House panel urges prosecution for ex-IRS official Lois Lerner over Tea Party fiasco

By Patrick Temple-West

WASHINGTON (Reuters) - A U.S. House of Representatives committee has asked the Justice Department to consider criminal prosecution for a former U.S. Internal Revenue Service official who played a key role in last year's Tea Party scandal at the IRS.

By a vote of 23-14 along party lines, the Republican-led Ways and Means Committee referred Lois Lerner to the Justice Department for criminal prosecution. The request was submitted in a letter to Attorney General Eric Holder.

Lerner triggered the IRS scandal last year when, answering a planted question from the audience at a legal conference, she issued a public apology in which she said the IRS had engaged in "inappropriate" targeting of political groups with the words "Tea Party" and other conservative terms in their names.

The 14-page letter to Holder, who heads the Justice Department, said Lerner may have targeted specific taxpayers for adverse treatment, made misleading statements to law enforcement agents and possibly disclosed private taxpayer information.

At hearings in Congress, Lerner had refused to answer questions, citing her right not to testify under the U.S. Constitution.

In a statement, her attorney William Taylor said: "This is just another attempt by Republicans to vilify Ms. Lerner for political gain. Ms. Lerner has done nothing wrong. She did not violate any law or regulation. She did not ‎mislead Congress. She did not interfere with the rights of any organization to a tax exemption."

Lerner's unexpected act of contrition at the conference set off a furor on Capitol Hill, with Republican politicians accusing the IRS of unfairly singling out for extra review and delay some applications for tax-exempt status from conservative groups.

The acting head of the IRS lost his job over the matter, while numerous investigations were launched. Republicans tried to link the White House to the IRS activity, but without success. The investigations revealed no clear political bias at the IRS and showed it had also closely reviewed applications from progressive political groups for tax-exempt status.

The White House declined to comment on the committee vote. The Justice Department said its continuing investigation of the IRS "remains a high priority."

"We will review the (committee) letter once we receive it and take it under consideration," a department spokeswoman said.

"EXTREME BIAS"

The committee letter said "Lerner showed extreme bias" toward certain conservative-leaning tax-exempt groups, including Crossroads GPS, the nonprofit 501 (c)(4) group founded by Republican political operative Karl Rove, a former key adviser to former President George W. Bush.

"Documents IRS produced to the committee show an aggressive and improper pursuit of Crossroads by Lerner," the panel said.

The House Oversight and Government Reform Committee will meet on Thursday to consider a resolution holding Lerner in contempt of Congress for refusing to answer questions.

After the committee debated the Lerner letter for almost two hours behind closed doors on Wednesday, Democrats accused Republicans of using Lerner as a political pawn ahead of the midterm congressional elections in November.

"This is really a political theater," Representative Lloyd Doggett, a Texas Democrat, said after the committee vote.

Committee Chairman Dave Camp, a Michigan Republican, dismissed the Democrats' political allegations. "This is really about how taxpayers ... were treated by an agency of the federal government," Camp told reporters.

(Additional reporting by Julia Edwards, Roberta Rampton and Gabriel Debenedetti; Editing by Howard Goller and Jonathan Oatis)