instead of working it out over the telephone, they bring you back up 

here, High Dudgeon, and then act outraged and suggest that you 

have not been straight with the American public. 

I want to give you the chance to say categorically, Mr. Koskinen, 

every time you have testified, have you testified to the truth to the 

very best of your ability and recollection? 

Mr. KOSKINEN. I have. 

Mr. CARTWRIGHT. How interested are you that the American public get the straight story? 

Mr. KOSKINEN. I think it is critical. As I said from the start, we 

take the basic issue seriously. Improper criteria should not have 

been used. We should do whatever we can to prevent it from happening again. 

The American public needs to and deserves to be confident that 

they will be treated fairly no matter who they are, whatever organization they belong to, or whoever they voted for in the last election. People have to be confident if they hear from the Internal 

Revenue Service, it is because of an issue either in their tax return 

or their application and if someone else had the same issue on 

their tax return or their application, they would get treated the 

same way. 

It is critical to the integrity of the tax collection administration 

process for the American public to be confident about that. 

I have never minimized the problem. I have always said we treat 

it seriously. The reason I spent time in my testimony today was to 

try to reassure everyone that we are taking all the actions that we 

can to make sure this does not happen again. 

Mr. CARTWRIGHT. Thank you so much, Commissioner. 

I yield back. 

Mr. JORDAN. I thank the gentleman. 

The gentleman from North Carolina is recognized. 

Mr. MEADOWS. Thank you, Mr. Chairman. 

Thank you for being back with us. 

I think there are three things that the American people want. 

First is the whole truth. The dribbling out of information, whether 

it be in the press or with this particular story or another, is troubling. 

Most recently, you mentioned the Blackberry that actually was 

wiped after indeed an investigation had been started not just here 

congressionally, not just with the IG, but also an internal invesVerDate Aug 31 2005 09:43 Nov 12, 2014 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\DOCS\91126.TXT APRIL
21 

tigation, according to testimony given in this room, that had taken 

place within the IRS. That is troubling. 

I also know that this did not happen on your watch. You have 

been given a task of cleaning up a mess. You are now the fourth 

Commissioner of the IRS that we have had the opportunity to hear. 

I think the people want two things beyond the whole truth. They 

want the people that were responsible for this to be held accountable. They do not understand why people have not been fired or 

lost their jobs. 

Would you agree that this was not just relegated to a couple of 

rogue agents in Cincinnati? Would you agree with that? 

Mr. KOSKINEN. That is right. I think it is clear that there was 

a management failure on the part of the agency that needs to be 

corrected. 

Mr. MEADOWS. I am going to bring us to the third point which 

is really what they want to make sure of is that what can we do 

to make sure this does not happen again so we can start to rebuild 

that trust and foundation? 

You mentioned IT failures. I know we have had a few conversations. Yesterday, we had, on the House Floor, a number of bills 

that were passed out of the House that are now being sent to the 

Senate that would address missing emails and senior level executive folks in terms of those who maliciously will use their private 

devices to get around the Records Act, whether it be the federal 

records Act or the presidential records Act. 

Those pieces of legislation are designed to make sure that it does 

not happen again. Is that something that you can support at least 

in principle? It sounded like from your testimony that you are already going there. 

Mr. KOSKINEN. Yes, in principle. I have not seen the language of 

the bills but clearly we already have a policy. One of the things we 

are doing is making sure everybody understands that you cannot 

use your personal email for IRS business. That has been a policy. 

We need to reinforce that. 

Mr. MEADOWS. You would agree that has at least occurred on a 

few occasions within the IRS? 

Mr. KOSKINEN. People do it inadvertently. They will send something to their own computer so they can print it out while they are 

working at home. We are trying to make it clear to everyone, even 

that simple issue should not be taken. We have trained people. We 

are going to retrain everyone to make sure they understand that. 

Mr. MEADOWS. In your testimony, you talked about not having 

the resources to do some of the things. As I understand, there is 

this authorization that the IRS needs to pay some of their IT people above the normal GS levels. That authorization is about to expire. 

Is that something you need reauthorized in terms of trying to address some of these IT needs? My understanding is a lot of those 

people are IT people, is that correct? 

Mr. KOSKINEN. People working on it. In fact, Chairman Issa has 

been a strong supporter over time of the fact that we need to have 

what is called streamlined critical path authority to make sure we 

can get the best people to come and work on those systems. 

22 

We are trying to improve our IT system, to learn from this lesson 

and make sure that we store emails and ultimately, that we have 

a searchable database that makes it easier. We should not have to 

spend $18 million to get the information you want. 

I said, I hope to talk to Chairman Issa about this. The streamlined critical path only applies to a handful of people, 25 right now. 

Virtually all of them are technical or analytical people. That authority would be very helpful. 

Mr. MEADOWS. If this body does not act, you are saying that authority will disappear at the end of the calendar year? 

Mr. KOSKINEN. The authority will disappear at the end of this 

calendar year and starting in January in a phased process because 

they are in various stages of their four year contracts, we will lose 

people. In January, we will lose the head of our Compliance Analytics Unit as we go forward. 

Mr. MEADOWS. Let me close with this final question. If we were 

to give you this authority, can you assure the American people that 

anyone who is getting paid under this authority was not directly 

or indirectly involved in any of the targeting work that is going on? 

Can you assure the American people that is the case? 

Mr. KOSKINEN. I can assure you of that. It is 25 people and none 

of them were involved in any of the use of improper criteria, any 

of the discussions that went on at that time. 

Mr. MEADOWS. I thank you. 

I yield back, Mr. Chairman. 

Mr. JORDAN. I thank the gentleman. 

The gentleman from Nevada is recognized. 

Mr. HORSFORD. Thank you, Mr. Chairman. 

I want to follow up to my colleague, Mr. Meadows, who I think 

just laid out a very reasonable set of objectives. I agree with him 

that the majority of Americans want the truth, accountability and 

the agency to restore trust with the American people out of this unfortunate situation with the IRS. 

I think that because of his questions, you were able to outline a 

number of specific recommendations that you need from Congress 

to do your job and the tools that you need, as well as things that 

you as the IRS need to do specifically to improve the management 

of the IRS. 

I think that is more the tone we should be working from, not the 

abusive tone that we continue to have from the chairman of this 

subcommittee or the full committee that turns this into something 

that it is not. 

I want to ask you, Commissioner, about a letter that I and 26 

of my other colleagues sent to the Acting Commissioner, Mr. 

Werfel, relating to the discrepancy between the agency’s regulatory 

interpretation of the law dealing with 501(c)(4)s and what the U.S. 

Code actually enumerates in statute. 

Are you familiar with the request that I made, along with 26 of 

my colleagues, on June 6, 2013? 

Mr. KOSKINEN. I am not familiar with the specific language but 

I do know a number of people have been encouraging us that when 

we look at the regulations under the 501(c)(4) to start with the 

statute which says that social welfare organizations under 501(c)(4) 

should be exclusively involved in social welfare. 

23 

Mr. HORSFORD. The regulation states primarily? 

Mr. KOSKINEN. The regulation established in 1959 said primarily. 

Mr. HORSFORD. Isn’t that problematic? 

Mr. KOSKINEN. It has been around for a long time and we have 

over 150,000 comments about how to deal with that issue which we 

are seriously taking a look at but it is the issue. One end of the 

spectrum is it should be exclusive, i.e., no activity and at the other 

end of the spectrum is there should not be any limitations at all. 

A third in the middle is primarily some percentage close to 50 

would be a good number. We are looking at that entire range of 

possibilities. 

Mr. HORSFORD. Until you make that final determination, this 

ambiguity remains. Because of the recent Citizens United decision, 

which created the huge influx of the number of organizations that 

were applying for tax exemption status, has contributed to this 

problem, has it not? 

Mr. KOSKINEN. You are right. We are still dealing with facts and 

circumstances. It is interesting. I have been reading and I asked 

for the most thoughtful comments on both sides of each of these 

issues—what the definition should be, how much you should be 

able to do and to whom it should apply. 

There is a consensus across the political spectrum, as well as the 

organizational spectrum, that nobody thinks the present facts and 

circumstances test gives anybody any guidance as to how it should 

be. 

Mr. HORSFORD. In addition to the critical path authority, the 

searchable database and some of the internal policies, having a review and to get a standard that is clear on this exclusive requirement would be an additional area you would recommend? 

Mr. KOSKINEN. I think if the Congress wanted to take a look at 

this and pass a law. 

Mr. HORSFORD. The law has already been passed. 

Mr. KOSKINEN. Right, and if you wanted to look at it, that would 

be fine. We view it as our responsibility. 

Mr. HORSFORD. To follow the law? 

Mr. KOSKINEN. To follow the law and to provide a regulation. As 

I said when I first started, any regulation needs to be clear, needs 

to be fair to everyone and needs to be easy to administer. 

Mr. HORSFORD. I will add one more. It needs to be in compliance 

with federal law. 

Mr. KOSKINEN. It should comply with the federal law. 

Mr. HORSFORD. Do we have any idea how much taxpayer money 

is lost on granting tax exemption to groups that would otherwise 

be ineligible for 501(c)(4) status? 

Mr. KOSKINEN. I do not have that information. 

Mr. HORSFORD. I think that is another area I would ask that this 

committee look into. 

Mr. ISSA. Would the gentleman yield? 

Mr. HORSFORD. Mr. Chairman, I would like to ask with unanimous consent to enter into the record my letter dated June 6, 2013 

along with my colleagues be entered in the record without objection. 

Mr. JORDAN. Without objection. 

24 

Mr. HORSFORD. Thank you. 

My time has expired. I yield back. 

Mr. JORDAN. I will recognize the gentleman from California for 

his five minutes. 

Mr. ISSA. Commissioner, this might be a good time to follow up 

on the gentleman from Nevada. 

A 527 versus 501(c)(4), 527 can do 100 percent political, right? 

Mr. KOSKINEN. Correct. 

Mr. ISSA. Any tax difference? 

Mr. KOSKINEN. There are complicated tax issues but basically—— 

Mr. ISSA. No. 

Mr. KOSKINEN. Basically, no. 

Mr. ISSA. There is no tax money lost at all. If a 501(c)(4) was 

suddenly not able to do what they are doing because we take the 

political free speech portion of what they can do in addition to social welfare to zero and they became 527s, there would be no tax 

ramification. Isn’t that clear and simple? 

Mr. KOSKINEN. Not quite. 

Mr. ISSA. Revenue to the taxpayers would be de minimis, zero? 

Mr. KOSKINEN. Might be. Some organizations spend their money 

every year and if it is a legitimate expenditure as a business expense, there is some question what is a business expense. 

The second issue is if they have funds and invest them, some organizations have capital and they keep it for a while, the earnings 

on those investments would be taxable if they were not a (c)(4). 

Mr. ISSA. But a 527, which the gentleman from Nevada runs a 

527 if he thinks about it right, he has a PAC for his reelection? 

Mr. KOSKINEN. There are significant differences between the 

527s and the 501(c)(4)s. 

Mr. ISSA. The canard that somehow the taxpayers are funding 

this is simply not true. For all practical purposes, if you raise 

money and spend it each year and do not invest it and make a 

whole bunch of secondary money off your investments, the taxable 

event on a 527 is zero? 

Mr. KOSKINEN. That is right. As long as your expenditures are 

deductible and there is some question about the nature of some expenditures. 

Mr. ISSA. But a 527’s expenditures can be a slam against the 

gentleman from Nevada and it is okay. They can do an ad that 

says he is awful and should not be re-elected or they can do one 

that says I am awful and should not be re-elected. 

Mr. CARTWRIGHT. Will the gentleman yield for a moment? 

Mr. ISSA. No. The gentleman from Nevada chose not to yield. 

The fact is there is no tax consequence and I hope we can put 

that to rest that although there is a hypothetical, that would not 

be the reality. 

Let me get to one question and I think it is an important question. I realize you are not here as a constitutional scholar. You told 

me one time you gave up being a lawyer for Lent one year and 

never went back. It is still the best reason to give up being a lawyer that I can think of. 

Before many people on the dais were born, the NAACP v. Alabama, do you know that case? 

25 

Mr. KOSKINEN. I am not sure I do. 

Mr. ISSSA. That case was fairly simple. It said the NAACP had 

a right to animus free speech under the First Amendment. It did 

so because, in fact, contributions to the NAACP support were being 

sought by people who objected to what they were involved in. That 

freedom of association and freedom of free speech was founded. 

If we look at that case, Citizens United is not so different. The 

fact is people’s ability to lets say support conventional marriage 

and not have the IRS leak the list of the donors so they can be targeted, in reality, that is something pretty much engrained in the 

Constitution and repeatedly, the Supreme Court has set up. 

I want to digress a little bit, just one quick one, from this because you did mention your need to for a reauthorization. I just 

want to touch on some areas we are going to be talking about in 

reauthorization. 

Do you remember the name Stephen Manning? 

Mr. KOSKINEN. Yes. 

Mr. ISSSA. Stephen Manning’s job was he was a CIO, Enterprise 

Networks, a very appropriate person to look at to try to make sure 

that we kept him if we wanted to get to I guess better email retention and so on, right? 

Mr. KOSKINEN. Right. 

Mr. ISSSA. A critical person. Manning has had two job titles but 

his total period of service was 2010 but with a small change from 

Associate CIO, Enterprise Manager, no pay change, to Deputy CIO 

for Strategic Modernization. He managed to have his four years extended, isn’t that true? 

Mr. KOSKINEN. The IG has just actually issued a report or is in 

the process of issuing a report where they looked at all that. They 

looked at everybody on the critical path, thought they had been appropriately appointed and where they had new jobs or extensions, 

they found no problem with that. 

Mr. ISSSA. This member finds a potential one because the current 

statute intends that you hire people for four years and they leave 

at the end of four years, not that you move the same people around 

and give them different titles. Let me go into one that concerns me 

more and it will be a subject for any reauthorization. 

Jonathan Davis, do you remember that name? 

Mr. KOSKINEN. I do remember that name, yes. 

Mr. ISSSA. Jonathan Davis was Chief of Staff to the Office of the 

Commissioner. He changed when he ran out of his time to Chief 

of Staff, Executive Director of Strategic and Organizational Development, Office of the Commissioner, $215,000 increased to 

$227,000 for essentially a political choice person to work as Chief 

of Staff to the Commissioner. 

Do you believe that the intent of Congress was to have the technical expertise of being chief of staff be one of them that we pay 

a quarter of a million dollars nearly and that they change from 

being chief of staff to some subtitle chief of staff, the seemingly 

lower position coming second isn’t anything other than a circumvention of the intent of the four year limit? 

Mr. KOSKINEN. As I said, the Inspector General looked at all—— 

Mr. ISSSA. No, no. Commissioner, you are talking about people 

that have to say did you live up to the intent of Congress in our 

26 

opinion and should we reauthorize it and should we allow somebody who was deeply involved with the Commissioner potentially 

in targeting has left, should we allow somebody to be the chief of 

staff for more than four years make over $200,000 as part of this 

reauthorization? 

Mr. KOSKINEN. I would not do that. If it were up to me, my chief 

of staff and the selection would not be a critical pay. 

Mr. ISSSA. That is part of what this committee is going to have 

to be part of in reauthorization, to make sure it is limited to four 

years and technical unless they choose to make it longer. 

I will tell you Jonathan Davis, to me, is a poster child for somebody, mostly prior to your coming in, abusing the system. 

Thank you, Mr. Chairman. I yield back. 

Mr. JORDAN. I thank the chairman. 

The gentleman from Virginia is recognized. 

Mr. CONNOLLY. Thank you. I would ask the chairman to be accommodated to the tune of one minute and 40 seconds. 

Mr. JORDAN. I have done that thus far and I will continue. 

Mr. CONNOLLY. Pardon me? 

Mr. JORDAN. I have done that thus far. 

Mr. CONNOLLY. You are always fair about time and I thank you. 

Mr. Koskinen, welcome back. 

Mr. KOSKINEN. I am happy to be back. 

Mr. CONNOLLY. I want to join with the Ranking Member in 

thanking you for your service. You were in retirement, a comfortable life and did not have to come and do this. You did it because there was a problem at IRS and you wanted to respond to 

the request to help. 

It is true, is it not, that your predecessor, Mr. Werfel, actually 

discovered the problem of recordkeeping and actually issued new 

guidelines for how it should be done, is that correct? 

Mr. KOSKINEN. I was not aware of that actually. 

Mr. CONNOLLY. Looking at the IG’s report, are you familiar with 

the report that came out by Mr. Levin of the Senate Permanent 

Subcommittee? 

Mr. KOSKINEN. I am. 

Mr. CONNOLLY. Have you had a chance to review it? 

Mr. KOSKINEN. I have reviewed it. 

Mr. CONNOLLY. Do you agree with the findings? Are you taking 

action with respect to the findings? 

Mr. KOSKINEN. At this point, a significant part of the recommendations go to the earlier discussion about the 501(c)(4) regulations. As I said, we got 150,000 comments and those suggestions 

and comments from the committee will be included in our consideration. 

Mr. CONNOLLY. One of the issues with respect to that has to do 

with the disclosure donors, is that not correct? 

Mr. KOSKINEN. That is correct. Ultimately, the difference between the 527s and the 501(c)(4)s is 527s have to review their donors, the 501(c)(4)s do not. 

Mr. CONNOLLY. In order to qualify for 501(c)(4) status, what 

must one do? What does one have to prove in order to qualify for 

that status? 

27 

Mr. KOSKINEN. You have to prove that under the present status 

that your primary purpose is social welfare. 

Mr. CONNOLLY. What does the law say with respect to social welfare? What is the adverb? 

Mr. KOSKINEN. The adverb in the law is exclusively. 

Mr. CONNOLLY. Right. How did we manage to go from exclusively 

to primarily? 

Mr. KOSKINEN. When it was reviewed in 1959 by the Internal 

Revenue Service, the decision was made, and I have not been able 

to have anyone tell me exactly how they came to it, that primarily 

would be an appropriate measure of activity. 

Mr. CONNOLLY. We have used the example before. If you have a 

couple dating, there is a difference between telling each other this 

is an exclusive relationship versus this is my primary relationship—primarily, I am going to be faithful to you as opposed to exclusively, I am going to be faithful to you. 

The words really do mean different things, do they not, even just 

to common sense? 

Mr. KOSKINEN. They do. I think in a number of areas in the 

Code, there are issues where it says something like exclusively or 

only and the regulations have allowed for some leeway so that people did not inadvertently end up in violation of the exclusion. 

Section 501(c)(3)s basically have a standard that basically says 

you have to virtually everything but if you actually inadvertently 

spend some portion of your money and time on an otherwise not 

allowed activity, it will not cause you to lose your certificate. 

I think probably what they had in mind with primarily was to 

not have people inadvertently get caught up in ex post facto review 

of what they were doing. 

Mr. CONNOLLY. One might suggest it is time to return to that 

subject and the meaning of those two adverbs because I think there 

are organizations that I do not think anybody in the public would 

agree are primarily or exclusively social welfare organizations. 

They are primarily political organizations. That is fine but that is 

not what the law called for and the interpretation is very liberal. 

In the time remaining to me, I want to go back to the TIGTA 

report. The IG was informed or the IG office was made aware as 

early as January 2012 that the IRS should use BOLOs but included the words occupy and others that could be associated with 

progressive groups. Are you aware of the fact that they were notified as early as January 2012? 

Mr. KOSKINEN. I did not know that until I read the report. 

Mr. CONNOLLY. Assuming that is corroborated, can you explain 

why the audit, knowing that back in January 2012, nonetheless 

would only look at conservative trigger words in its audit on 

BOLOs? 

Mr. KOSKINEN. I do not know the background of what the IG was 

doing. I think the IG would have to answer that question. 

Mr. CONNOLLY. Is it true that since the release of the TIGTA report, the IRS has eliminated BOLO listing for conservative as well 

as progressive groups? 

Mr. KOSKINEN. That is correct. Those lists and anything that 

looks like those lists is no longer used. As I said, we have taken 

28 

the problem seriously and are anxious to make sure it never happens again. 

Mr. CONNOLLY. If the problem was exclusively targeting conservative groups such as the Tea Party or Patriot, why would you 

eliminate BOLOs for progressive groups? 

Mr. KOSKINEN. Again, I think judging an organization as to 

whether it is subject to more review or whether it qualifies simply 

by the name of the organization is improper, whatever the name 

of the organization is. 

Whether it has progressive or some other liberal sounding name, 

Tea Party or some other conservative sounding name, the name 

itself should not be the criteria. 

Mr. CONNOLLY. Mr. Chairman, thank you for the extra time. 

Thank you, Mr. Koskinen, for your service to your country. 

Mr. JORDAN. I thank the gentleman. 

The gentleman from Arizona is recognized. 

Mr. GOSAR. Thank you, Mr. Chairman. 

Can you put up your original slides from your original testimony, 

please? 

Mr. Koskinen, there is a lot of debate back and forth so I would 

like to get your take. Mr. Shulman denied any targeting. Would 

you agree with that? 

Mr. KOSKINEN. I am sorry? 

Mr. GOSAR. Would you deny or confirm number one up there? 

Mr. KOSKINEN. There has been this long debate as to whether 

the use of improper criteria is targeting or not. Clearly, the IG report made a finding that none of us have disagreed with that improper criteria were used. 

To move to the next step and say whether there was targeting 

or not is, in fact, the basis of a lot of the discussion back and forth. 

Clearly, improper criteria were used. 

Mr. GOSAR. I agree. We are going to go through this kind of 

quickly. 

Mr. KOSKINEN. Okay. 

Mr. GOSAR. Lerner denies any targeting, the second one. Can you 

confirm or deny that second one? 

Mr. KOSKINEN. Again, there is this issue so that clearly improper 

criteria were used and it was applied to organizations when it 

shouldn’t have been. 

Mr. GOSAR. Once again, you are upholding number one and number two, right, they are false and misleading statements? 

Mr. KOSKINEN. I am saying targeting is not a word that I use 

as a matter—the IG didn’t use. 

Mr. GOSAR. Semantics, semantics. 

Mr. KOSKINEN. Some people attach a lot of significance to semantics. If the question is, were those misleading to the extent that 

they maintained improper criteria, were not used, then that was 

not true. The improper criteria were used. 

Mr. GOSAR. Let us go to three, this makes it easy. Lerner apologizes for line people in Cincinnati, true or false? 

Mr. KOSKINEN. Apologizes for? 

Mr. GOSAR. That this happened because of line people in Cincinnati, true or false? 

29 

Mr. KOSKINEN. I think that probably, from what I understand, 

is not true. 

Mr. GOSAR. That is what I thought. Jay Carney also blamed line 

people, so that is a false statement as well? 

Mr. KOSKINEN. I think on the basis of what everyone now knows, 

this was not a problem only in Cincinnati. 

Mr. GOSAR. That is what I thought. 

If we go down to number five, Mr. Werfel commits to producing 

all the Lerner emails, we know that is not possible, right? 

Mr. KOSKINEN. That is not because he didn’t try or we didn’t try 

but that is right, we do not have all of her emails. We have produced all the emails that we have and probably all of us, when we 

say we are going to produce everything, should say everything that 

we have. 

Mr. GOSAR. Number six, the President in his Sunday address in 

front of the mainstream media with Bill O’Reilly, talks of not even 

a smidgen of corruption here. Would that have been a wise comment to say? 

Mr. KOSKINEN. As I said at one of these hearings or early on 

back and forth, there have been a lot of people making judgments 

and statements before all the investigations are done. Generally, I 

think people are well advised to see what goes on. 

I do not think there has been any evidence at this point, that I 

know of, of corruption as most people would think of it. Mistakes 

were made. 

Mr. GOSAR. Ms. Lerner’s activities would not constitute a violation? 

Mr. KOSKINEN. A violation of a law? 

Mr. GOSAR. Yes. 

Mr. KOSKINEN. There is a referral in the Justice Department—— 

Mr. GOSAR. So I think you have to be recalcitrant in what you 

just said there, anybody. You would have to eliminate Ms. Lerner? 

Mr. KOSKINEN. You are right. There is a question about Ms. 

Lerner, exactly right. 

Mr. GOSAR. That brings me to my point. Are you familiar with 

the term, trust is a series of promises kept? Have you ever heard 

that? Trust is a series of promises kept. 

Mr. KOSKINEN. No, but I like that. 

Mr. GOSAR. Isn’t it nice? I think that is what the American people deserve in regards to the IRS. Mr. Meadows and a number of 

others on that dais want the facts and right now, we have seen this 

play out over and over again, brought up that there is not a smidgen of corruption in the IRS. 

There is a reason why the people are scared of the IRS, right? 

The power to tax is the power to destroy. 

Mr. KOSKINEN. We don’t tax, we simply collect, but people do 

worry that if you don’t pay your taxes, we are not going to be 

happy. That is true. 

Mr. GOSAR. How do you feel about the law? We are a law abiding 

country, right? 

Mr. KOSKINEN. I personally feel everyone should follow the law. 

The IRS follows the law. I think the law of the land should be 

obeyed. 

Mr. GOSAR. You are familiar with the Federal Records Act, right? 

30 

Mr. KOSKINEN. Yes. 

Mr. GOSAR. Everyone should be, particularly if they have spent 

any time in the Federal Government, right? 

Mr. KOSKINEN. Correct. 

Mr. GOSAR. Do you believe the IRS violated that Act in any way, 

shape or form? 

Mr. KOSKINEN. To my understanding, NARA reviewed our recordkeeping Act for 2011 and 2012 or 2012 and 2013 and rated us 

over 95 percent each year. NARA said that if are new records had 

been destroyed in Lois Lerner’s email loss, we had an obligation to 

advise NARA but there is no evidence yet as to whether those were 

records that were destroyed or not. 

If they were and we did not advise NARA, then that was, in fact, 

not consistent with the law but thus far, there is no evidence that 

we knew records were destroyed. We have advised NARA and are 

working with them, as I said, to try to make sure none of this happens again to the extent we can prevent it. 

Mr. GOSAR. You will notify us at the same time as the White 

House and the DOJ? 

Mr. KOSKINEN. Yes. I would just note that we have not passed 

any of this information on to either the White House or the Department of Justice. 

Mr. GOSAR. When we review this philanthropic aspect or 

501(c)(3) narratives, are you going to be equal opportunity and review the Tides Foundation? 

Mr. KOSKINEN. I am going to review them all. As I said, the most 

thoughtful comments on both sides of the issue are what is the definition of political activity, how much of it should be allowed and 

to whom should that apply. 

My goal is whatever regulation comes out should not only be 

clear, it should be fair to everyone and should be easy to administer. I am committed to trying to make that happen. 

Mr. GOSAR. I appreciate the gentleman’s answers. 

Mr. JORDAN. I thank the gentleman. 

The gentleman from Georgia is recognized. 

Mr. COLLINS. Thank you, Mr. Chairman. 

My alarm clock went off this morning, I woke up and it was 

Groundhog Day. You were back on the schedule, back on the dime, 

coming here under the same similar kind of situations. We had 

conversations, I am going to talk to you about it, on September 5, 

2014 that disclosed that there were more emails received by five 

other employees in addition to Ms. Lerner had been destroyed. 

Now we find out about 760 IRS exchange drives which have 

never been discussed because you thought they had been destroyed 

but they have not been. There is no way we can say everything has 

been complied with. 

I agree, at one point, with my gentleman friend from Virginia. 

I believe exclusively and primarily do have meanings. I believe exclusively and primarily can have a similar meaning because I believe exclusively and primarily the IRS is a tax collection agency 

that should be above reproach, should have truth and honesty with 

the American people, and fidelity to do their job. We have talked 

about this before. 

31 

I take extreme pressure, however you want to put it, with those 

two words in my own faithfulness to my wife and others but you 

seem to be following me around. 

I went home to August recess and spent several townhalls, went 

everywhere and everywhere I went, there was a question, what 

about the IRS? What is going on? They lost the emails? If they 

were serious about it or not laughing about it or saying, are you 

kidding me, it was a continual breakdown of trust everywhere we 

went. Now we are getting ready to go home in October and we find 

out more. 

Before I ask a specific question, I asked you this last time so as 

I said, we are experiencing Groundhog Day again as we go 

through. What is the problem that we cannot seem to not have 

something else come out? 

We are going to leave in October, come back in November and 

December. I expect to see you back here. I hope not to have another 

discovery that there are computers missing again. Tell me the 

truth. 

Mr. KOSKINEN. Congressman, I have tried to tell you the truth 

every time I have been here. 

Mr. COLLINS. Somebody is undermining you. You may be trying 

but it keeps coming out. 

Mr. KOSKINEN. It keeps coming out. What came out and has 

come out on September 5 is somehow an implication that there are 

emails out there that we did not find. No one has found a single 

email that I know of. 

Mr. COLLINS. Have you looked in these areas? It was already 

stated that you did not know they were because you thought they 

had been destroyed. 

Mr. KOSKINEN. Okay. Would you like to know what the story 

with the servers is? 

Mr. COLLINS. At this point, yes. 

Mr. KOSKINEN. The story with the servers is they were not 

looked at because when we changed in 2010 and 2011 and upgraded our Microsoft Office, all the data in the old servers was put 

on the new servers. When people were searching for servers, they 

thought the old ones were destroyed. Even if we knew they were 

there, there was no data on them that was not on the servers we 

had. 

If someone found new emails, I would be delighted but it is not 

as if someone is finding more emails at this point. What we have 

is an implication for the public like the mysterious backup system 

that is government-wide that has Lois Lerner emails on it. There 

has been a continual implication that suddenly new emails are 

being found or it is possible they might be found. 

Thus far, no one has produced another email although, as I said, 

if they could, I told the IG it would be terrific but thus far, no one 

has. 

Mr. COLLINS. At this point, like I said, it continually goes back 

to this exclusion from what is the role and the trust factor that is 

completely gone. 

Mr. KOSKINEN. I agree with your statements about trust and 

people should have confidence in us, they should view us as tax adVerDate Aug 31 2005 09:43 Nov 12, 2014 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 C:\DOCS\91126.TXT APRIL
32 

ministrators only and should feel they are going to get treated fairly. We should do that for them and I totally agree with that. 

Mr. COLLINS. I want to go back to our previous meeting on July 

23, 2014. I asked you if IRS had produced all the emails from Holly 

Paz, William Wilkins and Jonathan Davis as required by the subpoena which is here. Not surprisingly, your answer was no. 

Today, 56 days later, I am going to ask you the exact same questions. Have you produced all emails to and from Chief Counsel William Wilkins as required by this subpoena? 

Mr. KOSKINEN. No. 

Mr. COLLINS. Have you produced all emails to and from Holly 

Paz as required by this subpoena? 

Mr. KOSKINEN. At this point, you have about 7,500 emails from 

her. We expect that there are another 45,000 we are going through 

and any of those that are not duplicates, we will provide to you. 

We hope to do that before the fall is out. That is what we are focused on now. 

The answer to the other parts of the subpoena below Lois Lerner 

and Holly Paz, we have not gotten to those yet. We look forward 

to continuing to work with the committee. Some of those requests 

are to search 90,000 email hard drives to find emails—— 

Mr. COLLINS. I am going to stop you right there. As an attorney 

who did not give up being an attorney for Lent, your answer is eloquent but the answer would be no? 

Mr. KOSKINEN. I said no, I agree. Holly Paz you have 7,500 and 

we are working through the next 45,000. 

Mr. COLLINS. Again, if I included that word all, as you said a few 

moments ago, words do have meanings and I do place meaning on 

it, all would be no? 

Mr. KOSKINEN. All would be no. 

Mr. COLLINS. Jonathan Davis, all as required by the subpoena? 

Mr. KOSKINEN. No. 

Mr. COLLINS. I wish you the best, I do, but the problem is it 

comes back to this every single time. As I said, you follow me and 

I think follow many members of both parties around because of the 

agency which you head now and the issues that we keep developing 

over trust, fidelity, clarity exclusive and primarily. 

We can go down every adverb in the world but it all bottoms 

down to trust. Right now, others on this committee would like to 

talk about what is the new definition for how you are going to examine the tax status. That is all great for another hearing. This 

has nothing to do with that. Are we getting to the bottom of what 

did happen so that we can move forward. 

I am sure we will see you again. I hope it is not a Groundhog 

Day moment in which here we go again and something else is out 

there that undermines the very trust. 

Mr. KOSKINEN. If I could add, in March we notified the investigative committees that we had produced all the emails we could find 

and were identified as being relevant to the determination process. 

Mr. COLLINS. Stop right here. Let us just hold this right here. 

The subpoena does not ask for all and relevant. I know there is 

some discussion about let us clarify this. We were almost to the 

end here. I was actually going to yield back and go from here. By 

definition, all is all. 

33 

Mr. KOSKINEN. All is all. 

Mr. COLLINS. Thank you. 

Mr. KOSKINEN. My only point is the all that we are getting is a 

lot of stuff that does not have anything to do with the determination process but we are happy to provide. We are committed to continuing to work to provide you with all those. 

Mr. COLLINS. The subcommittee chairman and the Chairman 

have said all. I know Mr. Jordan has asked for all, not filtered. As 

I like to hear from my wife and kids, if you have bad news, give 

me all, don’t just send it out in small streams. 

This is the problem we are having. It is a subpoena. 

Mr. KOSKINEN. You are going to get them all. Some of them are 

going to take a while because you want them from 90,000 but you 

will get them all. 

Mr. COLLINS. Whether that is an issue for you and I, all is all. 

That is what the committee has asked for. I am asking for the committee. 

Mr. Koskinen, have a good day. 

Mr. JORDAN. I thank the gentleman. 

The gentlelady from Wyoming is recognized. 

Mrs. LUMMIS. I thank the gentleman. 

I was at another hearing and am scooting off to yet another hearing today. 

Mr. KOSKINEN. It is a busy day. 

Mrs. LUMMIS. It is a busy day. 

Thank you for being here. 

I am going to yield my time to the Chairman, Mr. Jordan. 

Mr. JORDAN. I thank the gentlelady. 

We will finish here and then do a quick second round. We have 

votes probably in 30 minutes. 

Mr. Koskinen, earlier you said, all we have to do is ask. Get on 

the phone and call you and you will give us whatever we want. 

It seems to me there is some information that frankly you should 

volunteer that is of such a critical nature, you should give that to 

us. We should not have to learn, for example, that there are 760 

backup servers from the IG. That is something you should have 

told us. 

We should not have to learn from the IG that there is a separate 

OCS chat system at the IRS that Ms. Lerner was pleased was not 

recorded and kept. We should not have to learn that from the IG, 

we should have learned that from the IRS. 

We should not have to learn from a deposition that there were 

nine backup tapes. That is something you should have told us. 

We should not have to learn from a judge, based on Judicial 

Watch’s FOIA action, that Ms. Lerner’s Blackberry was wiped 

clean. You should have told us that. 

We should not have to learn from Judicial Watch’s FOIA request 

that the IRS gave 1.1 million pages of information, 21 disks of information, some of it containing 6103 confidential information, to 

the Justice Department. You should have told us those kinds of 

things. Those are critical facts pertinent to the investigation. 

No, no, no, you make us come get it. When we do ask you, you 

do not answer our questions; you do not help us out because we ask 

repeatedly. We wanted to interview certain witnesses and you said, 

34 

no, cannot do it, there is an ongoing investigation. You cannot have 

it both ways. 

You cannot sit here and say all you have to do is call us and then 

when we call you and try to get witnesses, nope, you cannot interview them. We had to subpoena them. You cannot have it both 

ways. 

Here is where I really want to go. Mr. Meadows earlier said you 

spoke to him, I want to make sure I say this right, about reauthorizing the streamline critical pay authority, is that right, Mr. 

Koskinen? Is that something you are looking to do? 

Mr. KOSKINEN. Yes. 

Mr. JORDAN. This is to pay people more than the top level of the 

federal employee pay scale, something higher than the top level 

and requires statutory authority to do that, correct? 

Mr. KOSKINEN. That is correct. It was granted to the IRS in 1998 

and has been granted and operated until 2013. 

Mr. JORDAN. I understand. 

We did a little investigation looked at the people who are currently, over the last five years, getting paid more than the top employees under the normal and customary federal employee pay 

scale. We are going to put that up on the screen if we can. 

Our calculation was 83 different folks are paid above this level. 

We can probably scroll through the pages. 

Mr. KOSKINEN. There are 25 right now on the program. 

Mr. JORDAN. I am talking about the last five years, 83 different 

people over the last five years, frankly, the relevant time frame 

that we have been looking at when this targeting started to roll 

and took place. 

There were 83 different people and 56 of them, the business unit 

says are information technology, so 56 of them are IT folks making 

$202,000, $227,000, getting performance bonuses of $28,000, 

$19,000, $19,000, $20,000, making in some cases as the chairman 

said, almost a quarter of a million dollars. You think this should 

continue? 

Mr. KOSKINEN. Those people, not all of them make $220,000; some are at $160,000 or $170,000. For instance, the guy who runs 

our IT system worked in the private sector probably making four 

times that amount. 

If you go through all those, in fact, one of the requirements is 

that they have to have made multiples of what they are making 

here which is part of the reason they get hired under the streamline authority. 

They are primarily technical people, primarily modeling and our 

analytical people, all of whom should have, if the programmers run 

them, the IG just completed a review of it and said we did fine. 

All of them should have been making significantly more. 

Mr. JORDAN. Fifty-six out of 83 are making higher than the highest employees are supposed to make in the federal employee pay 

scale, many making $250,000, many getting bonuses of over 

$20,000. 

Mr. KOSKINEN. I would stress again there are only 25 now. The 

program is limited to 40 at any time and we have never had 40 

at any time. Over five years, it means people have been moving in 

and out which is what the program is supposed to do. 

35 

Mr. JORDAN. Here is my question. Fifty-six of them are IT people. You are asking us to reauthorize this at a time when IT people 

making a quarter of a million dollars at a time when you lost Lois 

Lerner’s emails, that is what you are coming forward to do? 

Mr. KOSKINEN. Ms. Lerner’s email crash occurred three years 

ago. 

Mr. JORDAN. At a time when you did not tell us there were any 

backup tapes; at a time when you did not tell us there were 760 

servers but there are; at a time when you did not tell us that her 

Blackberry was wiped clean but it was; at a time when you tell us 

you had trouble retaining the records, you had a duty to keep the 

records and disclose them, all this was going on and yet you still 

think it is appropriate to come to Congress and say, in spite of all 

this, all these problems with our information technology and the 

fact that we lost emails from the key person in this investigation, 

you come to Congress and say you know what, I need special statutory authority to keep paying IT people over $200,000 and give 

them $20,000 bonuses? 

Mr. KOSKINEN. There is a statutory limit. You cannot make $220,000 and get a $20,000 bonus but I am coming here and asking—— 

Mr. JORDAN. I see right here. 

Mr. KOSKINEN. These are the senior people running us. If we do 

not have the ability to keep them or replace them in the course of 

the program, it runs a real risk of crippling the agency. I think 

that is important for people to understand. 

I would not ask for it willy-nilly. It is a small program. 

Mr. JORDAN. I am not saying you asked for it willy-nilly. I am 

saying it takes a lot of gumption to come to Congress and say we 

just lost her emails but we need special authority to pay IT people 

more than anyone else in the Federal Government can make and 

give them $20,000 bonuses. That is what I am asking. 

Mr. KOSKINEN. I am just telling you that the people who run our 

online services program, the people who run the IT department—— 

Mr. JORDAN. Maybe you should switch. Maybe you need to hire 

a few more people at a lower salary who are actually going to do 

the job and would not lose Lois Lerner’s emails. Maybe you should 

think about that approach versus the approach you are taking. 

Mr. KOSKINEN. We have, as I said, taken the approach that we 

are going to fix that problem. We are actually going to have our 

senior executives immediately store on a separate shared drive 

rather than on their hard drives. I agree with you destroying 

emails on hard drives—— 

Mr. JORDAN. The taxpayer might say we are giving $20,000 

bonus, paying people over $200,000 and it takes a special law to 

do this, are we getting our money is worth here? They lost Lois 

Lerner’s emails. 

Mr. KOSKINEN. If you go on our website, 200 million people have 

pushed an app that says where is my refund and immediately you 

can find it. That is what these people did. You can run an app from 

our website, push an app and get your transcript for the last year 

only. That is what these people did. 

We are actually trying to make life easier for taxpayers through 

technology. To do that, we have to have the best we can. 

36 

Mr. JORDAN. What remedy are you telling people who were systematically targeted, had their First Amendment rights abused and 

the person at the center of the scandal, we cannot even find her 

emails, what do you say to them? What button do they push? 

Mr. KOSKINEN. You have 76,000 of her emails. 

Mr. JORDAN. I am not asking about that. I am asking what button do they push? You lost her emails. You are paying people a 

quarter of a million dollars and giving them bonuses. What button 

do they push? That is a question. 

Mr. KOSKINEN. You can ask that question. I am just telling you 

that the 25 people on that program are critical across the agency. 

If you want to deny us—— 

Mr. JORDAN. When you find that button, that is a button we are 

trying to find, that is a button we are trying to push to get to the 

bottom of that, how people’s First Amendment rights were abused. 

With that, I would recognize the gentleman from Pennsylvania. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

Mr. Koskinen, just so it is clear, when did you start as Commissioner of the IRS? 

Mr. KOSKINEN. December 23, 2013, part of my holiday celebration. 

Mr. CARTWRIGHT. What were you doing before that? 

Mr. KOSKINEN. I was on two publicly-traded company boards and 

basically semi-retired. 

Mr. CARTWRIGHT. You were not even working at the IRS in any 

capacity before December 23, 2013? 

Mr. KOSKINEN. Correct. 

Mr. CARTWRIGHT. When you talk about, for example, computer 

hard drive crashes, were those things happening after you started 

at the IRS? 

Mr. KOSKINEN. Hard drive crashes continue as we speak. 

Mr. CARTWRIGHT. I am talking about Lois Lerner’s Blackberry 

exchange. Did that happen before or after you started at the IRS? 

Mr. KOSKINEN. It was all before I was there. All of the issues 

that we have been holding hearings about occurred before I came. 

Mr. CARTWRIGHT. You are the one coming here to get hollered at 

for all of that. Are you here under subpoena today, Mr. Koskinen? 

Mr. KOSKINEN. No, I come voluntarily. 

Mr. CARTWRIGHT. You have come voluntarily to do that. It has 

been said before, but I thank you for your service to the United 

States. This is an amazing act of selflessness that you do this for 

our Nation and that you look into ways that we can improve our 

systems with transparency and accountability in the way we collect 

taxes in this country. 

To that end, much of your testimony today talked about looking 

forward, going forward and making sure these things get better as 

time goes on with the IRS. First of all, to the point about whether 

you pay people, what happens if you do not pay the market rate, 

the going rate for IT people? What happens to those people? 

Mr. KOSKINEN. In fact, we will not be able to make the improvements we want. We have an antiquated Model T we are running. 

Some of the applications we run were running when John F. Kennedy was President. We are trying to upgrade all of that. 

37 

If we do not have the appropriate leadership, that is not going 

to happen and we are going to have an IT system that makes no 

more progress. 

Mr. CARTWRIGHT. I understand this is beyond the comprehension 

of some of the members here, but if you do not pay people the going 

rate, the market rate, for what they are worth, they wander off and 

find better jobs, don’t them? 

Mr. KOSKINEN. All of these people, as I said, made three to four 

times what we are paying them. All of them have options to go 

elsewhere. These are people, as the chairman noted, who rotated 

through the program. They have been here and then have gone 

back out. 

None of the people working for us will have a problem. They will 

not be unemployed for a day. 

Mr. CARTWRIGHT. Commissioner Koskinen, last May the Inspector General issued a report finding that ‘‘ineffective management’’ 

at the IRS allowed inappropriate criteria to be developed and stay 

in place for more than 18 months and resulted in substantial 

delays in processing certain applications and allowed unnecessary 

information requests to be issued. 

The IG has repeatedly testified that his audit did not uncover 

any evidence of political motivation behind the inappropriate handling of these applications by IRS employees. You are familiar with 

that report, I take it? 

Mr. KOSKINEN. I am. 

Mr. CARTWRIGHT. The IG report also contained several recommendations to address the IRS management failures that led to 

the inappropriate handling of applications for tax exempt status, 

am I correct? 

Mr. KOSKINEN. That is correct. 

Mr. CARTWRIGHT. Has the IRS implemented all of the IG’s recommendations? 

Mr. KOSKINEN. All of those recommendations have been implemented. 

Mr. CARTWRIGHT. Can you describe what additional steps the 

IRS has taken to ensure that the management failures that led to 

the inappropriate handling of applications for tax exempt status do 

not occur again? 

Mr. KOSKINEN. Included in my oral statement and my full statement is a discussion of some of the other actions we are taking because I do think it is important for the committee as well as for 

the American public to understand that we take the problem seriously, including the difficulties with both saving and finding 

emails. 

We are doing our best to make sure none of these problems happen again and that we take them seriously. I think it is important. 

As I say, I want the committee members as well as the public to 

know we have done everything anyone has recommended thus far 

to make sure it does not happen again. 

I am looking forward, as I said from the start, to reports from 

the various investigative bodies, their finding is factual and most 

importantly, their recommendations that we should consider. 

Thus far, we have taken the recommendations we found we were 

able to implement and I think we have made major progress in enVerDate Aug 31 2005 09:43 Nov 12, 2014 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 C:\DOCS\91126.TXT APRIL
38 

suring it is important for the public to feel confident and comfortable about that, ensuring we do not have this problem again. 

Mr. CARTWRIGHT. I want to take the opportunity to thank you for 

your public service and also for your testimony. This is the kind of 

testimony where you are required to answer our questions and you 

are also required to anticipate what questions might be important 

to us so that you volunteer the answers to those questions even 

without being asked. 

It is a tough job and I do not envy you. Thank you for coming, 

Mr. Koskinen. 

Mr. JORDAN. The gentleman from North Carolina is recognized. 

Mr. MEADOWS. Thank you, Mr. Chairman. I will be brief. 

I guess one of the issues here is using federal tax dollars for political targeting. We know about the Hatch Act and the Politico ran 

a story. This came home to me just a couple of days ago where we 

had federal employees in my district that had been sharing actually with people who were supporters of mine to make sure that 

they do not vote for me. 

I had a choice to either make a big deal of it, which I did not, 

or to try to just ignore. When you run for office, you get thick skin. 

If not, you really need to have thick skin. 

Your choice in December 2013 is the closest thing I can think of 

to anybody running for political office. With that being said, Politico ran a story about an IRS worker who was suspended for urging 

people to re-elect Mr. Obama. Are you aware of that, a violation of 

the Hatch Act? 

Mr. KOSKINEN. I am aware of that. 

Mr. MEADOWS. Let us play the recording. I think it gets to the 

underlying point on some of this that we have to come clean and 

restore it. 

[Video shown.] 

Mr. MEADOWS. When you have these kinds of things that happen, you are a big agency, I understand that but this gentleman, 

as I understand it, was suspended, is that correct? 

Mr. KOSKINEN. I do not know the details and the privacy laws 

do not allow me to testify. I am happy to have someone give you 

all a briefing. 

Mr. MEADOWS. Is he working for the IRS today? 

Mr. KOSKINEN. That I do not know but we will find out that information for you. 

Mr. MEADOWS. You do not know whether this guy is employed 

today and working for you today? 

Mr. KOSKINEN. No. All I can say is, we take these situations very 

seriously. There is an image somehow that in the Federal Government nobody ever gets terminated for cause. I would say in the determination issue, the top five people, starting with the Commissioner on down, are not there anymore in terms of accountability. 

Without getting into the details and numbers, we have a significant number of employees every year who are terminated. They are 

terminated either because they take actions like this, they are terminated because they willfully do not pay their taxes regularly. 

Although we have a great work force, we have the highest tax 

compliance rate, over 99 percent, but we take it very seriously and 

the employees understand that. I think it is important and we conVerDate Aug 31 2005 09:43 Nov 12, 2014 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 C:\DOCS\91126.TXT APRIL
39 

tinue to reinforce that with regard to politics, no IRS employee during their official hours should do anything that sends any signal, 

one way or the other, about their political beliefs. 

We need to be non-political. We are in the tax administration 

business. People have to understand that is our business. If people 

on their own time on weekends want to do whatever they want, 

that is fine. The law is clear and we take that very seriously. 

Mr. MEADOWS. When we hear things like this, the more you dig, 

the more you feel like you have to dig because when you start to 

hear these kinds of things and if they were not terminated, it gives 

me great concern that this kind of environment will foster more 

people to do it if there is really no repercussion. 

Mr. KOSKINEN. I am happy to get you that but I feel very strongly, as you do, that if people are going to engage in political activity 

while they work, that is cause for termination. 

Mr. MEADOWS. We have a couple seconds left and I think we will 

go to the gentleman from Nevada. You have counsel here with you. 

Can they inquire and get you the answer so we can have that before the hearing is over today? 

Mr. KOSKINEN. As I said, on an individual matter, I cannot publicly give you the answer but we can give it to you—— 

Mr. MEADOWS. All I know is his first name and his ID. I have 

no idea what his last name is. I just need to know is he still working for the IRS? 

Mr. KOSKINEN. We will do our best to check on that and if we 

cannot get it to you before this is over, we will get it to you promptly. 

Mr. MEADOWS. Thank you. 

I yield back. 

Mr. JORDAN. The gentleman from Nevada is recognized. 

Mr. HORSFORD. Thank you, Mr. Chairman. 

Mr. Meadows, you had me at the first round. I just find the second round interesting that we would use one example of one employee when there are some 90,000 employees. 

Mr. MEADOWS. If the gentleman will yield, this came personally 

to me. I actually had a VA employee who was campaigning against 

me just the other day and I found out. We all know that whether 

they are a Democrat or a Republican, the federal tax dollar is not 

anyplace that needs to be promoting, I would not want them campaigning against you and vice versa. 

I appreciate the gentleman. 

Mr. HORSFORD. Reclaiming my time, I believe that there are certain staff, including Ms. Lerner, who have not served this Administration well, that due to poor management, poor decision-making, 

we are in a position to have to have these types of hearings. 

I am not going to defend every action or every decision that certain former staffers of the IRS have taken, but I also think it is 

inappropriate for members of this committee to apply such a broad 

brush to all staff or all management of the IRS or other federal 

agencies. 

I also think it takes a lot of gumption of certain members of Congress to question the request for critical pay authority when this 

is the least productive Congress in the history of Congresses. Hardworking people cannot get a raise but members of Congress conVerDate Aug 31 2005 09:43 Nov 12, 2014 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 C:\DOCS\91126.TXT APRIL
40 

tinue to get paid whether they do their job or get anything done 

around here or not. 

At the same time that we are having this hearing, which is the 

15th hearing, there is debate on the Floor right now that is crucial 

to our country’s safety, to international relations and is one of the 

most serious issues that this Congress is being confronted with. 

Instead, this chairman has decided to have the 15th hearing on 

the same issue trying to assert the same allegations and never getting to the point of action on anything. 

Mr. Chairman, either we get on with the business of the American people, that they have sent us here for or we need to stop 

wasting time and taxpayer resources. There are important issues 

that we need to be tackling but unfortunately, this committee’s 

time has been wasted, in large part. 

Commissioner, I will take you at your word that you are working 

in earnest on this regulation because I think this is part of the 

problem. We had nearly 200,000 applications filed for tax exempt 

status between 2010 and 2012, 73,319 applications in 2012 alone. 

Your agency at that time did not approve about 22,000 of them. 

This is the world after Citizens United. My colleagues on the 

other side, the chairman of the full committee, may want to say 

this has nothing to do with it but it has everything to do with it. 

Just because someone decides to make a donation to a 501(c)(4) 

does not necessarily guarantee that tax exempt status should apply 

if they are not meeting the standard of the law, the federal law. 

For us to not get a clear answer from the agency as to why since 

1959, the agency has been out of compliance with the federal law, 

is the basis of the problem. 

I am not here to attack individual members of the IRS, I am not 

here to cast aspersions on every action that has been taken but I 

am here to hold you guys accountable. One thing that I will do 

every hearing is to ask you what is the status of you coming into 

compliance with the federal statute that requires the exclusive benefit to the social welfare, not primarily benefiting social welfare. 

I will take you at your word that is something you are earnestly 

working on and I await your action and recommendations to this 

Congress. 

Thank you. 

Mr. JORDAN. We will just finish with a quick closing statement 

from myself and the Ranking Member. 

I would say this. The previous member offered a critique of Mr. 

Meadows for bringing up this example. This was brought to light 

by the Office of the Special Counsel. It is entirely appropriate. This 

whole thing is about politics. 

The gentleman from Nevada said to use this political example, 

he did not feel was appropriate. That is what this is all about. 

Mr. HORSFORD. Would the gentleman yield? 

Mr. JORDAN. In just a second. 

People were systematically targeted for their political beliefs. 

That is what took place here. Because conservative groups around 

the country disagreed with the President, they were systematically 

harassed and targeted. That is as political as it gets. That is a violation of the most fundamental aspect of the First Amendment, 

your right to speak out against your government. 

41 

This example is one where you are supporting violating the 

Hatch Act. What took place at the IRS was targeting of the Bill of 

Rights’ First Amendment. The member said it is a waste of time 

to dig into that? Are you kidding me? This is why we should have 

hearing after hearing to find out exactly what happened. 

Again, I will repeat, if the IRS would be a little more forthcoming 

and give us straight answers that would be a lot more helpful. 

That would help us get to the truth a lot sooner and hopefully protect people’s most fundamental liberties as we move forward. 

I will yield to the gentleman if he still wants to be recognized. 

Mr. HORSFORD. Thank you, Mr. Chairman. 

The issue of a political nature is the fact that these hearings continue to make the political accusations even though after 15 hearings, there is nothing to substantiate that accusation. The wrongdoing that did occur needs to be held accountable. 

One of the ways to hold that accountable is by making sure that 

the regulation, which is not in compliance with the federal law— 

do you agree there is—— 

Mr. JORDAN. Reclaiming my time, the reason we are bringing Mr. 

Koskinen back is because on March 25, 2014, he told this committee, the full committee actually, Mr. Cummings actually asked 

the question, he would get us all of Ms. Lerner’s emails even 

though at that time his Chief Counsel already knew they could not. 

His Chief Counsel knew in February there was a problem with Ms. 

Lerner’s hard drive but they waited until June to tell us. 

Then he told us he could confirm there were no backup tapes. We 

have learned that is wrong. Those are just a couple of examples. 

We have a bunch more that I cited in my opening statement. 

The reason we keep bring Mr. Koskinen back is because when he 

tells us something, we later learn it is not accurate. In the interest 

of good government and the truth, we give him a chance to fix the 

record time and time again. 

This will come as no surprise to anyone. I am going to keep 

bringing him back every time he says something that turns out not 

to be true. You had a guy violate the Hatch Act that has been reported in the press and he cannot even tell us if he still works at 

the IRS. 

I know there are lots of employees there but there are not many 

who get referenced in the paper for violating the Hatch Act for political activity. You would think he would know if that guy still 

works there. He does not so we are going to give him a chance to 

give us that answer at some point. 

I yield to the gentleman from Pennsylvania. 

Mr. CARTWRIGHT. Thank you, Mr. Chairman. 

I will keep coming to these hearings too. I will keep doing what 

we are expected to do. Many of these things we agree on. We need 

to protect accountability of our government and need to protect 

legal responsibility. We need to make sure our laws are not violated by people who are unrepentant and are not chastised, fired, 

fined, or imprisoned for it. 

We need to protect the First Amendment rights of the people. We 

need to protect people’s rights to engage in politics in a fair and 

forthright manner. 

42 

Above all, we need to protect our American democracy and protect it so that it is not stolen away from us in the dark of night. 

That is what I am really worried about. I am worried about the difference. 

Anyone listening to these hearings, we talk a lot about the difference between the 529s, the chairman of the full committee 

brought this up. The difference between the 529s and the 

501(c)(4)s. This whole fist fight going on right now is about 

501(c)(4)s. What is the difference between 529s and 501(c)(4)s? 

Both of them are tax statuses for outfits that people put money 

into and are they going to use it for political purposes in advertising. 

The difference is not in the taxation, the difference is in the disclosure, the transparency and the accountability because the 

501(c)(4)s do not have to disclose their donors. That is why this is 

so important. That is why so many applications were put in for 

501(c)(4) status by outfits and people that wanted to contribute to 

politics and not be identified. 

We are talking about people and entities that wanted to go undisclosed. They wanted to remain secret. They wanted to be hidden 

from the American people and put in all this money and direct 

American politics and distort American democracy with this money. 

I do not apologize because I call it dark money because nobody 

knows where it came from, from whom it came, or even whether 

it came from foreign countries and foreign nationals. We do not 

know that with 501(c)(4)s. 

That is why, Mr. Koskinen, it is so vital that we go back to exclusively engaging in social welfare as opposed to primarily. The difference between those words is vast. If we go back to only granting 

501(c)(4) status to outfits that exclusively engage in social welfare, 

we do not have to worry about dark money wrecking our American 

democracy. 

With that, I yield back, Mr. Chairman. 

Mr. JORDAN. I thank the gentleman. 

The committee will be adjourned. 

[Whereupon, at 4:00 p.m., the subcommittee was adjourned.] 

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