[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
IRS COMMISSIONER JOHN KOSKINEN
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JUNE 20, 2014
__________
Serial No. 113-FC19
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
21-117 WASHINGTON : 2017
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
C O N T E N T S
__________
Page
Advisory of June 20, 2014 announcing the hearing................. 2
WITNESSES
The Honorable John Koskinen, Commissioner, Internal Revenue
Service........................................................ 8
SUBMISSIONS FOR THE RECORD
The Honorable Dave Camp, letter 1................................ 25
The Honorable Dave Camp, letter 2................................ 76
The Honorable Devin Nunes, letter................................ 79
The Honorable Kenny Marchant, letter............................. 80
The Honorable Ron Kind, articles................................. 82
Paul Redgate, statement.......................................... 85
IRS COMMISSIONER JOHN KOSKINEN
----------
FRIDAY, JUNE 20, 2014
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The committee met, pursuant to call, at 9:04 a.m., in Room
100, Longworth House Office Building, the Honorable Dave Camp
[chairman of the committee] presiding.
[The advisory announcing the hearing follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman CAMP. Good morning, the committee will come to
order. Over 3 years ago this committee started asking the IRS,
was it targeting conservatives for their beliefs? Was it asking
groups inappropriate questions? Was it harassing conservative
donors? The IRS assured the committee and even testified before
Congress time and time again that no targeting was occurring.
Then as we all recall, 1 year ago in a signature IRS Friday
news dump, then head of Exempt Organizations at the IRS, Lois
Lerner admitted to the American people that the IRS targeted
conservative organizations.
The IRS lied to Congress and the American people. In fact,
this committee has found that there is ample evidence to
suggest the IRS violated the constitutional rights of
taxpayers. As of today, the investigation into the IRS's
intentional-organized targeting of Americans for their beliefs
has been ongoing for over a year. What we have found so far is
outrageous. The IRS spent over 3 years responding to top
Democrat complaints and calls to action to stop all activities
of conservative groups. The IRS in Washington, D.C. took their
marching orders and subjected Americans to harassment going so
far as to question the content of their prayers, and their
political beliefs, while subjecting them to audits and leaking
their personal taxpayer information.
When the scandal first broke out the President vowed that
his administration would work ``hand in hand with Congress to
get this thing fixed.'' And this spring, Commissioner Koskinen,
you said your goal was to ``find problems quickly, fix them
promptly, make sure they stayed fixed, and be transparent about
the entire process.''
Well, since my time in Congress, I have never seen an IRS
so broken. Last--late last Friday, the IRS admitted to Congress
that the agency had lost over 2 year's worth of Lois Lerner
emails and blamed the loss on a computer crash. My committee
staff later learned in an interview that it wasn't only Ms.
Lerner's emails, but the emails of six other individuals
relevant to this investigation including the former Acting
Commissioner's chief of staff.
And just 2 days ago, we found out the IRS and White House
have known for months and kept it secret from Congress. This is
not the most open and transparent administration the President
promised. This is about as far as you can get from getting this
thing fixed. Now what does this really mean? It means that if
the IRS's claim that Ms. Lerner's hard drive is really
unrecoverable, the public will never know the full extent of
the abuse of Americans who are exercising their First Amendment
rights.
Let me give you an example. Ms. Lerner told TIGTA
investigators that she first learned about the Tea Party
targeting in July of 2011. That wasn't true. In February of
2011, Ms. Lerner told subordinates by email ``Tea Party matter
dangerous'' and discussed ways to deny the applications. We
only have this email because it came from another employee's
inbox. Had Ms. Lerner emailed this to the Treasury Department,
or Justice, for example, it would be gone forever according to
the IRS.
We are missing a huge piece of the puzzle. The years
between 2009 and 2011 are the very peak of when the IRS
organized and implemented its targeting scheme. How convenient
for the IRS and the administration.
I find it hard to believe and I don't believe the IRS went
through every possible exercise to recover these documents. We
are missing the emails of seven IRS officials during periods
critical to this investigation. How is this possible? Making
matters worse, the IRS kept all of this a secret from the
public for months while quickly informing political staff in
the administration. After all of the obstruction, I fear this
Congress and the American people cannot take the IRS at its
word.
One thing is for certain. You can blame it on a technical
glitch. It is not a technical glitch to mislead the American
people. You say that you have lost the emails, but what you
have lost is all credibility. The IRS is in charge of hundreds
of millions of taxpayers' information, and you are now saying
your technology system was so poor that year's worth of emails
are forever unrecoverable. How does that put anyone at ease?
How far would the excuse of ``I lost it'' get with the IRS
for an average American trying to file the yearly taxes who may
have lost a few receipts? Oddly enough, this seems a
satisfactory answer for the Attorney General. As far as I can
tell, this administration has done nothing to investigate what
truly happened, notwithstanding this committee sending the
Department of Justice a detailed referral letter of nearly 100
pages. They have repeatedly tried to sweep this under a rug and
claimed no wrongdoing without ever looking for the facts.
The American people have no reason to trust the IRS or,
frankly, the administration on this issue. To wait years to
reveal the fact the IRS was targeting the American people and
then wait months to reveal your conveniently missing years of
documents, well, it's no wonder I have heard the word ``cover-
up'' thrown about a lot this week. The time for denials,
delays, obstructions, and attempts to blow this off as a phony
scandal are over. This committee is fed up and we expect some
answers not only--from not only the IRS, but the whole
administration. It is time we restore the American people's
trust in their government, but I fear with recent events that
may not be possible.
And now Mr. Levin, I will recognize you for an opening
statement.
Mr. LEVIN. Thank you. On September 11, 2013, the Internal
Revenue Service provided this committee with one of the 770,000
pages of documents it has turned over since Ways and Means
undertook its investigation into the IRS in May 2013. In total,
more than 250 IRS employees have spent over 120,000 hours
working to produce documents at a cost of at least $16 million
to taxpayers. That document received last September, last
September, included an email from Lois Lerner, to other IRS
personnel dated June 14, 2011. It began: ``My computer crashed
yesterday.'' We now know the full extent of that equipment
failure. Despite an exhaustive effort by forensic IT
professionals at the IRS, they were unable to save her hard
drive and her emails between January 1, 2009 and April 2011.
Although her emails from June 1, 2009, through April 2011
are unrecoverable from her hard drive, the IRS will produce
67,000 emails related to Lois Lerner. The IRS has or will be
producing 24,000 emails that have been recovered from the
period before her computer crashed. They recovered these emails
from other IRS employees. That is on top of more than 43,000
emails involving Ms. Lerner after April 2011 that have already
been produced.
There is absolutely no evidence, absolutely no evidence to
show that Ms. Lerner's computer crash was anything more than
equipment failure. At the time of the incident in June 2011,
IRS computer experts reviewed the issue and informed Lois
Lerner that ``Unfortunately the news is not good. The sectors
on the hard drive were bad which made your data
unrecoverable.''
Was her computer crash a conspiracy? No. Was the Internal
Revenue Service's system for backing up its email system
entirely underfunded and wholly deficient? Clearly, yes. In
fact, Congress has cut the IRS budget for operations which
includes what it spends on computers and other information
technology every year for the last 5 years. House Republicans
are proposing to slash it once again next year.
Commissioner Koskinen, who we welcome here today, has
informed this committee that the IRS has $1 billion worth of
computer equipment and that the agency should be spending $150
million to $200 million on maintenance for that equipment.
Instead, the agency spends virtually nothing because it cannot
afford to properly maintain what it has.
It is important to remember the emails were routinely lost
during the Bush administration. In one instance in 2007,
according to a report by Democrats in the Oversight and
Government Reform Committee, the Bush White House acknowledged
having lost nearly 5 million emails between March 2003 and
October 2005 related to allegations of the politically
motivated dismissal of U.S. attorneys.
Lost data under the Bush administration, coupled with the
number of computer crashes at the IRS, clearly demonstrate the
need for government agencies to have adequate budgets to
invest, upgrade, and maintain information technology. My
colleagues on the other side of the aisle have taken this
opportunity to rehash well-worn allegations of White House
involvement; allegations that Republicans have made from the
very moment the Inspector General released his report more than
a year ago.
On the day the report was released, before congressional
investigation into the issue had even begun, Chairman Issa
accused the White House of ``Targeting its political enemies.''
Three days later, our chairman, Mr. Camp in your opening
statement during the first hearing on this matter, you accused
the White House of a culture of cover-up. Congressional
Republicans are so determined to find a needle in a haystack
that they seek desperately to add to the haystack even though
no needle has been discovered. It was in that vein that
Chairman Camp this week said that this entire case started with
the White House, and sent a letter to the President requesting
all correspondence between Lois Lerner and the executive office
of the President between January 2009 and May 2011, the period
before Ms. Lerner's hard drive crashed.
The White House has conducted that search, and what have
they found? There was not a single email correspondence sent to
or from Ms. Lerner and the White House.
This committee has been involved in this investigation for
over a year. Here is what we have learned: The 501(c)(4)
applications of both conservative and progressive groups were
inappropriately screened. There were long delays in processing
applications. There were serious mismanagement, and I was among
the very first to call for Ms. Lerner and then Commissioner
Miller to be relieved of their duties.
In all of the 770,000 pages of documents that the IRS has
supplied congressional committees, including ours, there has
not been any evidence of political motivation or of White House
involvement. Now there have been computer failures at the IRS,
and Republican conspiracy theories have started anew. The
evidence to date reinforces this long-evident truth: The
prevailing conspiracy in this matter is that of the
Republicans' desire to stir their base, tie the problem to the
White House, and keep up this drum beat until the November
election.
I am glad that you, Commissioner Koskinen, is here with us
today to set the record straight. We are glad you are here. You
started at the IRS last December after a distinguished career
in the public and private sectors; at OMB, at Freddie Mac, as
the chair of President Clinton's Y2K computer council. So
again, we welcome your testimony. We are glad you are here. We
look forward to your testimony to set the record straight.
Chairman CAMP. All right, thank you. Before I recognize
Commissioner Koskinen for his opening statement I ask that he
stand to be sworn in.
[Witness sworn.]
Chairman CAMP. Let the record reflect the witness answered
in the affirmative. Thank you. Commissioner Koskinen, thank you
for being with us today. You will have 5 minutes to present
your testimony with your full written statement submitted for
the record. You are now recognized for 5 minutes.
STATEMENT OF COMMISSIONER JOHN KOSKINEN, INTERNAL REVENUE
SERVICE
Mr. KOSKINEN. Chairman Camp, Ranking Member Levin, and
Members of the Committee, thank you for the opportunity to
appear before you today to provide you with an update on recent
IRS document productions to Congress. The IRS has, over the
past year, made a massive document production in response to
inquiries from Congress. In March, the IRS advised this
committee and the Senate Finance Committee that we had
completed the production of documents identified as relating to
their investigation of the processing and review of
applications for tax-exempt status as described in the May 2013
report from the Treasury Inspector General for Tax
Administration known as TIGTA.
Those production efforts included 11,000 emails from Lois
Lerner, former director of the IRS Exempt Organizations
Division. This committee and the Senate Finance Committee has
noted have now received more than 770,000 pages of unredacted
materials. We are sending another production to you later today
of additional Lerner emails. You already have more than 25,000
emails from Ms. Lerner's computer account, and more than 5,000
emails from other custodians' accounts for which Mrs. Lerner
was an author or recipient.
The IRS expects, as noted earlier in my conversation with
you, to complete its production of the remaining Lerner emails
to this committee by the end of the month. At that time, you
will have all of the emails, 43,000 of them that we have from
Ms. Lerner's computer and email account for the period January
2009 through May 2013. In addition, as noted you will have
24,000 Lerner emails from other custodian accounts during the
period that her hard drive was crashed for a total of 67,000
Lerner emails.
In the course of responding to congressional requests, the
IRS in February reviewed the email available from Ms. Lerner's
custodial computer accounts which had been date limited and
limited by search terms we had worked out with investigators
and identified the possibility of an issue because the date
distribution of the email was uneven. It was not clear then
whether Lerner emails were overlooked, missing, or had other
technical issues involved. IRS information technology
professionals identified documents that indicated Ms. Lerner
had experienced a computer failure in 2011. As Congressman
Levin noted, some of those emails had earlier been provided
last fall to this committee.
In mid-March 2014, the IRS focused on redacting materials
for the non-tax writing committees and processing the rest of
Ms. Lerner's email for production. As we reviewed additional
Lerner emails not limited by search terms, relevance, or
subject matter, in other words, all of her emails, the IRS
review team learned additional facts regarding Ms. Lerner's
computer crash in mid-2011 which occurred before these
investigations opened or the IG's report began.
We learned that in 2011 the IRS Information Technology
Division had tried using multiple processes at Ms. Lerner's
request to recover the information stored on her computer's
hard drive. A series of emails available after all of Ms.
Lerner's email was loaded, recounts the sequence of events in
2011. A frontline manager in IT reported to Ms. Lerner in an
email on July 20th, 2011, ``I checked with the technician and
he still has your drive. He wanted to exhaust all avenues to
recover the data before sending it to the hard-drive cemetery.
Unfortunately, after receiving assistance from several highly-
skilled technicians including HP experts, he still cannot
recover the data.''
Ms. Lerner was told by email on August 1, 2011, ``as a last
resort we sent your hard drive to CI--that's the IRS Criminal
Investigation Division forensic lab to attempt data recovery.''
In an email on August 5, 2011, after 3 weeks of attempts to
retrieve her emails at Lois Lerner's request, Ms. Lerner was
advised ``Unfortunately, the news is not good. The sectors on
the hard drive were bad which made your data unrecoverable. I
am very sorry. Everyone involved tried their best.''
The committee has been provided earlier these emails
earlier this spring. In light of the hard-drive issue, the IRS
took multiple steps over the past months to assess the
situation and produce as much email as possible for which Ms.
Lerner was an author or recipient. We retraced the collection
process for her emails. We located, processed, and included
email from an unrelated 2011 data collection for Ms. Lerner. We
confirmed the backup tapes from 2011 no longer existed because
they had been recycled pursuant to the IRS normal policy. We
searched email from other custodians for material on which Ms.
Lerner appears as author or recipient. From mid-March to late
April, the IRS review team concentrated on loading for review
all of the remaining email from Ms. Lerner's account, and then
repeating the entire process for quality control and to ensure
that no new emails from Ms. Lerner were missing. During this
time into May we also were identifying and reviewing Lerner
emails to and from 82 other custodians. By mid-May as a result
of these efforts, the IRS had identified the 24,000 Lerner
emails between January 1 and April of 2011.
As the search for and production of Lerner emails was
concluding, I asked those working on this matter to determine
whether computer systems of the other 82 custodians had
experienced any similar difficulties, especially in light of
the aged equipment the IRS has been increasingly using as a
result of its budget pressures.
After the IRS report on Ms. Lerner's email production was
delivered last Friday to Congress, it was determined earlier
this week, actually on Monday, that seven additional custodians
had experienced hard drive failures during the search period. A
hard-drive failure does not automatically mean that any or all
emails have been lost or cannot be reconstructed. Given the
extremely broad scope of our production effort, it is not
surprising that we would discover that some employees had
encountered some technical issues, especially in light of the
agency's aging information technology infrastructure.
As you know, the IRS described in great detail in its
public report last week its efforts to produce Lerner emails.
We are still assessing what effect, if any, hard drive crashes
had on the emails of any other custodian. At this time, it is
too earlier to know if any emails have been lost on any of
those hard drives. We are committed to continually to working
cooperatively and transparently with you, this committee, and
we will continue to provide you with updates. This concludes my
testimony. I would be happy to take your questions.
[The prepared statement of Mr. Koskinen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman CAMP. Well, thank you. What I didn't hear in that
was an apology to this committee.
Mr. KOSKINEN. I don't think an apology is owed. There is--
not a single email has been lost since the start of this
investigation. Every email has been preserved that we have. We
have produced or will produce by the end of this----
Chairman CAMP. You don't think the time period between
January 2009 and April 2011, is relevant to this investigation?
Mr. KOSKINEN. It is a very relevant time frame.
Chairman CAMP. Let me ask you this: The letter that we
received from the IRS on Friday the 13th, admitted the Lerner
emails were lost for this 2.5-year period.
Mr. KOSKINEN. They were lost off--they were lost off her
hard drive. We also advised you----
Chairman CAMP. Let me finish. I am not finished with my
question.
Mr. KOSKINEN. I'm sorry.
Chairman CAMP. And I will give you an opportunity to
answer.
Mr. KOSKINEN. That's fine.
Chairman CAMP. But you failed to explain the timeline of
events that led to that admission. And my question to you is,
from the interviews that we have had with the deputy chief of
information--the Deputy Chief Information Officer for the IRS,
I am told that the IRS knew as early as February that her
computer crash supposedly caused the loss of her emails during
the time period of January 2009 to 2011. Has the IRS known
since February?
Mr. KOSKINEN. The IRS knew in February there was an issue.
As noted, we all had emails from Ms. Lerner last fall in which
she recited that she had had a hard drive cash.
Chairman CAMP. So in February you knew the emails were
missing?
Mr. KOSKINEN. No. In February what we knew was there was a
problem because we were looking at it from the standpoint of
where, what the time frame was in which her emails appeared,
and it appeared that that there were not enough emails in that
time frame.
Chairman CAMP. So why didn't you--why didn't the IRS notify
Congress at that time there was a problem with the potential
loss of the emails we were investigating?
Mr. KOSKINEN. Because I thought it was important. It was my
decision that we complete the investigation so we could fully
advise you as what the situation was.
Chairman CAMP. Now, I got a letter from the White House 2
days ago that says that Treasury contacted the White House in
April--in April of this year to tell them about the lost
emails. Who told the Treasury Department?
Mr. KOSKINEN. Pardon?
Chairman CAMP. Who told the Treasury Department? The letter
I received from the White House says that Treasury told them in
April of 2014. So my question is, who told the Treasury
Department?
Mr. KOSKINEN. My understanding, only from that letter which
I have seen which does not say that emails have been lost. My
understanding of the letter says that someone in the general
counsel's office at the IRS informed the general counsel's
office at Treasury that there was an issue and the IRS was
investigating.
Chairman CAMP. No. The letter says that Treasury was told--
that Treasury told the White House--we also have a letter from
Treasury that says that they learned in April of 2014. Who told
Treasury? And do you know who in Treasury told the White House?
Mr. KOSKINEN. I have no idea. I have no communications with
the White House.
Chairman CAMP. Well, you are the head of the IRS. You don't
know of something this important, the contacts between your
agency and the executive branch? You are unaware of them?
Mr. KOSKINEN. We are part of the executive branch. We have
regular communications with Treasury. We issue regulations, we
review them. We are in the process of reviewing, for instance,
the regulations on the 501(c) issue. We have regular
communication, particularly between our counsel's office and
the Treasury counsel.
Chairman CAMP. Well, if the IRS knew in February or maybe
even March and Treasury and White House knew at least in April,
but Congress and the American people didn't find out until
June, were you purposely not telling us?
Mr. KOSKINEN. No.
Chairman CAMP. Were you purposely not revealing this to the
American people?
Mr. KOSKINEN. No, as I told you, my proposal was, and in
fact, our original thought was to complete the Lois Lerner
email production, complete the review of what other custodians
had a problem, and produce a report to you laying it all out.
Chairman CAMP. So why did you tell--why did the IRS inform
the executive branch agencies, the White House, the
administration, but kept it secret from the Congress who was
conducting an investigation?
Mr. KOSKINEN. We were not keeping it a secret. It was our
public report to you that has, in fact, provided you this
information. There has been no attempt to keep it a secret. My
position has been that when we provide information, we should
provide it completely. If we provide you incomplete
information, people sometimes are tempted to leap to the wrong
conclusion, not based on any fact, so we thought it would be
important to give you the full description of what----
Chairman CAMP. It is okay for them to leap to a conclusion.
Mr. KOSKINEN. Pardon?
Chairman CAMP. It is okay for the White House and Treasury
to leap to a conclusion 6 weeks before the Congress, but my
question also is, have there been discussions within the IRS
about when to reveal this information to Congress?
Mr. KOSKINEN. Certainly.
Chairman CAMP. And obviously, these discussions included
Treasury?
Mr. KOSKINEN. No.
Chairman CAMP. Well, then how did Treasury find out about
it?
Mr. KOSKINEN. Treasury in a conversation I am not aware of
apparently the first time I knew about that was that White
House----
Chairman CAMP. I will have a lot of questions to write to
you, to have follow-up with you. This is completely
unacceptable.
Mr. KOSKINEN. Can I answer the question to make the record
straight?
Chairman CAMP. Well, I don't think you are giving me an
answer and I want to move on to another topic.
Mr. KOSKINEN. All right.
Chairman CAMP. Your letter describes the Lois Lerner emails
as being unrecoverable.
Mr. KOSKINEN. Correct.
Chairman CAMP. But failed to mention where the damaged hard
drive is today. Do you know where the actual hard drive is that
crashed in 2011?
Mr. KOSKINEN. I am advised the actual hard drive, after it
was determined that it was dysfunctional and that with experts
no emails could be retrieved, was recycled and destroyed in the
normal process.
Chairman CAMP. So was it physically destroyed?
Mr. KOSKINEN. That's my understanding.
Chairman CAMP. So was it melted down, do you know?
Mr. KOSKINEN. I have no idea what the recycler does with
it. This was 3 years ago.
Chairman CAMP. Does the IRS have a system for tracking
items?
Mr. KOSKINEN. Tracking what?
Chairman CAMP. Items? Does the IRS have a system for
tracking items?
Mr. KOSKINEN. We track items. We don't track every item
that everybody has everywhere, but I am sure we track some
items. We track----
Chairman CAMP. Does someone there have a serial number for
that hard drive?
Mr. KOSKINEN. I do not know whether they do or not. I am
just advised that in normal case, when a hard drive fails, the
email cannot be reconstructed. The hard drive is turned over to
recyclers.
Chairman CAMP. Well, it seems to me that if it was
recycled, the government property would have been tracked.
Mr. KOSKINEN. Pardon?
Chairman CAMP. It seems to me that if it was recycled,
government property would have been tracked or people could
simply walk away with property from the IRS. So I assume there
is a tracking system for the disposal of government property.
Mr. KOSKINEN. There is tracking system for computers. My
understanding is that Lois Lerner's computer continued to be
functioning with a new hard drive. The hard drive fits with
inside. I am not aware whether a hard drives have computer--
have identifiers.
Chairman CAMP. Can we get the serial number of this hard
drive and all of the other employees whose hard drives have
been--whose emails have been lost?
Mr. KOSKINEN. If they have serial numbers, you are welcome
to them.
Chairman CAMP. All right. Because I want that hard drive
and I want the hard drive of every computer that crashed during
that time frame. So you know, what I have learned in the last
week, I think calls into question every document and response
the IRS has given, or for that matter, has failed to give to
this committee. And the only way I can see any hope of
restoring any confidence is to establish a special prosecutor
with the authorities, the powers, and the resources needed to
uncover the truth. So for the sake of the agency and to restore
the trust of the American people, will you support the
appointment of a special prosecutor?
Mr. KOSKINEN. There are six investigations going on of this
event now.
Chairman CAMP. Yes, sir, I know.
Mr. KOSKINEN. The IG is already investigating this.
Chairman CAMP. Can you give a definitive answer to this
committee? Yes or no, do you support the appointment of a
special prosecutor? I am controlling the time. I am asking a
question that can have a simple yes or no answer----
VOICE. You are trying to control the answer.
Chairman CAMP. Regular order.
Mr. KOSKINEN. I think the appointment of a special
prosecutor after the six investigations ongoing, and the IG
investigation into this matter ongoing, would be a monumental
waste of taxpayer funds.
Mr. BREWER. So is that a yes or a no?
Mr. KOSKINEN. That's a no.
Chairman CAMP. Thank you. Mr. Levin is recognized. You have
5 minutes.
Mr. LEVIN. You know, I think the witness deserve some
respect. I think it is in the tradition of this committee to
give witnesses respect. This is not the committee of decades
ago led by people who disrespected witnesses.
Mr. Koskinen, you had a long career. What have you done in
the years of your career briefly?
Mr. KOSKINEN. I am sorry. What have I done what?
Mr. LEVIN. What has your career been like?
Mr. KOSKINEN. My career has been 20 years in the private
sector turning around large troubled organizations. I started
my career as the chief of staff for Senator Ribicoff for 4
years in the United States Senate. I served on a Presidential
Commission as a staff member during the Kerner Commission in
late 1960s. I represented New York City here for a year and a
half. I was the Deputy Director for Management at OMB for 3
years. I was the chair of the President's Council on the Year
2000, for 2 years guiding the country through the year 2000
transition. I was asked by the Bush administration to take over
Freddie Mac as the chairman of the board when the government
took over those enterprises, and I was asked to come to the
IRS, which I did in last December when I was confirmed to steer
the agency through these difficult times.
Mr. LEVIN. The letter that went from the counsel of the
President to Mr. Camp and Mr. Wyden, spelled this out and
indicated when the Treasury was notified, or when the Treasury
counsel informed the White House counsel about this problem
with the computer. It also has indicated, contrary to this
effort by the committee on the Republican side to connect the
problems, and there were serious problems with the White House,
that there is no such connection.
They are desperate to find a connection. They have never
found it. They will keep looking because I think it makes sense
for them politically. I don't think whatever our political
affiliations are, we should be disrespectful.
So will you repeat again what happened these last months
after you found out about the computer crash, and why you
decided to conduct yourself the way you did?
Mr. KOSKINEN. We learned in February that--I learned in
February that there was a potential issue with her hard drive.
That was investigated through March, by the end of March into
early April the IT people had uncovered the emails train, you
can see, that talked about the effort to restore her computer.
Those emails have been provided some time ago to this
committee, so they were not hidden or covered up. Thereafter, I
told people that we needed--we decided we would look at all of
the other custodians to produce as many emails as we could that
were, in fact, within our system which is the 24,000. I also
asked that we actually review all of the 82 custodians to see
what if any failures that happened then.
Our plan was when we produced--completed the production of
all of the Lois Lerner emails at the end of this month, we
would provide a full report, and by that time we would know
what the situation was with the custodians. There has been a
question of why I didn't advise Congress earlier, and my
experience has been, we do better to have a rational discussion
when you know all of the facts. It is shown by the fact that on
Monday--we were advised Monday morning that there were
preliminary indications that there were difficulties with a
handful of custodians. That information was passed on to the
staff of this committee on Monday afternoon.
Immediately thereafter, rather than asking us for
additional information, a press release went out from this
committee identifying Nikole Flax as a particularly interesting
person to this committee, and stating that Nikole Flax emails
had been lost.
Had the committee waited to issue that release until we
knew further information which we are continuing to derive,
they would have discovered that Nikole Flax had two computers;
her office computer which she used during the day, and she had
a travel computer, a portable. It was the portable computer
that crashed. It ran on the same email system as her office
system. So it turns out there is no indication that a single
Nikole Flax email has been lost, notwithstanding the press
release and statements out of this committee.
So those press releases with regard to Nikole Flax were
inaccurate and misleading, and it demonstrates why we will
provide this committee a full report about the custodian review
when it is completed. We are not going to dribble out the
information and have it played out in the press.
Chairman CAMP. The time is expired. Mr. Johnson is
recognized.
Mr. JOHNSON. Thank you, Mr. Chairman. Thank you for holding
this hearing. You know, learning about the loss of Lois
Lerner's emails and other IRS officials is troubling, and we
received that information with great skepticism. Americans have
been waiting for the whole truth and we hope to get it today.
It doesn't sound like we are getting it. It is past time to
hold all of those responsible accountable for targeting
Americans for their beliefs.
Mr. Commissioner, welcome. I have some questions for you.
You have argued that the IRS's practice of destroying employee
emails after 6 months was a cost-cutting measure. In fiscal
year 2011, the IRS-enacted budget was $12 billion, a high
watermark of spending. Can you tell me whether in 2011 the IRS
was engaged in a policy of destroying and reusing its backup
tapes?
Mr. KOSKINEN. Actually what happened with the IRS, in 2008
when our new IT director came, the retention policy then was
only for less than 3 months. In 2008, he increased the
retention backup policy to 6 months. It is a disaster recovery
system. So if the entire system goes down, you can reconstitute
the emails. Those systems actually are usable and then if there
is no disaster you continue to produce and backup the emails so
they are available. I would note as I did in my testimony,
since the start of this investigation, every email has been
preserved. Nothing has been lost, nothing has been destroyed.
Mr. JOHNSON. Yeah, which tells me that you have got plenty
of computer space. You know, I wondered at the time how could
you keep track of everybody's IRS requirements when you lose
your own.
Let me just ask you: Didn't the IRS estimate that keeping
and storing those tapes would only cost $200,000 annually?
Mr. KOSKINEN. It costs $200,000 annually every year, but it
grows. We collect--we have trillions now of terabytes as it is
called, where you have hundreds of millions of emails stored
over 6 months and the disaster recovery program was that--it is
not--the email system, as I said in my testimony, is not a
system of record. A system of record is in fact, or the Records
Act to produce hard copies, and file those in the records. So
that the IRS has historically only preserved backup tapes for 6
months.
We are reviewing all of this. I have told people some
months ago, when we get through with this, we need to take a
look at what we can do to actually create a more searchable
email process. The problem right now is any time anybody wants
a piece of information, we have 90,000 employees, whatever
employees want, we have to pull their email accounts. We have
to pull their hard drives, and then we have to take them and
load them into a search machine to be able to discover what's
in them.
That is an antiquated system. I fondly referred to our IT
system at a Model T with a very nice GPS system, and a sound
system, and a redone engine, but it is still a Model T.
Mr. JOHNSON. You know, my constituents and I refuse to
accept that in years of record-high IRS budgets, you know, you
wouldn't let us refuse to give you information on our tax
returns, the IRS destroyed employee emails every 6 months just
to save $200,000 annually. I am far too familiar with the
rampant wasteful spending at the IRS during that time.
To date, the committee has uncovered wasteful spending from
the Star Trek videos, to the spending on lavish conferences, to
an IRS estimated $23.5 million in spending on salary and
benefits due to union time, and to bonuses going to workers who
owe back taxes.
Mr. Commissioner, you and I both know the IRS failure to
back up employee emails began long before any budget cuts
happened to that agency. There's simply no excuse for what
happened. I yield back.
Chairman CAMP. All right, Mr. McDermott is recognized for
minutes.
Mr. MCDERMOTT. Thank you, Mr. Chairman. Today we are here
listening to a myth that there was a conspiracy by Ms. Lerner,
and whoever else, to get rid of some data. And before I came to
Congress, I was a physician. And one of the things you always
did with a patient was take a history. And I would like to
review the history again with you, Mr. Koskinen. On June 13th,
2011, Lois Lerner's hard drive failed, meaning all of her
emails were lost at that point, is that true?
Mr. KOSKINEN. That's correct.
Mr. MCDERMOTT. Sixteen days later, she was briefed that
inappropriate criteria had been used in mismanagement in
Cincinnati according to the IG's report. Is that true?
Mr. KOSKINEN. That's what the report reports.
Mr. MCDERMOTT. Well, the question then is, did Lois Lerner
preemptively crash her hard drive?
Mr. KOSKINEN. All of the evidence is to the contrary. The
email string I told you shows that at her request,
extraordinary efforts were made to retrieve the emails from her
crashed hard drive.
Mr. MCDERMOTT. Did you think, did she foresee something
happening in the future and make the decision to destroy her
own hard drive?
Mr. KOSKINEN. The record shows quite the contrary. Also,
after the crash on April 11, she continued to send and archive
emails on her computer. We have produced--will produce 43,000
of those. So if she was going to, in fact, try to hide emails,
there is no indication in the record that her performance
demonstrated that.
Mr. MCDERMOTT. In all of the emails that have been
collected, is there any evidence to suggest that she called the
White House or the White House called her and said, get those
right-wing organizations?
Mr. KOSKINEN. There is none that we have been able to
produce and I understand, although I have not seen the
production from the White House, that the White House did not
find any email to or from Lois Lerner.
Mr. MCDERMOTT. And the Inspector General didn't find them
in his----
Mr. KOSKINEN. No, my understanding, the Inspector General's
report stated there was no evidence of political involvement.
Mr. MCDERMOTT. In fact, as you quote, as you talked about,
on July 19th, 2011, Lerner wrote to Lillie Wilburn, who is the
field director of customer service support for informational
technology saying, whatever you can do is helpful, would be
greatly appreciated.
Now, in mid-July 2011, she learned about Cincinnati. And
for a couple of weeks the IT division tried to repair her hard
drive, bringing in experts inside IT, and also the forensic
division of the IRS, is that correct?
Mr. KOSKINEN. That's correct.
Mr. MCDERMOTT. And they failed?
Mr. KOSKINEN. They failed after 3 weeks of efforts. The
email trail is clear. I would note as I did in my full
testimony, the Criminal Investigation Division is expert at in
seizures from--in civil and criminal cases seizing hard drives
and restoring emails. So we had at the time apparently great
confidence if you could find those emails, they would find
them, and they were unsuccessful.
Mr. MCDERMOTT. Finally, she wrote: ``Thanks for your
efforts'' to them, ``I really do appreciate the efforts,
sometimes stuff happens.''
Now is this a woman rejoicing over losing her hard drive
and saying, thank God that thing is gone? They are never going
to get me? No. It is a woman who is resigned, really, to the
fact that the thing is lost.
In my office, we just upgraded. We upgraded to Windows
2010, and my staff director in Washington State lost her hard
drive. They fried it. I don't know how it happened. Nobody
knows how it happened. She lost all of her records. She did not
rejoice over that experience, I can tell you that. But then we
come fast forward to February 2014, and Chairman Camp asked for
all, and I emphasize, all of Lois' emails. Is there anything
you can see in the time that you have been there, that they
didn't, that the IRS did not do to try and get all?
Mr. KOSKINEN. There's no indication. As I said, we have
gone to great lengths. We retraced the process for producing
her email twice just to make sure that no email was missing. We
understand the importance of this investigation. We have gone
to great lengths, spent a significant amount of money trying to
make sure that there is no email that is required that has not
been produced.
Mr. MCDERMOTT. I understand you sort of backtracked and
went out to 83 people in the agency that she had contact with
and retrieved their emails to try and get the emails for the
committee?
Mr. KOSKINEN. That's correct, and that's why rather than
having lost Lois Lerner emails as if there are none of them, we
have been able to produce over time and will by the end of this
month, 24,000 Lois Lerner emails from the time frame in
question.
Chairman CAMP. The time has expired. I would ask unanimous
consent to put into the record a letter from this committee,
from me as chairman to then-Commissioner Doug Shulman on June
3rd, 2011, asking for the names, titles, and divisions of any
individuals who are involved in investigating taxpayer
contributions to 501(c)(4)s, which was sent to the IRS 10 days
before Lois Lerner's email crash. And with that, I would yield
to Mr. Brady.
Mr. MCDERMOTT. Point of information, Mr. Chairman.
Chairman CAMP. Yes. So the letter without objection is put
into the record.
[The letter follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. MCDERMOTT. Yes. Point of information. Was that letter
circulated to Members of the Committee?
Chairman CAMP. The letter was signed by me and sent to the
Commissioner of the IRS, on behalf of the committee.
Mr. MCDERMOTT. Oh, so none of us have seen it? Okay. Thank
you.
Chairman CAMP. You may have seen it. It has certainly
been--we can get one to you. We can get you a copy. But I think
as long as you are bringing up a timeline, we ought to get a
complete picture of the timeline which is the email crash
occurred 10 days after the first letter went to the IRS.
Mr. MCDERMOTT. I appreciate that.
Chairman CAMP. Mr. Brady is recognized.
Mr. BRADY. When were you told about the problems with the
Lerner emails?
Mr. KOSKINEN. Pardon?
Mr. BRADY. When were you told----
Mr. KOSKINEN. February is when I was told that they had
discovered there was an issue with her email.
Mr. BRADY. In February?
Mr. KOSKINEN. In February.
Mr. BRADY. Why did you choose to withhold that information
from this congressional investigation?
Mr. KOSKINEN. I had no intention of withholding that
information. As I have stated, our plan was to investigate and
find out what the details were. At that point we did not know
whether there had been a crash that had affected her emails or
not.
Mr. BRADY. You just testified that you gave your agency 3
weeks to determine if it could be retrievable or not. They
weren't successful, so giving you the benefit of the doubt, in
March, you knew those emails were not available. Why didn't you
inform this congressional investigation then?
Mr. KOSKINEN. As I told you, my goal was to, in fact,
determine all of the facts so we could give you a full report.
As I noted earlier--earlier this week, we provided----
Mr. BRADY. Yes, you informed.
Mr. KOSKINEN. Do I get to answer the question?
Mr. LEVIN. Could the witness answer the question?
Chairman CAMP. You know, regular order, Mr. Levin. The
gentleman from Texas has the time and he is questioning
appropriately, so please no more interruptions.
Mr. LEVIN. Regular order allows a witness to answer a
question.
Chairman CAMP. Regular order allows the witness to conduct
his questioning as he sees fit. This committee has given broad
latitude to Members of both parties to do that.
Chairman CAMP. The time is restored to Mr. Brady.
Mr. BECERRA. Mr. Chairman, parliamentary inquiry.
Chairman CAMP. Please continue.
Mr. BECERRA. Parliamentary inquiry, Mr. Chairman.
Chairman CAMP. The gentleman will state his parliamentary
inquiry.
Mr. BECERRA. Under the rules of the House, every Member has
5 minutes to pose questions to the witness and the witness is
given an opportunity and right to respond. Is the chairman
saying that the witness does not have a right to respond to the
question?
Chairman CAMP. We are--the gentleman has had plenty of time
to respond. That is not a parliamentary inquiry. Mr. Brady has
the time.
Mr. BECERRA. Mr. Chairman, my question is, does the witness
have a right to respond to the question?
Chairman CAMP. The gentleman has not stated a parliamentary
inquiry. The gentleman from Texas.
Mr. KOSKINEN. Start again with the question.
Mr. BRADY. You knew in March that you withheld information
from this congressional investigation. And in May you assured
this committee that all of Ms. Lerner's emails would be
provided to us, yet you knew that that was not possible.
Mr. KOSKINEN. No, in fact, I knew that, in fact, we would
provide you all of the Lois Lerner emails that we had.
Mr. BRADY. You already knew in March they were not
retrievable. A, you didn't inform the congressional
investigation; B, 2 months later, you told us you would provide
all of the emails without limitations. And you knew you didn't
have them.
Mr. KOSKINEN. By March I did not know that they were not
retrievable and in fact, we had received--we have retrieved----
Mr. BRADY. You just testified to Mr. McDermott----
Mr. KOSKINEN [continuing]. 24,000 of those emails.
Mr. BRADY [continuing]. That that was the case, you knew.
And in April, your agency informed Treasury about the problem,
and Treasury agreed with you that Congress should be told as
soon as it was able to.
Mr. KOSKINEN. Our----
Mr. BRADY. Yet you didn't provide the information. And then
you assured us you would provide all of the emails without
limitation, with no mention that you then knew 2, 3 months into
this, that they weren't retrievable.
Mr. KOSKINEN. As noted, and I think your record should make
it clear, all of this issue is as a result of providing you a
public and fulsome document about this matter. So we have not
been hiding from you.
Mr. BRADY. Mr. Commissioner, sending a letter months after
you knew the emails were supposedly lost, withholding the
information from the investigation--you were aware there was a
congressional investigation, right?
Mr. KOSKINEN. I was aware there was an investigation.
Mr. BRADY. So you withheld the information?
Mr. KOSKINEN. We did not withhold the information.
Mr. BRADY. You misled Congress in May when you said those
emails would be provided.
Mr. KOSKINEN. We have provided you the information. And it
turns out you had the information for some time.
Mr. BRADY. Mr. Commissioner, you did not tell me under oath
that you told us in February, in March, in April, in May that
the information was lost? That was just what you said. Tell us
that again, that we knew.
Mr. KOSKINEN. In February and March and until April, I did
not know if any information was lost.
Mr. BRADY. Yet, your agency had already, in April,
communicated with Treasury Department about the problem. And
the letter we have from Treasury says, we agreed with the IRS
that it should inform Congress as soon as it is able. That is
the letter today that exactly disputes what you just told us
under oath. Exactly disputes it.
Mr. KOSKINEN. That letter from Treasury reveals and
provides to you all of the Lois Lerner emails so that there is
no issue that any Lois Lerner email provided to anyone
outside----
Mr. BRADY. Mr. Fitzpayne, Assistant Secretary for
Legislative Affairs ``Treasury agreed with the IRS that it
should inform Congress as soon as it was able.'' Yet, you did
not.
Mr. KOSKINEN. We actually have provided you the
information. My goal was to----
Mr. BRADY. You have not provided us any information.
Mr. KOSKINEN. Well----
Mr. BRADY. In fact, we didn't learn until last week and
then this week that you had supposedly lost the emails not just
from Ms. Lerner, but other persons of interest in the IRS.
Mr. KOSKINEN. There is no evidence that any of those emails
have been lost either. And in fact, as I said earlier, my
process has been to make sure that we had all of the facts when
we provided them to you, so that in fact----
Mr. BRADY. Why at this point, why should anyone believe
you? The IRS denied for 2 years targeting of Americans based on
their political beliefs. That wasn't the truth. They said it
was a few rogue agents in Cincinnati. That wasn't the truth.
You said you were targeting liberal organizations. That wasn't
the truth. And then you assured us you would provide us all of
the emails in May and that wasn't the truth. And today you are
telling us out of thousands of IRS computers, the one that lost
the emails was a person of interest in an ongoing congressional
investigation.
Mr. CROWLEY. The gentleman's time is expired. Point of
order.
Mr. BRADY. And that is not the truth, either. This is the
most corrupt and deceitful IRS in the history.
Chairman CAMP. The gentleman's time is expired. Mr. Lewis
is recognized for 5 minutes.
Mr. LEWIS. Mr. Commissioner, first of all, I want to thank
you for your service. Thank you for your patience, and I want
to apologize to you for the way you have been treated this
morning. I thought this was a hearing and not a trial. I want
you to take the 5 minutes that I have and use it to say
anything that you haven't had an opportunity to say.
Mr. KOSKINEN. Thank you. I think that between my full
testimony and my oral testimony and my response to the
questions, that I hope is clear, that we have not, in this
investigation, lost any email from the start of the
investigation until now.
I hope it is clear that by the end of this month we will
have provided all of the Lois Lerner emails that we have; that
those will number 67,000.
It should be clear that in the period of Ms. Lerner's hard-
drive crash, we have located 24,000 emails that Lois Lerner
sent or received.
It should be clear on the basis of the email track that
Lois Lerner was not trying to destroy email; in fact, was
working very hard and asked for extraordinary efforts to try to
restore her emails at that time so that it doesn't appear to be
any attempt on her part as noted to rejoice over the loss of
those emails.
It should be clear that when we did provide this committee
with on Monday preliminary information reporting, the net
result of that was a press release erroneously leaping to
conclusions that Nikole Flax' emails had been lost along with
others. It turns out on further investigation and we are
continuing that investigation, that none of Nikole Flax's
emails appear to have been lost.
We will provide this committee a full report on the other
custodians as we complete that work. Thus far it has been
clearly demonstrated that piecemealing out information about
there is a possible problem simply results in press releases,
and angry letters to me.
So my position from the start and will continue to be, we
will, as we have, continue to keep this committee fully
informed of the facts as we find them. If there are situations,
we will investigate those and give you all of the information
about them.
I did not come out of retirement to run an agency that did
not create transparency, responsiveness to congressional
inquiries, congressional letters, or otherwise. This is an
important agency. It provides critical work for the government
collecting 93 percent of the money the government uses to run,
but more importantly, it touches virtually every American. And
I think it is important for every American taxpayer to feel
comfortable and confident that when they treat--deal with the
IRS, they are going to be treated fairly no matter who they
are; whether they are rich or poor, whether they are
Republicans or Democrats, whoever they voted for in the last
election.
And to say that this is the most corrupt IRS in history
ignores a lot of history, and seems to me, again, is a classic
overreaction to a serious problem which we are dealing with
seriously. And I would just like that to be our record. I am
comfortable with it. I am confident about it, and I am willing
to stand on that record in the 6 months that I have been the
IRS Commissioner.
Chairman CAMP. All right. Thank you.
Mr. LEWIS. Thank you, Mr. Commissioner.
I yield back.
Chairman CAMP. I ask unanimous consent to place into the
record a June 18th letter from Neal Eggleston, Counsel to the
President, as well as a June 20th letter of this year from
Alastair M. Fitzpayne, Assistant Secretary for Legislative
Affairs at the Department of the Treasury.
Without objection, so ordered.
Mr. LEVIN. May I reserve my right to object?
Chairman CAMP. Yes, you may reserve your right to object.
Mr. LEVIN. And I will tell you why. I hope everybody will
read the letter from Mr. Fitzpayne, which says----
Chairman CAMP. That is the purpose of placing it in the
record.
Mr. LEVIN. I just want to--I know. And I want to continue
with my reservation.
Chairman CAMP. The gentleman has reserved his objection----
Mr. LEVIN. I want to tell you why.
Chairman CAMP [continuing]. To letters from the
administration.
Mr. LEVIN. It says, ``In response to your questions, IRS
informed Treasury in 2014 that Ms. Lerner's custodial email box
appeared to contain very few emails prior to 2011. Treasury
agreed with the IRS that it should inform Congress as soon as
it was able to provide accurate and complete information,
although Treasury ultimately deferred to the IRS on how to
handle the matter.'' I withdraw my----
Mr. KIND. Mr. Chairman, are copies of those letters being
distributed?
Chairman CAMP. We are making copies now. We just--the
committee just received these pretty recently. So, yeah, copies
will be made available to every member of the committee.
So, without objection, so ordered.
Mr. Ryan is recognized for 5 minutes.
Mr. RYAN. This is unbelievable. The apology that ought to
be given is to the American taxpayer, not to a government
agency that is abusing its power. I am sitting here listening
to this testimony, I just--I don't believe it. That is your
problem. Nobody believes you.
Mr. LEVIN. Come on now.
Mr. RYAN. The Internal Revenue Service comes to Congress a
couple years ago and misleads us and says no targeting is
occurring. Then it said it was a few rogue agents in
Cincinnati. Then it also said it was also on progressives. All
of those things have been proven untrue. This committee sent a
criminal referral of possible criminal wrongdoing just a month
ago to the Justice Department. We have heard nothing. You bury
in a 27-page letter to the Senate asking for them to conclude
the investigation that you have lost Lois Lerner's emails
during the time in question because of a hard drive crash.
Monday, our investigators asked your agency whether any
other hard drives crashed, and we learn that six other hard
drives of the people we are investigating were involved. You
didn't tell us that.
Mr. KOSKINEN. We told you on Monday.
Mr. RYAN. On Monday.
Mr. KOSKINEN. What did you do with the information?
Mr. RYAN. Because we asked you.
Mr. KOSKINEN. Right. And what did you do with that
information?
Mr. RYAN. You told us on Monday because we asked you
whether any other hard drives crashed. This is unbelievable.
You told us in May you were going to give us all of Lois
Lerner's emails, and you learned in February that this crashed.
Mr. KOSKINEN. I did not learn in February it was a crash.
And we told you on Monday----
Mr. RYAN. I am not asking you a question. I am making a
statement.
Mr. KOSKINEN. I am sorry about that. My apologies.
Mr. RYAN. You are the Internal Revenue Service. You can
reach into the lives of hardworking taxpayers and with a phone
call, an email, or a letter, you can turn their lives upside
down. You ask taxpayers to hang onto 7 years of their personal
tax information in case they are ever audited, and you can't
keep 6 months' worth of employee emails? And now that we are
seeing this investigation, you don't have the emails. Hard
drives crashed. You learned about this months ago, you just
told us, and we had to ask you on Monday. This is not being
forthcoming. This is being misleading again. This is a pattern
of abuse, a pattern of behavior that is not giving us any
confidence that this agency is being impartial. I don't believe
you. This is incredible.
Mr. KOSKINEN. I have a long career. That is the first time
anybody has ever said they do not believe me.
Mr. RYAN. I don't believe you.
Mr. KOSKINEN. That's fine. We can have a disagreement. I am
willing to stand on my record. I am willing to remind you that
it was not buried in 27 pages. Most of that 27 pages is
exhibits. When asked about the custodians, we advised you
what----
Mr. RYAN. Being forthcoming.
Mr. KOSKINEN [continuing]. Which we knew for 1 day.
Mr. RYAN. Being forthcoming is to say----
Mr. KOSKINEN. I am sorry----
Mr. RYAN [continuing]. You know, investigators, Congress
who is investigating this----
Mr. LEVIN. Will you let him answer the question?
Mr. RYAN. I didn't ask him a question.
Mr. LEVIN. Yes, you did.
Chairman CAMP. The gentleman--the gentleman from Wisconsin
controls the time.
Mr. RYAN. I control the time.
Chairman CAMP. I realize that disrupting a hearing----
Mr. LEVIN. Now come on.
Chairman CAMP [continuing]. Serves people. But the
gentleman from Wisconsin----
Mr. RYAN. I am not yielding time. I control the time.
Chairman CAMP. He has the time.
Mr. RYAN. Here is what being forthcoming is.
Chairman CAMP. Regular order.
Mr. RYAN. If we are investigating criminal wrongdoing,
targeting of people based on their political beliefs, and the
emails in question are lost because of a hard drive crash that
is apparently unrecoverable, which a lot of IT professionals
will question, and you don't tell us about it until we ask you
about it, that is not being forthcoming.
Mr. KOSKINEN. And that's not true.
Mr. RYAN. I yield back the balance of my time.
Mr. KOSKINEN. That is not true.
Mr. RYAN. I yield back the balance of my time.
Chairman CAMP. The gentleman has yielded back his time.
Mr. KOSKINEN. Good. Thank you.
Chairman CAMP. Mr. Neal is recognized.
Mr. NEAL. Well, I am going to let you answer Mr. Ryan's
question. Go ahead.
Mr. KOSKINEN. Right. Mr. Ryan tried to leave the impression
that only by being asked did we reveal the information about
the hard drive crash.
First of all, I reiterate the information about the hard
drive crash is in the emails that you and your staff have had
for some time.
Secondly, we produced that public report telling you about
the email loss on our own. It was not in response to a
question.
Third, we learned on Monday morning about the custodians.
We were asked, our staff was asked on Monday afternoon. We told
them all we knew, which was there a was an indication there had
been a hard drive problem with six others. The next morning,
this committee put out a release asserting, leaping to the
conclusion that therefore emails had been lost, particularly
Nikole Flax's emails. It turns out, as we have continued to
work and we have more work to do, that there is no evidence
that any Nikole Flax email was lost. We are responding. What we
are trying do, as the Treasury letter suggested, is as soon as
we are able to give you a full picture of it, we are providing
that.
It is not in response to a question. That was a public
report we provided you. We will continue to provide you
documents. You have 770,000 pages. You will have 67,000 Lois
Lerner emails; 24,000 of Lois Lerner emails in the period when
it crashed have not been lost, they will be produced to you.
Chairman CAMP. Mr. Neal, on this point, may I ask you a
question? May I ask a question here on your time, and I will
give you some more time? There is a distinction, yes. The
committee did know about the hard drive. But we did not know
about the server. There is a distinction. We did not know about
the server. And the server came in the carbon copy of the
letter you sent to the Senate. The server means they are lost
forever. A hard drive crash doesn't necessarily mean that the
emails are lost forever. So there is a significant distinction
here that has not been made yet to date.
So Mr. Neal, I will make sure you have more time.
Mr. NEAL. Would you like to respond?
Mr. KOSKINEN. That is an important question, and one of the
reasons that we did not immediately say we discovered a hard
drive crash, because as you just noted, a hard drive crash does
not mean that emails have been lost forever. And in fact, in
the case of Lois Lerner, 24,000 of her emails were not lost.
They have actually been found; they will be produced. You have
5,000 of them already, you will have 24,000 of them by the end
of the month. So when a hard drive crashes, the emails do not
necessarily disappear. Her email account, any emails in those
accounts, which were the emails we could find in that period,
were included and did not crash.
Mr. NEAL. Thank you.
Commissioner, I must tell you that based on what we have
heard so far today, if you came in here and said you agreed
with everything that the Republicans have suggested, then they
would say, We don't believe you. They have come to a
conclusion, not based upon the facts, but upon what they might
promote as a conspiracy. The only thing that is missing is
Oliver Stone. But there is time for that because there is an
election 5 months from now. So there will be plenty of
opportunity for them to do this.
Let me say something, having served on this committee for a
long period of time. You have an individual here today who has
a distinguished career, who has served in Republican and
Democratic administrations, coupled with the fact he took an
oath today. Unless those here didn't hear him take the oath or
witness him taking the oath, for him to take the oath and then
to have people suggest to him, we don't believe you, that is
not the way this committee has functioned in the past. And it
ought not to be the way we function going forward.
Now, just a couple of quick questions, and then I want to
offer something to you. The tax investigator general has said
there wasn't a cover up. Is that correct?
Mr. KOSKINEN. That is correct.
Mr. NEAL. There was not a conspiracy based on that
assertion that he has made?
Mr. KOSKINEN. That is my understanding.
Mr. NEAL. That's your understanding. And to the moment,
there is no smoking gun linking the administration to Lois
Lerner.
Mr. KOSKINEN. That's also my understanding.
Mr. NEAL. Now, I would hope that at some point, this
committee might spend a hearing, maybe a morning talking about
the success that you have had with offshoring accounts for
individual taxpayers. The number is pretty stunning in what you
have begun to collect from those who have voluntarily complied
in Switzerland and in other tax havens. And it is a story that
I would hope that we would have an opportunity to talk about.
Mr. Camp is correct when he says the tax system works on
the basis of people believing that there is equity in it for
all and that everybody carries their burden. And spending some
time on offshoring and spending some time on compliance might
be equally good for a hearing. But I know it doesn't fit with
the determination that was made this morning for the purpose of
this hearing.
Thank you, Commissioner.
Chairman CAMP. All right.
Mr. Nunes is recognized.
Mr. NUNES. Thank you, Mr. Chairman.
Mr. Commissioner, in September 2010, a letter from Chairman
Baucus asking for an investigation of apolitical 501(c)(4)
groups, that would have went to Mrs. Lerner, correct?
Mr. KOSKINEN. It would have gone to her? I don't know where
it would have gone. I was not there.
Mr. NUNES. But if it went to her, assuming it did, like it
should have, she would have responded.
Mr. KOSKINEN. She or the agency. Either she or the agency
would respond to that. I haven't seen the letter. I don't know
what the response would have been.
Mr. NUNES. Would we have that email.
Mr. KOSKINEN. Which email?
Mr. NUNES. Would we have the response?
Mr. KOSKINEN. The response I assume would not have been by
email.
Mr. NUNES. There would be a letter, I assume----
Mr. KOSKINEN. There would be a letter.
Mr. NUNES [continuing]. Back to a Senator who chairs the
Finance Committee.
Mr. KOSKINEN. If a letter comes in the from the Senator,
there should be a response back.
Mr. NUNES. Then there was in October of 2010, Senator
Durbin wrote Commissioner Shulman urging him to investigate
conservative groups, specifically Crossroads GPS. That letter
would have likely been sent to Ms. Lerner. Did Ms. Lerner ever
write Senator Durbin or his staff back?
Mr. KOSKINEN. I have no idea.
Mr. NUNES. If she did, would we have any of the emails
associated with it?
Mr. KOSKINEN. If she wrote back or the agency wrote back,
there would be a hard copy. There would be a letter in the file
as to what it said.
Mr. NUNES. And during the period before the crash, liberal
leaning groups, Democracy 21, repeatedly wrote the IRS asking
for an investigation of conservative leaning groups. Did Lois
Lerner ever write them back?
Mr. KOSKINEN. I don't know whether she wrote them back or
not.
Mr. NUNES. Would you have a copy of those letters?
Mr. KOSKINEN. You would have a copy of those letters.
Mr. NUNES. Could we get those letters?
Mr. KOSKINEN. If we have those letters, they probably have
already been produced.
Mr. NUNES. In June 2011, Chairman Camp sent a letter to the
IRS asking about abuses of the gift tax targeting. And just so
you know, we do have that letter. We did receive a response. So
the point here is that there were 83 specific employees that we
asked for all of their emails on. You are aware of that, right?
Mr. KOSKINEN. I am aware of that. You asked for all the
emails. We worked with the investigators to select the 83 that
seemed to be most likely to be involved, and to select a range
of search terms that would actually produce the emails that
would be relevant to the investigation.
Mr. NUNES. But that was only emails between the 83.
Mr. KOSKINEN. No, that's any emails.
Mr. NUNES. For example, if Lois Lerner sent an email to
Secretary Lew----
Mr. KOSKINEN. That would be in those emails searched for.
There was no limitation that they would only be emails within
the agency. The search terms were any emails to anyone. It is
just the 83 were the email accounts that were searched to see
if anybody of the 83 wrote to anybody else about any of those
search terms, those emails would be produced.
Mr. NUNES. But Secretary Lew is not one of the 83.
Mr. KOSKINEN. No.
Mr. NUNES. You are telling me if there was an email----
Mr. KOSKINEN. If there was an email from any of the 83 to
Secretary Lew, that email would be in their email box and would
have been found and produced. The limitation was not the
communications back and forth among the 83. It was the 83
custodians, as they are called, their emails, any email that in
the time frame met any of the search terms that were agreed to,
all of those emails were produced whether they were to someone
within the 83, outside the 83 in the agency, or outside the
agency.
Mr. NUNES. But do you understand Mr. Ryan's point when the
letter you sent to the Senate last week on Friday, which is
exactly what had happened when Lois Lerner planted the question
in the audience way back? I mean, it just shows a pattern of
abuse and a pattern of dumping things on Fridays. And then
specifically--I am not trying to get into a tit for tat with
you here. Okay? I am just saying why it is not believable is
because you only talked about Lois Lerner's hard drive, which
is one of the 83, but there were six additional folks in that
83 that have disappeared, too, and you didn't tell us about it
on Friday.
Mr. KOSKINEN. Right. Can I explain?
Mr. NUNES. Sure.
Mr. KOSKINEN. Explain. We originally, as I said, hoped to
complete the production of all Lois Lerner emails, complete the
investigation, which had just started, of the other 82 and
provide a complete report. Senate Finance Committee indicated
that they were nearing conclusion--closure on their report, and
they wanted an update on our letter in mid-March to this
committee and Finance that we had found--that we had produced
all the relevant emails to the IG investigation. We provided
that letter. They also asked for an update on all of our
production. And they asked for it no later than last Friday.
The reason it was produced Friday rather than the end of this
month was in response to a request from Finance. At the time we
produced that report on Friday, we had no information about the
other custodians that I had asked people to review. That
information was provided to our IT person--people on Monday
morning, who happened to then be briefing your staff Monday
afternoon. I am under a lot of heat from the Senate----
Chairman CAMP. Time has expired.
Mr. KOSKINEN.--because I didn't know on Monday, and I
didn't tell them on Monday because I didn't know. It was not
included in the Friday report produced in response to a Finance
Committee request, because when that report was prepared no one
in the agency knew which, if any, of the other 82 custodians
were involved.
Chairman CAMP. Time has expired.
Mr. Becerra.
Mr. BECERRA. Commissioner, thank you for being here. And
let me add my regrets to you that this hearing has been
conducted as less as a hearing than it has been as an
inquisition. And you deserve better. You certainly are
obligated to give us truthful answers. And we appreciate that
you are trying to. Let me suggest to you one thing. You have a
right to try to respond to any question. If you find that you
are being badgered or not given an opportunity to respond, just
take a breath and then try to get your answer out. If you are
not given that opportunity, then recognize that, again, this is
maybe not a hearing, but an inquisition. But you have a right
to make sure the record reflects what you under oath would like
to say.
Some want to confuse the real issue that's been raised by
this investigation. Let me ask you a question. In this added
scrutiny that IRS was giving to the so-called social welfare
organizations, is there evidence that shows that any number of
different types of organizations other than just far right or
conservative organizations were being scrutinized?
Mr. KOSKINEN. There is evidence that organizations across
the spectrum were reviewed. The bulk of the applications were
from conservative groups, so the bulk of the reviews were of
conservative groups.
Mr. BECERRA. But it wasn't just of conservative groups.
Mr. KOSKINEN. That is correct.
Mr. BECERRA. Okay. So some would like to portray this as
just targeting or an attack on conservative groups. But the
evidence, which has been revealed to everyone, including
members in this committee, is otherwise. I think we are
watching how people are trying to confuse the issue here. This
investigation should truly be about what is really wrong with
the system. And that is that today in America, these so-called
social welfare organizations, these not-for-profit
organizations that get special tax breaks that ordinary
Americans don't get, they pay less in taxes than an
organization that doesn't have that tax status as a 501(c)(4),
they spent in the last election cycle, 2012, more money as
social welfare organizations than the two political parties
combined; $256 million spent by so-called social welfare
organizations to conduct political campaigns. While the two
parties, which are there to conduct political campaigns, spent
less than the $256 million that these social welfare
organizations spent.
I hope, at some point, Commissioner, we will have a chance
to get into that, because my understanding is that we are
seeing now the seeds of this dark money that's being spent. My
understanding is there is an investigation by the State
prosecutors in the State of Wisconsin of the Wisconsin Governor
for perhaps coordinating illegally campaign activities in ways
that might violate the law. What we are finding is that fewer
and fewer of these organizations that are applying for this
tax-exempt status that gives them special tax treatment are
doing social welfare. They are doing nothing more than
campaigning. Is that something that the IRS is concerned about,
that what was to be a tax provision and tax status reserved for
organizations that want to do social welfare is being used to
conduct campaign activity?
Mr. KOSKINEN. Our concern at this point is to try, as I
have testified on numerous occasions, to take a review of the
regulations governing all (c) organizations and determine, can
we provide clarity as to what's allowable activity, the amount
of it that you can engage in without jeopardizing your tax
exemption, and to which organizations should it apply. As you
know, we have had over 150,000 comments on that draft
regulation. We announced that sometime probably into early next
year, we will review and repropose, ask for more comments, have
a public hearing. I do think it is important--we are not in the
political business. I think what is important is to provide
clarity. Right now, it is an unclear standard. It is hard for
people running those organizations to know what's allowable and
not allowable. They should not operate those organizations
worried that somebody's going to say the facts and
circumstances changed, and now you are not eligible. So that
our goal is to have, as I have said, a rule that's fair to
everyone, clear, and easy to administer. And we are going to
try to do that.
Mr. BECERRA. Final question. You are under oath. To your
knowledge, are there any documents or requests for information
that you have not responded to completely?
Mr. KOSKINEN. There are--we are responding as quickly as we
can. We have far flung requests for documents that we have not
been able to respond to now. There is no document request or
information request that we are not going to respond to as
quickly as we can. We will provide anything the committee would
like.
Chairman CAMP. The time has expired.
Mr. Tiberi is recognized.
Mr. TIBERI. Commissioner, you have a really important job.
A lot of Americans fear the IRS. Very important agency that has
struggled to have a leader with any consistency over the last
several years. And this Congress and this committee have heard
from a lot of different leaders who come and go. And it is been
quite frustrating for us and many of our constituents
regarding--and I won't rehash the concern. But I think every
member of this committee ought to do something this weekend and
maybe Monday. Go talk to your case worker who deals with the
IRS for your constituents. Get an earful from them. And maybe
we wouldn't be apologizing to the IRS.
Let me tell you a story, sir. Small business man in my
district paid his taxes on time forever. Forever. He had an
automatic payment set up in fact with his bank to pay the IRS,
probably like you have done as a business man in the past.
October of last year, he found out one day--actually, the day
that his payment was due to the IRS--that his account had been
hacked. No fault of his own. Fraud. Fraud. He did what any law-
abiding citizen would do. He worked with the bank to close the
account. The IRS had already accessed the account, but it had
already been closed, and he knew that. He called the IRS and
said, Hey, my account had been hacked. A payment was made. It
was made incorrectly because they closed the account, so the
payment is going to bounce. I don't want to get penalized. I
don't want interest. What do I do? Well, thank you for letting
us know. Send us a letter. Get us a check immediately. And all
will be good.
It is the middle of June, sir. He is being charged penalty
and interest because of that fraudulent payment. No fault of
his own. He fears the IRS. That is just one case. That is one
case, ladies and gentlemen.
And when these constituents have watched, long before you
got to the IRS, by the way, long before you got there, have
seen the IRS continually delay when there is no delay on their
part if the IRS wants information. If they say, well, my
document got destroyed, sorry, buddy, not an excuse. There
seems to be two sets of rules, sir. And the frustration that we
have is, quite frankly, everybody knows that this has going on
for years, for 3 years.
And so if the President would have asked me to go over and
be commissioner of the IRS, and I found out in May, April,
March, February, what you found out, rather than bury it in a
letter on page 15, here is what I would have done: Just a
suggestion. Because of the lack of confidence the American
people and this committee have because of how our constituents
are treated differently than how the IRS leadership treats
America, is Mr. Camp, Mr. Levin, this just--I just found out
this happened. Wouldn't cost a cent. Just pick up the phone.
The President has a phone. You probably have a phone. Pick up
the phone, call Mr. Wyden and say something very bad just
happened. Don't know why. I don't think it is a coverup. I
don't think it is criminal. But because of the past and the
lack of transparency in the past and because we are a really
important agency that the American people need to have
confidence in and Congress needs to have confidence in, I just
wanted you to be aware of this. And we are going to continue to
try to get to the bottom of this. When you don't do that, for
what reasons--I understand completely what you are saying,
don't necessarily agree with, but I understand where you are
coming from, but when we find it buried in a letter, and then
on Monday, because we asked the question, not because you
provided the information, because we asked the right question,
and there are probably a lot of questions that we haven't
figured out are the right questions yet, we get the right
answer, there is a feeling here that, oh, my gosh, the IRS has
no credibility. And it doesn't need to be that way.
This isn't about Republicans and Democrats. This is about
our constituents, ladies and gentlemen. Talk to your IRS case
worker. I can give you 12 more. I did IRS case work. Americans
fear the IRS. And now, unfortunately, with a pattern of delay
and disrespect and deceit, in many cases--not from you, sir--
there is just no credibility. This is not good for our country.
And my hope is that you can clean this up.
But I got to tell you I don't even have a question for you.
This is amazingly awful. This is absolutely awful. This is not
partisan. Just talk to your case workers, guys. This is not
partisan. This is just Americans frustrated with an arrogance
of an agency that is above the law in their opinion.
I yield back.
Chairman CAMP. Thank you.
Mr. Doggett is recognized.
Mr. DOGGETT. Well, the first thing I did in preparing for
today's hearing was to talk with my case workers, our
constituent service representatives, as we call them, in Austin
and San Antonio. And what I found, Commissioner, is that when
250 IRS employees spend over 120,000 hours and almost $20
million on responding to Congress, those employees are not able
to respond to their ordinary duties. I found, for example, that
as far as nonprofit community service organizations, that the
Austin African American Cultural Center, that a small town area
community foundation that wanted to raise money in that small
town for the first time to support community activities, that a
neighborhood community association in San Antonio, that the
Unitarian Universalist Justice Ministry, that a video service
that covers community organizations in San Antonio and tries to
spread the word about their activities, all of them had waited
months and, in some cases, over a year to try to get approval
of their application because it would appear to me your folks
are so busy responding to one claim after another, you have no
additional resources, you are not able to respond to the job
that the law asked you to do.
I believe that there has been a long-term commitment to
hamstring, to encumber, to underfund the Internal Revenue
Service and discredit it and the whole concept of progressive
taxation in this country.
Now, let me ask you, as to the seriousness of this
investigation, sir, have you ever been in Benghazi?
Mr. KOSKINEN. No.
Mr. DOGGETT. Do you know if you or Ms. Lerner have ever had
any responsibility for anything having to do with Benghazi and
our Embassy there?
Mr. KOSKINEN. No.
Mr. DOGGETT. How about Area 51 out in Roswell, New Mexico,
where all those space aliens allegedly came? Have you ever had
any responsibility for that?
Mr. KOSKINEN. No.
Mr. DOGGETT. Have you ever had custody of the President's
birth certificate?
Mr. KOSKINEN. No.
Mr. DOGGETT. Well, Commissioner, I believe one of the
mistakes that you have made in dealing with the committee today
is that you did assume professionally that this was a serious
inquiry. I believe it is an endless conspiracy theory that's
involved here that is being exploited solely for political
purposes.
I don't approve of Ms. Lerner. I don't approve of the way
the IRS handled all these matters.
But I think there is a much larger coverup issue here. And
it is the desire of our Republican colleagues to cover up these
purported social welfare organizations that don't want to
disclose the secret corporate campaign contributions that they
rely on to pollute our democracy.
It is not surprising to me that, without a letter from a
Member of Congress, that the Internal Revenue Service would
have at least questioned why one organization headed by Karl
Rove of Texas, Crossroads GPS, was spending $71 million in
election cycle 2012. My concern is that it doesn't appear from
the public record that there has been a determination as to
whether that was a legitimate social welfare organization or
not.
As my colleague Mr. Becerra indicated, we know from today's
papers an elaborate chart, that another of these social welfare
organizations headed by Mr. Rove, called Citizens for a Strong
America, and we are sure all for that, but that that
organization apparently was involved in polluting the political
process in the State of Wisconsin.
I believe that this is a serious matter. The use of
corporate secret money is a problem enough. But the
determination to have that money be taxpayer-subsidized in
social welfare organizations, in some cases headed by
individuals who never had any interest in social welfare until
they can claim it for themselves to pollute our democracy, that
that is a serious problem.
I am pleased you are going to be coming forward with
anything else that you can find. Because though this is not a
serious investigation, but the endless pursuit, the obsession
with conspiracy and conspiracies, we do need to have every bit
of information, every shred of information that you can find,
even though the people I talk about in Texas who have
legitimate issues before the IRS are collateral damage in the
process. But then I guess Mr. Rove and some of his colleagues
never much cared about collateral damage in other contexts
anyway.
I yield back.
Chairman CAMP. Mr. Reichert is recognized.
Mr. REICHERT. Thank you, Mr. Chairman.
Mr. Koskinen, I believe that you are an honest man and that
you want to do the right thing and that you took this job to
improve the IRS and serve the American people. And so I just
have a few questions. I used to be--I was a cop for 33 years.
So I just want to kind of go through some questions and try to
understand this thing, because it is pretty confusing I think
to the American people. Wouldn't you agree with that?
Mr. KOSKINEN. It is a confusing--technology is confusing to
all of us.
Mr. REICHERT. Yes. Okay. Well, so there is an IG
investigation currently ongoing. Right?
Mr. KOSKINEN. There are two IG investigations, one on the
response to the first IG report and another IG investigation
going on into in fact the hard drive crash of Lois Lerner.
Mr. REICHERT. And you are fully cooperating with the IG's
office?
Mr. KOSKINEN. We have always fully cooperated. I once
chaired the intergovernmental agency of coordination of all
inspectors general. I am a big supporter.
Mr. REICHERT. All right. And you provided them with all the
information they asked for in the process of their
investigation?
Mr. KOSKINEN. Yes.
Mr. REICHERT. All the requests. And you have kept them
updated as much as you can on all the information that's
developed on this investigation?
Mr. KOSKINEN. As they investigate, we have provided all the
documents they want.
Mr. REICHERT. So I am a little confused today when I learn
that the IG's office called our office here, our staff people
here on the Ways and Means Committee and said that they didn't
learn about the hard drive issue until the Ways and Means
Committee put out their press release. How could that happen?
The IG is conducting an investigation, and they have no idea
there is hard drive issues or lost emails. Can you answer that
question?
Mr. KOSKINEN. The investigation they were doing is the
investigation of the response to their report. They have
started an investigation on the issues regarding the hard
drive. They were not doing an investigation of that.
Mr. REICHERT. But you just said you fully cooperated and
provided them with all the information.
Mr. KOSKINEN. I meet with the IG once a month.
Mr. REICHERT. They have to learn, Mr. Koskinen, they have
to learn through a press release from the Ways and Means
Committee of the United States Congress, they have to learn
from that that there is an issue that I would think as an old
cop again, I would need to know. If I was conducting that
investigation, and you were a part of that, and you were
helping me and assisting me in that investigation, does that
not make sense to you that that would be information that you
would provide to the IG's office?
Mr. KOSKINEN. We are providing----
Mr. REICHERT. Yes or no. Yes or no because my time is
limited. Would that not be information that you would provide
to the IG's office? I just need a yes or no.
Mr. KOSKINEN. Yes. And we have provided it, and we will
continue to provide information to them.
Mr. REICHERT. I think that's important. But you didn't
provide it to them because they learned it in a press release.
That's not correct. I think you want to be honest, but there
have been some mistakes made, and I can understand that. You
know, so let's just go through this, you know, very quickly. So
we have, you know, a flagging of the Tea Party applications.
People have gone over kind of the timeline here. Lois Lerner
sends her emails to IRS employees. Cincy should probably not
have these cases. Tea Party matter is very dangerous. We begin
our investigation. We are told that any potential targeting was
conducted by rogue employees in Ohio. We request all of Lois
Lerner's emails. The internal review. Then we find out that
emails are destroyed. Now we find out the hard drive is
destroyed. Mr. Koskinen, the American people don't believe
this. They can't--I can't--if you had an employee under
investigation for some violation of your policy internally, you
wouldn't accept, oh, Mr. Koskinen, Mr. Supervisor, Madam
Supervisor, I lost my emails.
Mr. KOSKINEN. I would accept----
Mr. REICHERT. My hard drive. It blew up. So would you stop
your investigation?
Mr. KOSKINEN. No, I would accept--if I found
contemporaneous----
Mr. REICHERT. What happened if they would say, look, I have
destroyed--I have destroyed my hard drive?
Mr. KOSKINEN. If I found contemporary----
Mr. REICHERT. What would you do, sir? What would you do,
sir. What would you do, sir?
My time, thank you, Mr. Levin.
Chairman CAMP. Regular order. Regular order.
Mr. REICHERT. What would you do, sir, if an employee came
to you and said my hard drive has--I destroyed it? I destroyed
my hard drive?
Mr. KOSKINEN. If I found, investigated and found
contemporaneous information from 3 years earlier that he in
fact had worked very hard to restore his hard drive, he had got
the best experts available to try to reconstitute the email and
that had failed, I would tend to believe him.
Mr. REICHERT. The other six hard drives, they destroyed,
too?
Mr. KOSKINEN. At this point, we are still investigating the
other hard drives. As I noted, on one of them--actually, one of
the ones on Monday turned out to have a failure in February of
this year, which is outside the timeline. Ms. Flax's hard drive
appears not to have caused the loss of a single email. Hard
drive crashes alone do not cause email to be destroyed. We
don't know that information. We will get it to you when we find
it.
Chairman CAMP. Time has expired, Mr. Koskinen.
Mr. KOSKINEN. All right.
Chairman CAMP. And now Mr. Thompson.
Mr. THOMPSON. Thank you, Mr. Chairman.
Mr. Commissioner, thank you very much for being here. I,
too, want to thank you for your public service and your
distinguished career. And I don't want to apologize to the IRS,
but I do want to apologize to you as a professional in the way
that you have been treated today. You know, if you could cut
through a lot of the political theater that we see taking place
on this dais today, I think there is actually some things that
we can all from both sides of the aisle agree to. I think we
are all pretty upset if in fact there was any inappropriate
behavior on the part of the IRS. And I think most of us in
previous hearings have expressed that. I don't care if you are
a Democrat--actually, I do care if you are a Democrat or a
Republican. But it doesn't matter if you are a Democrat or you
are a Republican, a conservative or a liberal, you should
receive equal and transparent treatment from the IRS. And if
there is any targeting done, it was absolutely inexcusable. I
think we are all at the least disappointed that Ms. Lerner took
the Fifth. I think that helped create a lot of the political
nonsense that we are seeing playing out today. I wish that
would have gone smoother and we could have gotten to the bottom
of some of these problems from the start. And I certainly hope
that we all agree that given all of these hearings that we are
having, a race to have our hearing before the other committee
has theirs, and all the effort that's gone into this, it has
really been a distraction from us being able to address the
problems, a lot of the problems that are important to the
American people; everything from tax reform to immigration
reform, highway repair, a transportation bill. If we could just
take a little bit of this time, maybe we could get some of the
issues that would help put America back to work dealt with.
And I think all of us experienced the same situation as my
friend from Ohio. We all can tell stories about constituent
problems with not just the IRS but with anything. I will take
the opportunity, I will take the lead from my friend from Ohio
and the opportunity, given that you are here, to tell you I
personally have been trying for weeks to get an appointment in
my district with the IRS over a constituent matter that--a
small business man in my district has been dealing with for a
couple of years. And it is all based on a bill that the
chairman and I co-authored and had signed into law dealing with
conservation easements. So if you have any influence on your
California office, please ask them to return my call. I would
like to deal with that. But the thing that I found that has
really pricked my interest today, in addition to getting this
thing cleaned up and done with, is the issue of the lost and
misplaced, and not knowing where they are or that the process
for dealing with them is hard drives. A number of years ago,
because of legislation that I carried dealing with electronic
waste, we found out, not through our own resources, through
press reports, that a number of hard drives from our
intelligence community and from the Department of Defense were
found in Third World countries in disposal sites. And that was
a terrible breach of national security and caused me to amend
our intelligence bill. And probably everybody here who was
there then voted for that amendment and that bill. And we
figured out how to deal with that in the intelligence
community. But it sounds like we have the same security problem
with some of the hardware and software in your agency. And I
would like to know if you think that's something that we should
try and collaborate on to make sure that we can protect the
records of the public as they are stored in your equipment.
Mr. KOSKINEN. No, it is an important issue, which is why
when there is a hard drive that no longer is usable, it goes to
a recycler and is destroyed rather than put in a waste dump or
sent out somewhere else.
Mr. THOMPSON. Well, I would be happy to share with you the
intel approach we took if you think that might help. In the
remainder of my time, I know you had some things you were
trying to say to the last--my last colleague who spoke to you.
I would put my remaining time to you to answer any of those
questions.
Mr. KOSKINEN. Thank you. I appreciate that.
I think the important thing to note is I would encourage
everybody to talk to their case workers and to let us know if
there are issues. I have spent a significant amount of time
visiting the 25 largest IRS offices across the country,
encouraging--I have met with over 10,000 employees--encouraging
frontline employees, who often know best what is going on, to
let me know if there is an issue, to give us their best
insights and advice and suggestions for how to improve our
operations. I am particularly concerned, and we are working on
the backlog in the 501(c)(3) organizations. And we are doing
our best to work that backlog down so that your constituents
actually get an appropriate and prompt answer to their
applications.
Chairman CAMP. All right. Time has expired.
Dr. Boustany.
Mr. BOUSTANY. Thank you, Mr. Chairman.
Commissioner, good to see you. I have to tell you I was
damned angry on Friday when we got word about what happened
with Lois Lerner's hard drive and all the news that's broken
since then on this. And I am even angrier today about this. And
it is interesting, you know, Chairman Camp and I sent a letter
to Secretary Lew on Monday, and after months of stonewalling
about documents, we finally got 2,500 documents 30 minutes
before this committee convened its hearing. And it is just
amazing that the White House or the Treasury can respond that
quickly when spurred to do so, and we are still waiting for a
lot of this information from your agency. But I want to explore
some questions with regard to Nikole Flax. She had two
computers, correct?
Mr. KOSKINEN. Correct.
Mr. BOUSTANY. She had one desktop and a laptop, is that
right?
Mr. KOSKINEN. Yes.
Mr. BOUSTANY. Yes. Okay. Which hard drive failed?
Mr. KOSKINEN. I have been advised it was her laptop that
failed, not her office computer.
Mr. BOUSTANY. Okay. And so how do you know where she has
archived--or do you know where she has archived the key
documents from the time frame that we are interested in?
Mr. KOSKINEN. Time frame you are interested in, everyone
archives their documents on their hard drive in the office
because that's where most of the work is done and they want to
be retrievable.
Mr. BOUSTANY. So can you attest that all relevant emails
and documents, memos from Nikole Flax related to targeting are
produceable? You have these?
Mr. KOSKINEN. I can attest at this point I am advised there
is no evidence that any email was lost by Nikole Flax. I have
not personally talked to her. And again, this is all
information that's being developed as we talk.
Mr. BOUSTANY. Email, memos, all documents?
Mr. KOSKINEN. My understanding is no email of hers has been
lost as a result of her hard drive crash.
Mr. BOUSTANY. Okay. And where is the laptop now which
supposedly has hard drive problems?
Mr. KOSKINEN. I don't know. As I said----
Mr. BOUSTANY. You don't know.
Mr. KOSKINEN. We just got the list on Monday ourselves. We
have been pursuing this. And we will in fact give you a full
report on all the custodians, now seven; the eighth one is one
that actually failed this year, and it doesn't count.
Mr. BOUSTANY. So we don't know where those hard drives are
right now.
Mr. KOSKINEN. We don't know where those are. We will give
you a full update on all of that.
Mr. BOUSTANY. It is unbelievable to me that you don't have
that information. It's been a week since the information was
made public to us.
Mr. KOSKINEN. The information was made public by you. We
advised you in committee on Monday that this is all we had was
the names. We are actually working through a review to find out
what's the status of those, how many emails were lost. We will
find out and we will know where the hard drives are. Many times
you reconstitute the hard drive and it continues to function.
We will give you that information when we have it. Part of the
issue, as I said earlier, with providing partial information is
then we get immediately asked, well, what is the answer to
this, and we don't know the answer----
Mr. BOUSTANY. So we can expect this information in a timely
manner.
Mr. KOSKINEN. In a timely manner, we will get you all of
the information we are able to discover.
Mr. BOUSTANY. When was Lois Lerner's hard drive recycled
and made irretrievable?
Mr. KOSKINEN. All I know is she was advised, as I noted, in
the summer of 2011 that the Criminal Investigation Division had
been unable to retrieve any emails off her hard drive, and it
was recycled. I will get you the date, to the extent we have
it, of when----
Mr. BOUSTANY. Get us that precise date. But I am really,
really disturbed that it took this long for the committee to
find out this information. Buried in the letter that we
received on Friday.
Mr. KOSKINEN. As I noted, there are emails that actually--
as I say, we have had a good close working relationship with
your staff--there are emails last fall in the productions that
referenced her hard drive crash that no one was paying any
attention to because they were looking at all of the relevant
information. As we proceeded through, it was not until into
April that we understood there was a crash. And it was not
until mid-May that we could actually bound the issue and
determine how many emails were available and how many were not.
Mr. BOUSTANY. But why wasn't this committee notified before
a decision was made to completely recycle her hard drive?
Mr. KOSKINEN. The committee was not notified because that
decision would have been made 3 years ago. That is not a
decision--none of this had anything to do with the
investigation. It was----
Mr. BOUSTANY. Well, I would submit it does have to do with
the investigation, because we are trying to get necessary
information. I know you were not there at the time. But I just
thought maybe in your investigation of what's going on, you
might be able to shed some light as to why we were not
notified. It disturbs me that this decision was made internally
without any kind of outside consultation when this committee
was vigorously pursuing information regarding this targeting
scandal.
Mr. KOSKINEN. I would like to make the record very clear,
the decision about that hard drive was made 3 years ago. There
has been no decision made since this investigation started, and
certainly since I started, to have anything destroyed. Every
email, every hard drive that people are using now is safe. Lois
Lerner's hard drive after the crash is now in the possession of
the IG.
Mr. BOUSTANY. I just want to make it very clear that any
decisions that are made, we need to be notified. This committee
needs to be notified prior to any decisions made about the
disposition of those hard drives.
Chairman CAMP. All right. Thank you. Time has expired.
We will be going two to one.
Mr. Roskam is recognized.
Mr. ROSKAM. Thank you, Mr. Chairman.
Commissioner, I am going to make an observation. It will
sound condescending, and I don't mean it be to be
condescending. So go really deep into the meaning of what I am
communicating. Growing up, my father would always tell me,
Peter, make good choices. And we kind of have a running joke,
one of my kids go out the door in the morning, or particularly
in the evening, make good choices. And so I think you have made
a bad choice. And it's not a bad choice based on invective or
bad motivation. I think the administration came to you
singularly as a person, as a white knight, as someone with a
sterling reputation, someone who has had experience turning
around bad organizations. And I think the administration is
trading on your reputation.
So I think you have made a bad choice. Now you are in it
now. But I think the decision to accept this responsibility as
the IRS Commissioner and defending this administration was a
bad choice. And I will make a prediction. I will make a
prediction that in several months or in a year, you are not the
Commissioner of the IRS anymore and that they will go out to
someone else. Because now you are the third person in this. I
don't ask you to respond to that. But it is an observation. And
I mean no condescension in it.
So here is the point. You are being characterized today by
the other side as the victim. I mean, the IRS as a victim is so
richly ironic, you can hardly believe it. So you are not a
victim today. The IRS is not a victim today. And here is the
fundamental problem. Chairman Camp sent a letter on this whole
issue, and then 10 days later--so think about the duration of
10 days. Ten days is the ability to panic at the IRS, reflect,
plan, talk, and execute. And there was a crash 10 days after
the chairman's letter. Now, I have got a slide. That's a fire.
And inside that fire is a hard drive. I have got another slide.
That's the hard drive after it was burned. And you know what,
Commissioner? You know what was recoverable from that? One
hundred percent of the data. So the notion that a hard drive or
a server in the midst of this entire situation has been lost
into oblivion is a case that even a white knight can't make.
I yield back.
Mr. KOSKINEN. Mr. Chairman, can I make a comment?
Chairman CAMP. He has yielded back his time. You may seek
time from the other side----
Mr. KOSKINEN. All right.
Chairman CAMP [continuing]. Because it is now Mr.
Blumenauer's time.
Ms. SANCHEZ. Mr. Chairman, I ask unanimous consent to allow
the witness some time to respond to the allegation that Lois
Lerner's drive was thrown into a fire and 100 percent of it was
recoverable, because it's ridiculous.
Chairman CAMP. There is not a question pending for the
witness. Mr. Roskam made a statement. I object myself to that.
Mr. Blumenauer, you are recognized and you may use your
time as you see fit.
Mr. BLUMENAUER. Well, thank you. I appreciate that.
And I will try and be brief and turn a couple of those
minutes over to you.
First of all, thank you for appearing. Mr. Roskam said that
you are not going to be doing this forever. I am surprised
anybody takes this job based on the treatment that has been
accorded to people who had better things to do with their
lives, had credible careers, and who stepped into difficult
circumstances. Thank you. I appreciate it. I appreciate the
fact that you are managing, or attempting to, 90,000 employees.
You have a budget almost $11 billion. And I appreciate that you
are doing this with a workforce, since I have been in Congress,
that has shrunk 25,000 employees, 10,000 I think in the last 4
years. That the budget, if this Congress in its wisdom, my
Republican colleagues are cutting your budget. The training
budget I think went from $172 million to $22 million for a Tax
Code that we consistently make more complex. And oftentimes, we
don't get our job done in time so that your employees can do
their job. And then somehow we are pillorying you.
And some of this does sound condescending I will say, or
not allowing you to answer questions, for a situation that
Congress has made worse and has systematically assaulted the
IRS in its capacity to function. What did we do in the
government shutdown? What business furloughs its accounts
receivable department? Not one that stays in business very
long. Not one that has the capacity to deal with layers and
layers of complexity and a vast system where people pound away
on the IRS and the people who work there. I am amazed that
anybody takes those jobs, from you on down. And I appreciate
they do. You know, it is a certain irony it is now the dicta of
the Republican Party to assault the IRS at every turn and
undercut its ability to function. Gee, they were Republican
Presidents, starting with Lincoln and Taft and Roosevelt, that
promoted the income tax, which doesn't collect itself.
I appreciate the hard work. I appreciate being able to
tease out this. I appreciate my friend Mr. Doggett's reference
to all manner of things that are being laid at your doorstep. I
hope before we get through this budget process, we take a hard
look at what this critical agency needs to function, like
training, like people on the job. Not have budget cuts that we
are told by the tax advocate a budget cut of $1 costs the
Federal Government $7. And undercutting enforcement, which
every dollar is over $250 that's returned to the taxpayers for
veterans' services, for environmental protection, for defense.
I am sorry, I am taking more time than I wanted. I would like
to turn to you to give you an unfettered minute or two if there
is something that you would like to say.
Mr. KOSKINEN. Thank you very much.
Mr. BLUMENAUER. And I will just conclude with my thanks for
your being here.
Mr. KOSKINEN. With regard to bad choices, I am sorry the
Congressman has left, I have noted that when people ask why I
took this job that perhaps I need counseling to make decisions
going forward.
But I think if there is one issue I would like to have come
out of this hearing, we have 90,000 dedicated employees that I
have said I have talked to and listened to 10,000 of them.
There is one point I want to come out of this, is I want to
totally refute the suggestion that sometime in the next 6 to 12
months, I am going to fade away. I am firmly committed that I
will serve the remaining 3 and a half years of my term come
whatever it may be. And I think it is important for those
employees, dedicated as they are to the mission of this agency,
to have confidence that their leader, the Commissioner of the
IRS, is not going to cut and run, is not going to decide it was
a bad choice to take this job, is delighted to be working with
them, and that I look forward to the next 3 and a half years of
my term doing that.
I would also like to note the reference, again, that
somehow it's unbelievable we lost the hard drive now is
unbelievable because it was not lost now, it was not destroyed
now. That was a decision made 3 years ago, before any of these
investigations started. There should be no implication that
anything has been destroyed or tampered with since this
investigation started and certainly since I became
Commissioner.
Chairman CAMP. Time has expired.
Mr. GERLACH. Thank you, Mr. Chairman.
Commissioner, on numerous occasions during your testimony
here this morning, as well as on the first page of your written
testimony that you presented to the committee, you cite
numerous statistics of the amount of emails and other
communications that the IRS has produced for this committee and
certainly for the Senate Finance Committee. But frankly, all of
these statistics are irrelevant if the effort doesn't get us to
the full truth. And certainly all of these statistics are
minuscule when compared to the constitutional rights of the
average citizens that have been trampled on through the process
that was at this point to our understanding guided by Lois
Lerner, perhaps others within the IRS.
Since you have been on board at the IRS, you have had
opportunity, obviously, to try to get your head around and
hands around the scope of this investigation and the work that
was actually conducted by Lois Lerner, perhaps others. So I
would like to ask you, based upon your understanding of all
that, what do you think Lois Lerner did wrong or did
inappropriately in the handling of her duties while she was in
charge of the tax-exempt organization application review
process?
Mr. KOSKINEN. Good question. I have not independently
investigated the matter, as I have said on occasions in the
past. We have a lot of investigations going on. But I think it
is clear, to the extent, as the IG found, that inappropriate
criteria were used to select applications for further review,
to the extent that applicants were required or requested to
provide voluminous improper information, that was a mistake. It
shouldn't have happened. And we should do everything we can to
make sure it doesn't happen again. The IG made recommendations
into what should be done. We have accepted all of those. We are
implementing those. We are providing appropriate training and
safeguards, because as I said earlier, I think it is critical
for every American, no matter what their political beliefs,
whether they go to church or they don't go to church, whatever
meeting they went to last week, if they wrote an op-ed
someplace, should be confident that if they hear from us, it's
because of something in their return. And if somebody else had
something else in their return that looked like that, they
would hear from us again. I think that's critical. And that is
a commitment we have made.
Mr. GERLACH. So you are basing that upon the IG's report
and investigation, but yet you just said you didn't do your own
investigation.
Mr. KOSKINEN. I have not.
Mr. GERLACH. I would think, however, that if I were to
become head of an agency like the IRS I would want to conduct
an internal investigation of my own agency to understand fully
what happened so I knew what happened because I am in charge of
that agency. Do you have any plans to do your own internal
investigation of this activity?
Mr. KOSKINEN. When I arrived, it was very clear with all of
the investigations going on, (A) the last thing I wanted to do
was appear to be interfering with those investigations, talking
to any of the potential witnesses. Secondly, my thought has
been and continues to be, with six investigations and the
amount of time going on, what I am looking forward to is being
educated by the reports of those committees.
They are going to--you all have spent more and more time. I
have an agency to run with 90,000 employees.
Mr. GERLACH. Okay, so you are not going to do your own
investigation?
Mr. KOSKINEN. No, I am not going to be doing an
investigation.
Mr. GERLACH. Okay.
Mr. KOSKINEN. I am looking forward to your facts. I am
looking forward to your recommendations, will take those
recommendations----
Mr. GERLACH. Well, it won't be our facts. It will be
everybody's facts.
Mr. KOSKINEN. Everybody's facts, whatever they are.
Mr. GERLACH. Yeah, right. Let me ask you this in the time
that I have: The new head of the Tax Exempt and Government
Entities Division, Sunita Lough, recently announced that the
IRS will restart audits of 501(c)(4) organizations that were
selected during--for examination during the targeting and due
to political activity. These audits were suspended after Acting
Commissioner Werfel expressed concerns that they may have been
tainted by the targeting.
Indeed, the committee has found evidence that Lois Lerner,
in fact, bypassed internal controls as you just indicated, and
reached in to hand-select the right-leaning group for audit.
Given these concerns and the evidence that Lois Lerner
improperly influenced the audit selection of these groups, why
would the IRS choose to reopen these audits?
Mr. KOSKINEN. Because we think and I think it is unfair to
them to leave them in limbo, that they deserve to have closure.
We have made it clear in our reaching out to them----
Mr. GERLACH. Why not just process their application and
provide the answer to them without auditing the process?
Mr. KOSKINEN. We are going to actually--we have noted that
we are--any request for information that was inappropriate they
don't have to respond to. There will be new appropriate
requests for the normal follow-up. We want to close those
investigations so those organizations are not left in limbo,
not unable to function.
We will proceed with those effectively. It was my
determination that we ought not to leave them out there, that
we ought to appropriately review them--and in most of these
cases, they get approved--and if they are going to get
approved, we should do that.
Mr. GERLACH. Thank you.
Chairman CAMP. Dr. Price.
Mr. PRICE. Thank you, Mr. Chairman. Commissioner, I also
want to thank you for your service. There is this notion that
we on this side of the aisle don't appreciate what public
servants do, and we do. But this is serious stuff. This is
serious stuff.
The perception of my constituents, and many folks across
this great land, is that there has been a chilling activity on
the part of the Internal Revenue Service to target folks
because of their political views, and not just target those
organizations, but then the IRS took donor lists from
organizations, shared them with other groups, and then those
individuals on those donor lists were audited at a degree
higher than the usual rate; significantly higher than the usual
rate. That is chilling, chilling stuff.
So that's the sense that many of us have and our
constituents have. Your job is to rebuild this trust. And with
all due respect, the comments that we have heard today, the
processes that you have gone through haven't begun to rebuild
that trust. You have--you said that the work continues, the
ongoing work continues. So isn't it true that for our friends
to draw the conclusion of innocence is likely premature? Is
that not correct?
Mr. KOSKINEN. I am not sure who whose innocence you are
worried about. I would like to note that the statistics with we
have shared with this committee and we are happy to continue to
work with you, do not show that any donors were audited at a
higher rate than people in the public, generally. If they were,
it was a mistake, but there is no evidence that there was any
systematic attempt to----
Mr. PRICE. We will provide you with the information that we
have because it is clear that there were individuals who have
been--and anecdotally, there is no doubt about it. But the
statistics will show that folks who donated to these groups
were audited at a higher rate. I want to get to a couple of
specific questions. You said that you knew, you learned about
the crash of this hard drive in February of this year, is that
correct?
Mr. KOSKINEN. I learned there was a problem, a potential
problem in February. We did not know--I was not advised that
there had been a crash until into May when our IT people
discovered it, and it wasn't until into May that we understood
and were able to complete the investigation of what the
ramifications were, how many emails still existed and then
started the investigation of how many other----
Mr. PRICE. When was Treasury informed?
Mr. KOSKINEN. I don't know when Treasury was informed. I
did not----
Mr. PRICE. They had to have been informed by the IRS,
though, correct?
Mr. KOSKINEN. My understanding from the White House letter
is that sometime by mid-April in a conversation between counsel
in the IRS and counsel at Treasury, they were advised that
there was a problem with Lois Lerner's emails, and that it was
being fully investigated.
Mr. PRICE. It was IRS counsel that informed the Treasury,
is that right?
Mr. KOSKINEN. That's my understanding, and that they were
advised that we were investigating it.
Mr. PRICE. Now, Secretary Lew has refused, to date, to
provide emails as it relates to Lois Lerner and other items to
this committee. Don't you think it would be appropriate given--
or maybe his computer is crashed--you don't know if Secretary
Lew's computer is crashed, do you?
Mr. KOSKINEN. My understanding is that you now, as of this
morning, I haven't seen any of these documents, or the
presentations.
Mr. PRICE. Don't you think it would be appropriate for
Secretary Lew----
Mr. KOSKINEN. The Treasury Department has provided you all
of their Lois Lerner email.
Chairman CAMP. This morning, Dr. Price. This morning. We
have not reviewed them yet.
Mr. KOSKINEN. None of us have had a chance to review those,
but that's my understanding. So you do have now those emails,
and if there are any from--to or from Lois Lerner and Secretary
Lew, you will have those.
Mr. PRICE. Do you know if Lois Lerner had a BlackBerry or
an iPhone?
Mr. KOSKINEN. I do not know.
Mr. PRICE. You don't know.
Mr. KOSKINEN. I do not know.
Mr. PRICE. Do employees of the Internal Revenue Service
carry mobile devices that are issued to them by the government?
Mr. KOSKINEN. They carry mobile devices. The mobile devices
run the same email system, people do not have on their office
BlackBerrys, if they have them, or whatever mobile devices they
have, they all run against the same email account.
Mr. PRICE. Can you find out if Lois Lerner had an iPhone or
a BlackBerry for us?
Mr. KOSKINEN. I can find that out and would be happy to let
you know.
Mr. PRICE. There is a notion on the other side that the IRS
is just strapped for money; doesn't have any money at all,
can't do a doggone thing because they don't have any money. You
are aware that the IRS has a studio that produced the famous
Star Trek video that spends about $5 million annually on that
studio, are you not?
Mr. KOSKINEN. No longer. That studio has been closed. We
now have a review board and produce very few videos and they
are not done in a fancy studio. And that was all 4 years ago.
Since then, our budget has been cut by $850 million.
Mr. PRICE. You are also aware that IRS employees used
521,000 hours in fiscal year 2013, at a rate of about $23.5
million for union activities, are you not?
Mr. KOSKINEN. That is right. That's consistent across the
government in terms of union employees, and all Federal
agencies have a right to spend some portion of their time on
official business for the union. And the IRS has a union. And
those employees, pursuant to that process, do spend time on
union time.
Mr. PRICE. Might be appropriate for them to spend time on
something else other than that.
Mr. KOSKINEN. As long as there is a union, they will spend
time.
Chairman CAMP. Time is expired. Mr. Kind.
Mr. KIND. Thank you, Mr. Chairman. Mr. Commissioner, I want
to thank you for your incredible patience and your testimony
here today. And Mr. Commissioner, this, what you are seeing, is
an expected reaction from an overzealous committee that is so
desperate to find any type of evidence, any type of fact that
may point to a cover-up that does not exist, point to a
conspiracy that does not exist, and have instead chosen to go
after a public servant who, by all accounts, is a model of
integrity, honesty, and professionalism.
I think you are the right person, at the right place, at
the right time to help turn around a troubled agency. And this
committee and this Congress should be working with you to get
an IRS that is more responsive to the needs of the American
public than this fishing expedition and witch hunt which has
been going on for too long right now.
Mr. Chairman, I also want to ask unanimous consent to get
two articles inserted into today's record. One dated July 20th,
2011, a New York Times article that is titled ``Three Groups
Denied Break By IRS are Named.'' And another one by the Center
for Public Integrity titled: ``IRS Says Liberal Group Too
Political for Social Welfare Status.''
Chairman CAMP. Without objection so ordered.
Mr. KIND. And the reason I want those articles inserted
today, Mr. Chairman, is to point out the extreme irony of this
investigation. The only organizations that were applying for
501(c)(4) status with the IRS that were denied that application
were organizations that were affiliated with Democratic
candidates for office, not conservative organizations. In the
case of the three groups that were denied status, they were
Emerge Nevada, Emerge Maine, Emerge Massachusetts that only
supported Democratic candidates for office. And in the other
article, its subtitle is Agency Rejects Tax Exempt Application
of a pro-Blanche Lincoln Arkansas For Commonsense. They were
denied their application because they were viewed as too
political.
And that's--and there's no evidence at all that the IRS has
denied any conservative group applying for (c)(4) status during
the entire course of this investigation.
So this fake rage occurring from the other side is just
that. They are going after the IRS because of the political
fodder that it brings to their base and it is unfortunate that
we are having to conduct yet another witch hunt here today.
Mr. Commissioner, let me ask you some quick questions here
with the remaining time because you are under oath and we want
to make this explicitly clear with your testimony. But to your
knowledge, has anyone at the IRS deliberately withheld any
emails requested by this committee?
Mr. KOSKINEN. No.
Mr. KIND. To your knowledge, has anyone at the IRS withheld
any information specifically requested by this committee?
Mr. KOSKINEN. No. I would note that we haven't produced all
the information we have because it is voluminous, but we have
withheld no information.
Mr. KIND. Has there been any attempt within the IRS to
destroy any evidence to your knowledge?
Mr. KOSKINEN. No attempt by anyone during the course of
this investigation to destroy any evidence. As noted, we freeze
the email. In the past, emails were only retained for 6 months.
Mr. KIND. And to your knowledge, has there been any attempt
to tamper with any evidence or information requested by this
committee?
Mr. KOSKINEN. None.
Mr. KIND. And since you have been acting Commissioner at
the IRS have you seen any evidence of any attempt to cover up
information pertinent to this committee's investigation?
Mr. KOSKINEN. No.
Mr. KIND. What about any information requested by the other
investigations that have been occurring? I think you testified
to six investigations that are still pending with the IRS.
Mr. KOSKINEN. We are providing the same information to all
of the investigators. The tax writing committees get unredacted
information. The non-tax writing committees get redacted
information. So they have got about 170,000 pages fewer of
information than this committee and Senate Finance.
Mr. KIND. Have you seen any evidence of any direct
involvement by the White House in the screening of (c)(4)
applications that are the subject and involved in this
investigation?
Mr. KOSKINEN. I have seen none.
Mr. KIND. And has there been any evidence of any White
House involvement in the IRS's responses to the information
requested by this committee?
Mr. KOSKINEN. I have seen none.
Mr. KIND. Could you just give us a quick status update on
the computer system at the IRS that you encountered when you
took over as Commissioner?
Mr. KOSKINEN. Our computer system, as I said, is somewhat
antiquated. We have been updating as much as we can. As noted
in my testimony, we have about a $1 billion infrastructure as a
result of the budget constraints. This year we are spending
minimal amounts on that, as I noted. We still can't get all of
the employees on to Windows 7. I heard a reference earlier of
somebody going to Windows 10. We should be so fortunate to get
everybody on Windows 7. So we are significantly constrained,
and our budget has been significantly underfunded on a
declining basis over the last 4 years.
Mr. KIND. If you had a specific request for this committee,
this Congress in regards to what we can do to assist the IRS to
get an updated, more modern, functioning computer system, what
would that be?
Mr. KOSKINEN. We have given you proposal--the President's
budget would allow to us continue to make progress in that
regard. We have at this point, 4- to $500 million of
modernization in improvement activities that we would
undertake.
Mr. KIND. Already, thank you. Thank you, Mr. Chairman.
Chairman CAMP. Thank you. Mr. Smith.
Mr. SMITH. Thank you, Mr. Chairman, and to our witness here
for your time today, thank you. I realize--I think we have a
large issue here. I know it has been dismissed as an
overzealous reach of the committee, or a conspiracy similar to
various others over history, political theater. I think you
agree that this is a serious issue, and I think that moving
forward, I would ask for full cooperation. It has been
frustrating with the various responses that have been offered
over the last I think 13, 14 months now. You mentioned
contemporaneous documentation. Could you expound on that? I
have an idea what that is, but I would like you to expound----
Mr. KOSKINEN. I am sorry contemporaneous----
Mr. SMITH. Contemporaneous documentation that you
referenced earlier.
Mr. KOSKINEN. I was talking about, and by the way, if you
wouldn't mind, maybe I can give you the time in the middle of
this 2 hours, the last question I answered about what we knew
when. As I noted in----
Mr. SMITH. Sir, time is limited. If you would answer my
question, please.
Mr. KOSKINEN. Okay, I will answer. Contemporaneous means
that the email traffic that we have found in our search about
the crash was email traffic at the time of the crash when--and
the time of the attempted restoration 3 years ago.
Mr. SMITH. Okay, and various documentation is recommended
by the IRS with tax filers. Documentation is required to be
retained how long?
Mr. KOSKINEN. Generally, as a general matter, people are
subject to audits for 3 years unless there is criminal
activity, and then we can go back, actually, in some cases,
unlimited amounts. But as a general matter, unless you are a
willful evader, we limit our audits to 3 years.
Mr. SMITH. Now given, shifting gears just a bit here, when
you look at the size of the IRS, 90,000 people that we are
reminded at $2.4 trillion revenue, many would say that the core
of power in Washington, D.C. is the Tax Code, 10,000 pages in
length, various other descriptions of this. And it was noted
earlier that a budget cut of $1 in the operating costs of the
IRS results in costing revenues $7. Would you agree with that
assessment?
Mr. KOSKINEN. Could I what?
Mr. SMITH. That a $1 budget cut would result in a $7 cost
to revenue?
Mr. KOSKINEN. It depends on whom you ask as to whether it
is $4, $6, or $8, or $7, $1, but it is clear, as I have said,
for instance, if we had the pre-sequester, $500 million that we
were denied this year, we would have provided back over $2
billion of revenue. So we do provide--we collect, in our
personal activities four times--over four or five times the
entire budget of the agency.
Mr. SMITH. Okay, obviously, there are many opinions here,
and I have to tell you that given the complexity of the Tax
Code, and I think that is the main reason why we are trying to
reform the Tax Code to come up with a simpler approach, my
question, how possible it is to iron these issues out, that
some dismiss, others find very serious. And I would hope that
we could have the full cooperation as we do move forward. I
would hope that you agree that this is not a finished case.
Would you agree with that?
Mr. KOSKINEN. No, and we are anxious and delighted to
continue to cooperate, as I noted. And I think it is important
for the record, again, we have had a very good working
relationship with your staff. And we have followed leads that
they wanted us to follow, and it has been I think productive
and we continue to hope to do that and we will be as responsive
as we can to requests of the committee. I think it is important
for us to do that.
Mr. SMITH. Well, Mr. Chairman, I certainly hope that we can
continue to get this resolved. I know that there are various
characterizations here. It is disappointing that to--some would
dismiss this situation here today. I hope that we can move
forward. Thank you.
Chairman CAMP. Thank you. Mr. Paulsen.
Mr. PAULSEN. Thank you, Mr. Chairman. Mr. Koskinen, I won't
go down the same line of questioning that has been used
already, but I do want to highlight an example of a case in my
district as well. A small business person--I went out and
toured this small business in Minnesota. This individual, small
business person, that their company had been involved and
subject to four different IRS audits over the past 10 years.
The most of which--the most recent is actually still going on.
So far, each of these audits has resulted in minimal, or zero,
zero changes to the company's income tax returns and the most
recent audit that is going on right now has been going on for
18 months. It has cost the company over about $110,000.
It is an audit that is done to help train IRS employees,
ironically at a cost to the company. The agency has asked the
company to produce an inordinate amount of information, even
requesting a receipt for a $10 cab fare that occurred months
ago. I am curious, Commissioner, if the company came forward
tomorrow and said this information has been lost, this $10 cab
fare we cannot find it, similar to the hard drives being
undiscoverable, you would understand that, right?
Mr. KOSKINEN. Yes.
Mr. PAULSEN. You would understand that and you wouldn't
hold them accountable? They wouldn't have to produce that
record?
Mr. KOSKINEN. I am not an exam agent, but if, as in this
case, he said, I don't have the receipt, but I can by other
information demonstrate that it is pretty close to $10 is what
I spent, that would be allowed, just as I provided you 24,000
Lois Lerner emails from the time of the crash.
Mr. PAULSEN. If they had a system of hard drive crashes
these went forward and they came forward and said, there's
nothing we can do; the servers are down; the hard drives are
gone; we have no recollection; we can't retrieve the data,
would you end the audits?
Mr. KOSKINEN. As I say, I am not an exam auditor expert. I
can tell you that those trying to become compliant, whether
they are individuals or they are businesses, we reach out to
them and we are trying and anxious to work with taxpayers
trying to become compliant. The ones we are concerned about are
the people willingly and consciously avoiding taxes, especially
those offshore. Those we are happy, I am happy to chase to the
end of the earth and throw in jail. But the people trying to
become compliant, we reach out to and do the best we can to, in
fact, work with them.
Mr. PAULSEN. And this is following just clearly on the same
situation that Mr. Tiberi identified earlier, or that others
have identified with individual cases in their districts, with
our constituents who look to the IRS for impartial judgment,
obviously----
Mr. KOSKINEN. Right.
Mr. PAULSEN [continuing]. And understanding. Let me ask
you, Commissioner Koskinen, if an employee at the IRS has a
computer problem, is there a way to track when that employee
called regarding the computer problem?
Mr. KOSKINEN. Yes, there are tickets, which is how we
actually in February discovered that there had been a computer
crash. I misspoke at the end of--middle of 2 hours at the last
questioner, I said we didn't know about the crash until the end
of April. We didn't know about the ramifications of the crash,
as I said in my organized testimony. There was the ticket, in
fact, information from IT that said there was a crash which
caused us to then take the time to figure out what did that
mean? Had their emails been lost? That's when we then
discovered in the production of the emails the track of the
emails that confirmed that, in fact, there had been a crash,
there had been a significant effort trying to locate the
emails.
Mr. PAULSEN. So with that ticket would the IRS be able to
track what the IT issue was that was actually being handled?
Mr. KOSKINEN. I don't know what the details of the ticket
are, but I do know from the correspondence and the emails that
it was a hard drive crash and from some of Ms. Lerner's emails
that she was unable to get to her emails.
Mr. PAULSEN. Would you be able to check based on the ticket
who handled that particular IT issue and how it was resolved,
the tracking mechanism within the IRS?
Mr. KOSKINEN. I don't know what the ticket would show, but
we would be happy to make sure you have the ticket and any
information related to it.
Mr. PAULSEN. Can you identify or tell me who at the IRS in
the IT area handled Ms. Lerner's computer crash issue in 2011?
Is that knowable, who handled that IT crash issue?
Mr. KOSKINEN. Yes, it was a frontline--the correspondence
was with a frontline IT manager. What was not ordinary was when
it couldn't be retrieved by the normal IT experts, to have it
sent to the experts at the Criminal Investigation Division,
which was an additional step taken----
Mr. PAULSEN. Can you tell me what caused Ms. Lerner's
hardware crash?
Mr. KOSKINEN. Pardon?
Mr. PAULSEN. Can you tell me what caused the crash itself?
Mr. KOSKINEN. I do not know what caused the crash. In fact,
in my understanding with computers, 3 to 5 percent of them
crash as a general industry standard and there is no way to
know why they crashed.
Mr. PAULSEN. Can you rule out, Commissioner, what you know,
or based on these tickets, can you rule out that Lois Lerner
destroyed her own computer? Can you rule that out?
Mr. KOSKINEN. There is no evidence that she did. And in
fact, if she had done that----
Mr. PAULSEN. Can you rule that out, though?
Mr. KOSKINEN. Well, you can never rule out something you
don't know. But at this point there is no evidence, or the
evidence is she worked very hard to try to restore her email.
Mr. PAULSEN. And can you answer the questions about the
hard drive crashes for the other six employees as well that
were involved in the targeting, similar situation? Can we
identify and make sure that they were not done intentionally?
Mr. KOSKINEN. We are investigating that right now, and as I
said, we will give you all of the information we are able to
determine about when those computers crashed, whether any
emails were lost, what has been done with the hard drives. To
the extent they are still available, they will be made
available.
Chairman CAMP. Thank you. Mr. Pascrell is recognized.
Mr. PASCRELL. Thank you, Mr. Chairman. Let me give you 15,
20 seconds, sir. I am over here.
Mr. KOSKINEN. I am sorry. You are behind the stenographer.
Mr. PASCRELL. To answer one of the questions you weren't
able to answer before in question, you wanted to correct the
record.
Mr. KOSKINEN. That was just, and I started to correct the
record, that as I said in my testimony, written testimony, we
knew with the IT ticket in February there had been a crash.
What we didn't know until late April, was what the implications
were. Had their emails been lost? If so, were there other
emails that were from Lois in that time frame. So I have been
consistent except for that one point, I am told.
Mr. PASCRELL. Thank you. Do you agree that when the IRS
grants a group tax-exempt status, now, that means that there is
an advantage of one group as compared to another group in how
they are taxed? This is important.
Mr. KOSKINEN. Yes.
Mr. PASCRELL. And I don't know what the number is, how much
money the Federal Government doesn't take in because we do
exempt. I mean, the total amount of money. I am not--that's not
my question.
Can they save significant tax advantage to a group, whether
they are left, right, north, south, doesn't matter, a
significant tax advantage to that group, and its operations are
being implicitly subsidized by you and me--you and I.
Mr. KOSKINEN. That's correct.
Mr. PASCRELL. Okay. Is that correct?
Mr. KOSKINEN. That is correct.
Mr. PASCRELL. Yeah, I am not using hyperbole here, am I?
That's exactly what happens.
Mr. KOSKINEN. That's exactly what happens.
Mr. PASCRELL. So the taxpayers out there, do you actually
think--I am going to ask your opinion--do you actually think
they understand about what this is all about? I mean, this is
not about what happened to the black box. This is about
protecting the coverage that we have decided in our infinite
wisdom to provide certain groups that are social groups, but
not political groups. Now, do you believe the IRS has a
responsibility to protect the taxpayers of this country by
ensuring that the groups that we allow to operate as tax exempt
are operating in a way that is consistent with the law?
Mr. KOSKINEN. I do and that applies to all 501(c)
organizations.
Mr. PASCRELL. Now, according to the law in this area, tax
exempt 501(c)(4) groups are required to operate exclusively for
social welfare in that that must be their primary purpose. Am I
correct or incorrect?
Mr. KOSKINEN. That is correct. The regulation provides that
your primary purpose has to be social welfare activity.
Mr. PASCRELL. Now, let me ask you this then: Can you
describe the process that the IRS currently uses to determine a
501(c)(4) group is really a social welfare group or is engaging
in an inappropriate amount of political activity? Is that an
intensive process that requires a lot of money? Requires a lot
of manpower? Explain.
Mr. KOSKINEN. It is a complicated process. We have
1,600,000 tax-exempt organizations.
Mr. PASCRELL. How many?
Mr. KOSKINEN. 1,600,000 total of which somewhere in the
range of 100, or 150,000 are (c)(4) social welfare
organizations. A lot of them are garden clubs or people that
have nothing to do with advocacy. When an organization applies
for exemption, the historic process has been, their activities
or proposed activities will be determined on a facts-and-
circumstances test. And then there are a long set of examples
and complicated regulations that describe how to determine the
amount of activity that is social welfare activity, and what
kinds of activities and the facts and circumstances are
political activities, and so it is a complicated process.
Mr. PASCRELL. But it is intensive?
Mr. KOSKINEN. And it is intensive.
Mr. PASCRELL. And it should be.
Mr. KOSKINEN. And it's what?
Mr. PASCRELL. And it should be.
Mr. KOSKINEN. Yes, we take seriously across all 501(c)s our
determination process.
Mr. PASCRELL. In the last 4 years, how many organizations
went from 501(c)(4)s to like any other organizations, in the
last 4 years?
Chairman CAMP. Answer quickly, please.
Mr. KOSKINEN. I don't know the answer, but I will get that
for you.
Chairman CAMP. Mr. Marchant.
Ms. SANCHEZ. Mr. Chairman.
Chairman CAMP. Yes.
Ms. SANCHEZ. Parliamentary inquiry.
Chairman CAMP. Yes, please state parliamentary inquiry.
Ms. SANCHEZ. Since we are being summoned to vote and not
all members will be given a chance to ask questions, I would
like to know if those of us who do not have an opportunity to
question the witness may submit comments and questions for the
record?
Chairman CAMP. Yes, and my plan is to recess and come back
after votes, but----
Ms. SANCHEZ. Some of us have travel plans after votes.
Chairman CAMP. I understand, yes, but members will be able
to submit questions. Mr. Marchant.
Mr. MARCHANT. I am privileged----
Chairman CAMP. Your microphone.
Mr. KOSKINEN. I keep forgetting to turn mine on as well.
Mr. MARCHANT. This one is working. I am privileged to have
a district that has a vast number of people that are very high
tech. So Mr. Chairman, I would like to submit for the record a
letter from one of my high-tech people that has some
suggestions on how you may recover some of these emails that we
are looking for.
Chairman CAMP. Without objection, so ordered.
Mr. MARCHANT. This----
Mr. KOSKINEN. Can I have a copy of that letter as well as
for the record?
Mr. MARCHANT. Yes. I would be happy to provide it to you.
Mr. KOSKINEN. That would be great.
Mr. MARCHANT. This entire inquiry was started because there
were constituents in our district that were harassed and
treated differently by the IRS. And whether we get all of the
emails, ever get all of the emails involved in this, I think
that it has already been established that this committee is
dealing with this issue today not because it is a witch hunt,
but because we have--our citizens in our districts were
discriminated against and treated badly by the IRS. So that is
why we are here today.
Do you believe it's important for this committee to receive
all of the emails from Ms. Lerner's email account and all of
the emails from all of the persons that have been identified of
interest in this case?
Mr. KOSKINEN. I have always thought that was important.
Mr. MARCHANT. Is the IRS and its emails exempt from
monitoring by the FBI or the NSA?
Mr. KOSKINEN. I have no information about that. But I have
no indication that we are exempt from anybody's monitoring.
Mr. MARCHANT. So we don't know that the emails are not
totally all recoverable in some process?
Mr. KOSKINEN. If the NSA was monitoring all of our emails
and collecting them and saving them someplace, then they might
be there. But I am not aware that that was done.
Mr. MARCHANT. Have you, as a Commissioner, personally
contacted the White House, the Treasury, the Federal Elections
Commission, and any other possible Federal agency that Lois
Lerner may have contacted by email?
Mr. KOSKINEN. I have not contacted any of those agencies
about any of the issues involved in this investigation,
including her email.
Mr. MARCHANT. Would you be willing to commit to this
committee that you will contact these agencies and request from
them that all emails that they have--that they have on their
records and can produce from Lois Lerner, and all of the people
of interest, and request of them that they furnish them to you?
Mr. KOSKINEN. This committee, I think, has already
requested them. We don't have authority over them and I am
delighted to know that the White House and Treasury already
have produced those. But with the other committees, I am happy
to, on behalf of the committee, make a request that they
provide any emails they may have. If you will give me that--
remind me of the list of the agencies again, that would be
helpful.
Mr. MARCHANT. I will submit it to you in writing.
Mr. KOSKINEN. Great.
Mr. MARCHANT. Thank you, Mr. Chairman.
Chairman CAMP. Thank you. Ms. Black.
Mrs. BLACK. Thank you, Mr. Chairman, and thank you Mr.
Commissioner for being here today. I am a bit confused about
the timeline here and what was known or was not known about Ms.
Lerner's computer and the crash of her computer, and therefore,
the lack of our ability to be able to get all of the emails.
And this has gone on for about a year and a half now, and I
read in your testimony before you came, and then I know you
read your testimony to us, it appears that the first time you
were made aware that there was actually a crashed computer was
when you saw that the date distribution of the email was
uneven.
Mr. KOSKINEN. No, I didn't see that. I was--pardon me?
Mrs. BLACK. Am I understanding that correctly that that was
the first time that you knew about the crashed computer was
when you determined after all of these files were given and you
went back to look at them, you did a limited search there, and
you said, whoa, there is something wrong here because there is
an uneven distribution. Was that the first time that you were
made aware that there was a crashed computer?
Mr. KOSKINEN. That's the first time I was aware. That
pattern caused people to do an investigation, and they found
that there had been a crash, so I won't told two separate
issues. I was told that there was a pattern problem, and IT had
determined that there had been a computer crash.
Mrs. BLACK. So during this period of time, I find it very
interesting, that is, we are asking for these emails, and we
are asking for them over and over and over again, and they are
not coming back to us in a timely fashion. And this was prior
to your even getting there. That all of a sudden, you look and
say, well, wait a minute, we don't have emails from this time
period. Something else might have gone on, that that is when we
find out, or you find out, or anybody in the agency that has
been getting this request from us and other--from the OGR
committee for emails, that's the first time it is found out? I
find that to be very curious.
No one else knew, no one else would come and say that? You
had to find this out because you saw that there was some kind
of uneven distribution in the dates? Does that seem odd to you?
Mr. KOSKINEN. No, the way the emails are pulled out of the
pool of emails that are in the server there, is they are all
pulled together in just a pool. The emails were extracted
initially and 11,000 of them were provided in response to the
search terms, so they don't get pulled out by time----
Mrs. BLACK. Mr. Commissioner, I know how many emails. You
have talked about that so many times----
Mr. KOSKINEN. No, no. They get pulled out initially. I am
just saying, they get pulled out initially by subject matter.
Mrs. BLACK. This--let me just finish this because I only
have a limited amount of time. But this discussion, and you say
here, the discussion of the hard drive was made 3 years ago.
And the hard drive is in the hands of the IG. So is that--I am
confused here, does the----
Mr. KOSKINEN. Two hard drives.
Mrs. BLACK. Okay.
Mr. KOSKINEN. The hard drive that was recycled and
destroyed was the hard drive that crashed in 2011. A new hard
drive was provided to Ms. Lerner and she used that from then
on, and that hard drive is----
Mrs. BLACK. That hard drive is gone. It is not in----
Mr. KOSKINEN. That hard drive was gone 3 years ago. This
replacement hard drive was preserved and is in the hands of the
Inspector General.
Mrs. BLACK. Okay, so we still do have a crashed hard drive
that is not recoverable that is missing that information, and
we will never get it because it is somewhere gone in space.
Mr. KOSKINEN. Three years ago.
Mrs. BLACK. Now, is it not true that there are also a
requirement by law that you keep paper records as well if
computers do go down? Do you not have paper records that are
required? That's my understanding.
Mr. KOSKINEN. We are required by law to keep paper records
of official records, and there's a definition under the Federal
Records Act what our official records are for agency
transactions. And then the employee is to print them out,
create a hard copy of it, and preserve it.
Mrs. BLACK. Okay, so I find all of that to be very curious
that in all of these questions of us asking for these emails,
that all of a sudden just recently someone comes up to say, oh,
by the way, Lois Lerner's email or hard drive is crashed, and
we destroyed it. It is just gone. Can't retrieve it. Now, these
six other computers that we talk about that, or the other
custodians----
Mr. KOSKINEN. Right.
Mrs. BLACK [continuing]. I find that really curious, too,
that that would be limited to that. So maybe you can help me
out. Are there other computers that you have found? What
percentage of computers, total computers have crashed within
the Department? Are there more than just this six? Because it
seems like if there are six people that are connected with
this, then you may have had a huge crash over there with this
many computers being crashed in just what we are asking for.
Mr. KOSKINEN. Right, the industry standard is you get 3 to
5 percent failures, which means----
Mrs. BLACK. Is this 3 to 5 percent----
Mr. KOSKINEN. No, it means across 90,000 employees.
Mrs. BLACK. So six of them that are related to this that
are custodians?
Mr. KOSKINEN. The 82 we have looked at had--at this point
we are looking at 7, which is within what the industry normally
expects, which is why I asked for a search.
Mrs. BLACK. I have one more question for you----
Mr. KOSKINEN. Sure.
Mrs. BLACK [continuing]. Because my time is going to run
out here.
Have you had any information that is taxpayer information
lost due to these crashes?
Mr. KOSKINEN. I have no indication that taxpayer
information has been lost.
Mrs. BLACK. So this information is lost, but all of this
information, you have on millions of taxpayers have not
crashed, not been lost, not been destroyed, is that correct?
Mr. KOSKINEN. There have been thousands of hard drive
crashes in the IRS across time.
Mrs. BLACK. But we haven't lost any taxpayer information?
Mr. KOSKINEN. That I know of. But I don't know--the
taxpayer information is saved in separate files so we have
access to it.
Mrs. BLACK. Thank you, Mr. Chairman. I will have follow-up
questions in writing.
Chairman CAMP. Mr. Crowley, and then the committee will
recess.
Mr. CROWLEY. Mr. Chairman, thank you very much.
Commissioner, welcome. Let me start by saying, I understand the
suspicions of the majority upon hearing 2 years worth of emails
just disappeared. Put the shoe on the other foot. When
Democrats were investigating the lies and the incompetence of
the Bush administration, we would be in disbelief at this
ineptitude as well--as you were, for example, when we learned
that the Bush White House admitted that it lost nearly 5
million, 5 million emails between March 2003 and October 2005
related to the allegations of the politically motivated
dismissal of then-U.S. attorneys.
Fortunately, we can put suspicious minds at ease today. The
Inspector General for the IRS, a man named J. Russell George,
who was a Republican political appointee of President George W.
Bush, has already testified that Ms. Lerner did not learn about
the inappropriate criteria being used in local Cincinnati IRS
office until a meeting of June 29th, 2011, at least 16 days
after Ms. Lerner's hard drive crashed.
Yes, her computer crashed more than 2 weeks before she was
notified about the inappropriate actions happening in
Cincinnati. Now, like those who continue to refuse to believe
that the birth certificate from the State of Hawaii is actually
real, a conspiracy theorist will continue to rattle sabers, but
really, does anyone in this room want to be seen in that light?
Commissioner, as I mentioned, welcome. Today, the IRS has
provided over 770,000 pages of documents involved in this
investigation. Is that correct, sir?
Mr. KOSKINEN. That's correct.
Mr. CROWLEY. And included in these, in those thousands of
pages of emails, PowerPoint presentations, and notes delivered
to Congress over 9 months ago, wasn't there information that
specifically mentions the crash of Ms. Lerner's computer?
Mr. KOSKINEN. Yes. Over time starting in the fall, and
through the spring, the emails from Lois about her failure, her
computer failure and the emails about the attempts to restore
it have all been provided to this committee.
Mr. CROWLEY. So the crash in Ms. Lerner's computer should
come as no surprise, no surprise if the majority were actually
reading the documents that the IRS was sending up. You may not
want to answer that question.
Do you think American taxpayers would be upset to know that
this phony investigation has already cost them over $16 million
and counting when the Republicans aren't even doing the basic
due diligence of reading the documents that you are providing
and sending to Congress?
I wouldn't necessarily want you to answer that question.
Mr. KOSKINEN. I am not answering that question.
Mr. CROWLEY. Commissioner, or could it be that the majority
in their zeal for an Academy Award for the best outrage in a
fake drama are more upset that they were caught actually not
reading the documents the IRS had sent up here, thereby
providing, proving--sorry, proving that they are more concerned
with the show trial than an actually--than actually finding
answers. And once again, I am not going to ask you to answer
that question.
The Democrats on this committee have been outraged as has
been said over and over again from the first day we heard about
Ms. Lerner's apology to a tax conference. We are angered by any
singling out of any tax-exempt application based on ideology,
whether it be for progressive groups or Tea Party extremists.
And contrary to what Mr. Ryan said, progressive groups were
targeted as well. That is a full statement that he made.
We led the charge for her to be fired. We have agreed to
oversight hearings with the determined zeal to find answers.
And for that reason, Mr. Chairman, in an effort to get to the
truth, the next hearing on this matter should be with the
Inspector General of the IRS who has not been before this
committee for over a year. Anything else would show that this
committee is not using its time and resources seriously. With
that, I thank the commissioner for being here today, and I
yield back the balance of my time.
Chairman CAMP. Thank you. The committee stands in recess
until shortly after votes are concluded.
[Recess.]
Chairman CAMP. The committee will resume. Mr. Reed is
recognized for 5 minutes.
Mr. REED. Thank you, Mr. Chairman, and thank you,
Commissioner, for being here today, and thank you for allowing
us to go vote and come back and continue this hearing, Mr.
Chairman.
This is a really important issue, obviously. To now hear
the loss of some critical emails, to me is something that is--I
don't understand how that could happen, why that could happen,
but I want to get to the bottom of it as much as possible. And
one of the things I found in your testimony that was intriguing
was the actual referral of Lois Lerner's hard drive and how she
went about to try to ``recover'' these emails.
So my understanding is that she asked the IT representative
to--my hard drive failed. There's a problem with it. Can you
take a look at it? That makes sense to me. But then there is
another step. There is a step where it was referred to your
criminal investigation department, your forensic experts in the
IRS. Now, those are the folks that are well-trained in the area
of criminal investigations, and these are top-notch forensic
people, correct?
Mr. KOSKINEN. Correct.
Mr. REED. Okay, so there is about an 11-day, maybe 12-day--
it is like July 20th, where the technician, the IT guy goes to
Lois Lerner supposedly and says, we can't do anything about it,
and then all of a sudden, she is told about 12 days later, as a
last resort we are sending your hard drive to the CI, the
criminal investigation, IRS division, for the forensic lab. Who
was involved in any of those decision-makings that you are
aware of during that period of time to send it to the forensic
lab?
Mr. KOSKINEN. I don't know any of the names of people who
caused it to go there. It, as I noted in my testimony, is an
extraordinary step in the sense of normally, if a hard drive is
irretrievable, it would simply be destroyed.
Mr. REED. That's my question, because you're referencing
your testimony, this is an extraordinary effort. And so we are
dealing with a normal hard drive situation according to you for
3 years--from 3 years ago.
Mr. KOSKINEN. Right.
Mr. REED. And yet, there is an extraordinary step taken
sending to it the foreign lab.
Mr. KOSKINEN. Correct.
Mr. REED. I am very interested to know, who made that
decision, why that decision was made, and I will also submit
some follow-up questions in writing so I can just----
Mr. KOSKINEN. That would be fine. My understanding just
from the emails that are in that train and otherwise, is that
it was a reflection of Ms. Lerner's strong attempt to try to
recover email.
Mr. REED. So do you think that Ms. Lerner is the one who
asked it to go to the criminal investigation unit?
Mr. KOSKINEN. I don't know whether she was or not. I know
she was pushing very hard to try to get the emails. On
occasion, criminal investigation will do that, but it is an
extraordinary step, because as you note they are very good at
this, but they are spending most of their time with drug
dealers and other criminal cases.
Mr. REED. And I know I am running on a limited time. On the
forensic--these are the well-trained people.
Mr. KOSKINEN. Right.
Mr. REED. Now, when I have ever dealt with the criminal
investigations, people in that--people like David Reichert,
police officers, there's reports that they go through. Have you
see the report that the criminal investigation forensic report
people provided as they did their review of Lois Lerner's hard
drive?
Mr. KOSKINEN. I have not.
Mr. REED. Are there any reports that exist that the
criminal investigation forensic unit will have completed?
Mr. KOSKINEN. I don't know.
Mr. REED. Were they typically----
Mr. KOSKINEN. But we can----
Mr. REED. I mean, they are your criminal investigators. You
have referred this matter 3 years ago, supposedly, to the
criminal investigation unit to do a complete forensics--these
are like the CSI guys. They are the guys that we watch on TV.
Mr. KOSKINEN. That is right. If you could restore the
emails, they would have been able to do it.
Mr. REED. But also they are doing an investigation as to
why this hard drive failed is my understanding too, isn't that
correct?
Mr. KOSKINEN. No, there are any number of reasons as to why
a hard drive fails. They would care--my assumption would be,
they wouldn't care why it failed. Their request was, can you
reconstitute----
Mr. REED. Oh, no, no, no. See, they are criminal
investigators. Because if there is malfeasance----
Mr. KOSKINEN. They are also civil investigators.
Mr. REED. Yeah, but they are criminal investigations into
your agency that are designed to catch criminals, and they are
trying to figure out what criminal behavior potentially--if I
get a referral, if you send the hard drive to a criminal
investigator in the IRS, my understanding, they are looking for
illegal activity.
Mr. KOSKINEN. No, actually----
Mr. REED. In other words, did somebody potentially damage
this hard drive on purpose? What caused the damage? I mean,
isn't that something they would do in their normal course of
business?
Mr. KOSKINEN. They also do civil cases. All of our civil
prosecutions and cases are investigated by criminal
investigators.
Mr. REED. Would you agree with me--would you agree with me
that the criminal investigators are looking for criminal
activity and that someone is trying to hide evidence, destroy
evidence, that is relevant to a tax proceeding, that they are
the guys that look into the forensics of the computer program
to figure out what is going on?
Mr. KOSKINEN. They will do that on occasion. There is no
indication they were doing anything other than retrieving
emails.
Mr. REED. Yeah, so they received this hard drive on
something as critical as this, and that's why I am asking those
questions. I am very interested in knowing what those forensic
folks, who they were--do you know who they were, first off?
Mr. KOSKINEN. I don't know who they were.
Mr. REED. Yeah, I would like to really know who they were,
when they completed it, the paperwork and the documentation for
chain of evidence purposes that they are trained in, I would
definitely like to know what those records are and have them
provide it to our office. And I guess my time is expired, and
with that, I yield back.
Mr. KOSKINEN. Great, that's fine. Good.
Chairman CAMP. Thank you. Mr. Young is recognized.
Mr. YOUNG. Mr. Commissioner, you have mentioned a number of
times today that the IRS learned of certain things at certain
periods of time; that perhaps even your office has learned of
certain things at different periods of time. I would like to
know, and you correct me if you have already spoken to this,
when you knew personally as Commissioner of the IRS, when you
knew that we had a problem here that emails were lost or
destroyed; that that constituted a larger issue and so forth.
Mr. KOSKINEN. When I first was advised about it, we didn't
know whether any emails had been lost or destroyed. But in
February----
Mr. YOUNG. When were you first advised of it, just so I am
clear, February?
Mr. KOSKINEN. In February, I was advised that there was an
issue with her emails, and subsequently, in the same time, I
was advised about that, and there was evidence that there had
been a hard drive crash, but nobody knew what the implications
of that were in terms of whether any emails had been lost, or
whether the hard drive had been recovered. All I knew, I was
advised in February was that there was an issue with the
initial production, review of emails, once we had started
looking at all of her emails, and that there was a hard-drive
cash and we needed to investigate what that meant. And that's
what proceeded.
Going forward by mid-March we had determined, found the
fact that there had been an attempt to reconstitute the hard
drive unsuccessfully, then started reprocessing all of her
emails to make sure there were none missing and reprocessing
all of the custodial emails to see what email of Ms. Lerner's
were available.
Mr. YOUNG. Okay. So you thought it was presumably premature
at that point. I have given you the opportunity to offer all
the context you wanted to. Premature to notify this committee
or anyone else of your knowledge, your personal knowledge.
Mr. KOSKINEN. My approach was that we needed to know, A,
what this meant, what had been the result, and ultimately what
emails, if any, were available and what emails, to the extent
we could find them, were not available. And that if we gave a
fulsome report, it would be more productive. And in fact,
that's been my normal practice.
Mr. YOUNG. And others have spoken to the fulsomeness of
that report, so I won't get into that, sir. We have invoked the
Federal Recordkeeping Act. You yourself invoked it on at least
one occasion, the Federal Records Act, that requires agencies
to store and preserve certain documents. Why did the IRS change
its document retention policy in May of 2013, the same month
Lois Lerner announced this targeting initiative?
Mr. KOSKINEN. IRS--I wasn't here, but my understanding,
they changed their document retention policy in May in response
to this investigation. In other words, once the investigation
started, the instructions went out to save all emails of
everyone, that we would no longer recycle them every 6 months,
that we would in fact make sure that nothing was changed.
Mr. YOUNG. Okay. Thank you, sir. Please explain to me why
the IRS did not instead change its document retention policy
when TIGTA initiated its investigation and started working with
the IRS, whereupon it presumably became clear that there was a
document retention problem.
Mr. KOSKINEN. I wasn't there at the start of the TIGTA
investigation, but I would note there is no evidence at this
point we know of that any emails were lost after that point in
time.
Mr. YOUNG. Okay.
Mr. KOSKINEN. But then I would stress that, as I have noted
several times, the final request I made was to review all
custodians, and that process has been going on. We got the
identification of those this week, and we are reviewing that,
and we will share all of that information with you as well.
Mr. YOUNG. Okay. It is my understanding that Sunita Lough,
who is the new head of the Tax Exempt and Government Entities
Division, has resumed audits of 501(c)(4) organizations that
were selected for examination during the targeting and due to
political activity. These audits were suspended after the
Acting Commissioner Werfel expressed concerns they may have
been tainted by targeting. Given these concerns and the
evidence Lois Lerner improperly influenced the audit selection
of right-leaning groups, why would the IRS choose to reopen
these audits?
Mr. KOSKINEN. Well, they were left as pending. It is my
decision that those organizations deserve the right to get to
closure on that. We made it clear to them that whatever
requests for documentation in the past, which may or may not
have been overreaching, would not apply. We would do this in a
straightforward way. My thought was it was important to let
them know that they could get to closure. And we expect that we
will.
Mr. YOUNG. But these groups were targeted we now know, and
you resumed audits among a body of different groups that may
have been improperly targeted. And that seems not only
counterintuitive, but certainly ill-advised.
Mr. KOSKINEN. Well----
Chairman CAMP. Time has expired. If you could answer
briefly.
Mr. KOSKINEN. To the extent that an audit had begun, it
seemed to me better for them and better for the process to
close those so there was no implication that had we completed
the audit, they might have actually been decertified or had a
problem. So that we are moving toward closure, and we don't
have any reason to assume that they won't all be cleared and
that they will be able to operate appropriately.
Mr. YOUNG. My time has expired. Thank you, sir.
Chairman CAMP. Thank you.
Mr. Kelly.
Mr. KELLY. Thank you, chairman. Thank you for having the
hearing.
Commissioner, good to see you again. We had about an hour's
conversation earlier this week. I think the one thing we both
agreed on is that I believe there is almost irreparable damage
done to the agency, and the process, as it continues to unwind,
makes it harder for the American people. Now I am talking about
average everyday people who are held to an entirely different
set of standards when it comes to what the IRS needs from them
and documents, information that they need to keep for a long,
long time. And when you are on the other side of the table, you
are really not allowed to say, Well, my hard drive crashed. You
know how this stuff goes. I just can't get to it.
But one of the things I think that really makes this
important--this has nothing do with the IRS by the way, and you
and I agreed on that Tuesday--what we do agree on is that,
again, the irreparable damage. And kind of the building back
again what people have known for a couple hundred years. I
think if you go back to I think it is Daniel Webster and Chief
Justice Marshall, they say the power to tax is the power to
destroy. So, for over 200 years, this is in the back of
people's minds. And as I have sat in the private sector and
watched the IRS come in, there is nothing more chilling than to
get that letter, or that call, or that visit, because you know
right away, it's going to be a tough day for you.
Now, whether people actually do that or not is another
question. It's what people believe, because perception is
reality.
I would just say to you on this, see everything I look at,
we knew well in advance that Ms. Lerner's emails were not going
to be available. I mean, years ago, we knew they weren't going
to be available. And I think the thing that bothers people on
the committee is that we were told, No, you are going to get
everything. Just give us a little more time. Just give us a
little more time. How much more time do you think not just this
committee but the American people can withstand? I think we
have reached a point now where they are exhausted of waiting.
This is not an indictment of you, because I think you are
trying to do the right thing. But the agency right now is
tainted. And it's kind of reaffirmed what most of us believe,
that we are guilty until we prove ourselves innocent. Now, in
this case, I am looking at this information, I can't understand
why, with all the knowledge that we knew, going back as far as
2011, that this stuff wasn't retrievable and telling Ms. Lerner
herself, Hey, listen, sorry, can't get it for you. As a last
resort, we sent your hard drive CI's, the IRS Criminal
Investigation, forensic lab to attempt data recovery. On August
5, 2011, after 3 weeks of attempts to retrieve her emails, Ms.
Lerner was advised, unfortunately, the news is not good. The
sectors on the hard drive were bad which made your data
unrecoverable. I am very sorry. Everyone involved tried to do
their best. And so the IRS knew this.
You see where I am coming from. If you knew it so long ago,
why is it so difficult to just tell people the truth? I am not
accusing you. But this is a very dangerous slope that we are
on. When do we tell the American people the truth? That
truthfully, right now, we are not going to be able to answer
what you are asking us. I just don't get it. What is the
strategy as you move forward? How do you restore the faith and
confidence of the people of the United States in this agency
and in this body? We have all taken an oath to defend the
Constitution. And yet I see there is two set of rules. There is
one for the general public. There is one for your agency.
General public is not allowed to keep bad records. General
public is not allowed to have hard drives crash. The general
public is not allowed to do some of the same things that we
have allowed the agency to do. And they say, see, you don't
understand, this is the way it has to play out. Again, going
back to our conversation on Tuesday, where do you see this
going? Because I don't see a bright end to this anywhere along
the way. At the very least, it's going to come out that somehow
people knew about this but refused to be forthcoming about it.
That is the best you can do on this.
Mr. KOSKINEN. The record should note that no one knew in
the IRS about this at the time we have been working on until we
actually in February discovered it. The emails involved in fact
were provided to this committee along the way in the normal
production, and nobody was paying attention----
Mr. KELLY. No, no, no, Commissioner that is not true. You
knew in August--not you, because you weren't there, the agency
knew in August of 2011 that they couldn't retrieve this
information, yet we have been constantly told we will get you
everything. And the fact that you haven't been forthcoming--not
you but your agency--adds to the dilemma that now we face. We
have reinforced the people's greatest fear, that the IRS works
in a completely different set of rules than the general public.
People's constitutional rights have been violated, but we have
chosen to turn a blind eye and a deaf ear to the American
people, and have continued to stonewall them, hoping that
somehow we can run out the clock. This is not a partisan issue.
This is bipartisan. And I don't want to hear anybody say it's
about an election. Is it about an election? I would say it is
about an election. But it's not the way they intone it. So,
listen, I appreciate you being here. I admire what you are
trying to do. But I got to tell you, this is a long uphill
climb to restore faith and confidence the American people have
to have in this form of government we have.
Chairman CAMP. Time has expired.
Mr. KELLY. Because that's what it comes down to. It's all
about trust, and nobody trusts the IRS right now. In fact, they
don't trust us as much as they need to.
Chairman CAMP. Thank you. Time has expired.
Mr. Griffin.
Mr. GRIFFIN. Thank you, Mr. Chairman.
Thank you, Commissioner, for being here. I just want to
follow up on a few of the issues. When asked by my colleagues
why the timing of the disclosure regarding the hard drives was
June as opposed to May or April or March or earlier, you
indicated that you thought it made sense to just wait until you
got all the information or did your analysis or what have you
and to sort of, once you got all that figured out, then let us
know.
I would just tell you, having been a counsel on the House
Government Reform Committee, having served on this committee,
having served at the White House and in the Department of
Justice, I wouldn't take that approach anymore. That is not the
way this city works. When you know and anyone at the IRS--in
fact, I would say that you were disserved your--by the
legislative folks at the IRS. If they did not tell you when you
started, they should have walked in and said, This is a hot
topic. There are numerous hearings on the Hill. Senators and
Members of Congress, particularly the Ways and Means Committee,
is going to want to know what's going on with this Lois Lerner
situation. By the way, we have some hard drive problems, and we
never told anybody. Let's not wait. It's in everybody's
interests to tell the Hill.
Now, I know about the 770,000 documents and all that stuff.
I used to be the guy on the House Government Reform Committee
who on a Friday night got a box, got 10 boxes from the White
House in the late 1990s. I was the guy that actually went
through those thousands. And I can tell you that the numbers
are misleading, because you get a bunch of blank sheets, you
get a bunch of nothing. There is not a lot of substance there
usually. Yes, I understand you are producing them, a bunch of
them. But the number in and of itself doesn't tell you a lot.
But the bottom line is I would just approach this committee
differently, and I think you would get a different response
from now on. Because people here feel like they need to know,
and they want it to be a conversation. They don't want it to be
a situation, and I know how this works, where the leg folks
say, and the White House says, Don't answer that unless they
ask you specifically. If they don't ask the right question,
don't give them that answer. Now I can tell you that happens
all the time. And I know for a fact that it happened to one of
my colleagues here that was telling me earlier, not necessarily
with you, but with someone else.
I give you an example. So you were interviewed in March of
this year in a fellow committee, and you were interviewed by
the Chairman Boustany up there, Dr. Boustany, and there were
numerous times where you were asked about the Lois Lerner
emails. And you would say things like, We are going to produce
them. We are working on redactions. We are looking at this; we
are looking at that. There was never one mention of an issue,
as you describe it. There was never one mention of a glitch.
And you know, with all due respect, my daughter's here with me
this week. That's like when she--I don't ask the right question
about what she ate, and then I find out that she ate a box of
cookies and she didn't tell me because I didn't ask the right
question. Well, she didn't tell me because she knew I'd be mad.
And I think you had numerous opportunities in these transcripts
to just say, Hey, we are going to get you all the emails that
we have, but I want you to know we have got some problems. And
you should know about the hard drive. And it never happened.
We faced this with Lois Lerner when we asked about the
(c)4s. We never asked them the precise right question, so we
never got our answer. I know how that game's played. I have
been up here long enough. And I'm saying if you want to get a
different attitude from this committee, go ahead and share what
the political people are telling you not to share. Just tell
us. Just tell us, share it. And if it's surplusage, we'll
ignore it.
And one more thing. I do have a question. Do you know of
anyone in the IRS who has gone before a grand jury on this
issue, or do you know of any grand jury subpoenas that have
been issued on this investigation?
Mr. KOSKINEN. I know of none.
Mr. GRIFFIN. None. None whatsoever. Do you know of a
Department of Justice investigation on this at all, criminal
investigation?
Mr. KOSKINEN. I don't know anything about that
investigation. I have not interfered with anybody's
investigation.
Mr. GRIFFIN. Thank you.
Chairman CAMP. Thank you.
Mr. Renacci.
Mr. RENACCI. Thank you, Mr. Chairman.
Thank you, Commissioner, for being here. And thank you for
sticking around. Just a couple things to try and wrap up some
things I heard. You testified earlier that 3 to 5 percent is a
normal crash rate for hard drives.
Mr. KOSKINEN. That's what I am advised.
Mr. RENACCI. Okay. And there were 82 IRS employees with
some potential political role in political targeting; seven
hard drives failed. That's approximately 9 percent. Can you get
me some information as to what the normal crash rate is for the
IRS computers?
Mr. KOSKINEN. I would be delighted to get that. I am
advised that once you get outside the warranty period, the
failure rate goes to 10 to 16 percent, but we will get you all
of that information.
Mr. RENACCI. I would appreciate that. The other thing that
concerned me based on what I have been hearing today is that
there was a hard drive failure, it was realized, it was then
investigated. At some point in time, someone said we can't get
the information off of it. And then it was destroyed. Is that a
normal process to destroy, especially in the middle of an
investigation, destroy a hard drive?
Mr. KOSKINEN. I would stress again that that hard drive was
never destroyed during an investigation. Nothing has been
destroyed during this investigation. That hard drive was
destroyed 3 years ago, after it was irretrievable in terms of
email, and it had nothing to do with this investigation.
Mr. RENACCI. Okay. Well, I would also tell you that I
practiced in front of the IRS for about 25 years as a CPA. I
have had to--I have had some very unusual clients, I will tell
you, that had some information that wasn't around, had their
hard drives lost, had a lot of things occur, and had to listen
to the IRS say to them, Why did you destroy, even though you
weren't being audited back then, why would you destroy
something that has information that might be needed? And I know
you talked about the 3 years and the 10 years. But I have also
seen the IRS bring a guy down on his knees in tears because
they said we are going to prosecute you to the full extent of
the law because you don't have the proper information. Now,
when did the standard change that the individual that you are
auditing has to do certain things but the IRS doesn't have to
keep information or have to keep hard drives or have to make
sure that their documentation is safe?
Mr. KOSKINEN. As the record will note, from all the
indications we have, Ms. Lerner worked very hard and the IT
department worked very hard to restore that information, not to
lose it.
Mr. RENACCI. I understand that. But when did it change that
there would be a destruction of a document, which is a hard
drive, knowing that it could potentially--there is data on
there that might be needed?
Mr. KOSKINEN. Nobody at that time viewed the data as being
related to an investigation. As a general matter, if an
employee's hard drive fails and the information cannot be
retrieved, it is regularly recycled and destroyed.
Mr. RENACCI. I will also tell you that it's interesting how
you answer those questions. And your answers--I think you have
heard people saying we have to restore trust to the American
people. Your answers probably should be that we are going to
make sure that we look at our processes in the future. I wasn't
here 3 years ago. And we are going to make sure we are not
destroying hard drives until we fully know that they are not
going to be an issue for the future. And that would be what
something I think the American people would rather hear than,
Well, it was destroyed, especially in this situation that we
have today.
Mr. KOSKINEN. It's a very good suggestion, but I think it's
important not to leave any implication here that there was any
attempt to get rid of evidence even before the investigation
started. I think it's important to remind people that the
evidence demonstrates Ms. Lerner worked very hard, the IT
system people worked very hard, the CI Division worked very
hard trying to restore the emails.
Mr. RENACCI. I don't practice in front of the IRS any more;
of course, I am here. But if I did, I wonder how that answer
would be taken sitting in front of an IRS agent.
Mr. KOSKINEN. If a client came before the IRS and said, I
have lost the data, but here's all the evidence that when I
lost it all, I did to try to retrieve it, here is alternate
evidence, like the 24,000 emails that we have provided, I would
hope that the IRS would look at the person as somebody who is
trying to comply, not somebody who is trying to evade.
Mr. RENACCI. Well, I can tell you from past history that
doesn't happen. And in many cases, I am not going to tell you
in all cases, because you do have some very good employees, but
in some cases, I have seen them actually prosecute to the full
extent of the law, which is not fair when an individual says, I
don't have it, I have lost it, I don't have the opportunity to
get it, and I don't have other information available to bring
it together. So, again, this is all about the American people
and them having an opportunity to get some full faith back in
the IRS. But at the same time, how are they ever going to do
that when you stand there and say, We didn't do anything wrong,
we destroyed a hard drive, it wasn't part of the process, but
yet when the other side, when the shoe's on the other side and
the individual taxpayer sits in front of you and says, I don't
have the information, they are always prosecuted to the full
extent of the law? Thank you. I yield back.
Chairman CAMP. All right.
Thank you very much.
Mr. Renacci is our last questioner.
With that, this hearing is now adjourned.
[Whereupon, at 1:00 p.m., the committee was adjourned.]
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