(Bloomberg) Steven Miller, who is being forced out as acting commissioner of the Internal Revenue Service, said the agency has learned from its mistakes while denying that it had targeted nonprofit groups for review because of their political views.

Under questioning from House Republicans at the first hearing on the agency’s selective scrutiny of small-government groups that applied for tax-exempt status, Miller insisted that IRS employees didn’t have partisan motivations.

“What happened here is that foolish mistakes were made by people trying to be more efficient,” Miller said at a House Ways and Means Committee hearing.

Republicans peppered Miller with questions, demanding that he explain why he didn’t inform Congress once he learned in May 2012 about what had happened.

Four congressional committees are investigating the IRS in a scandal that has erupted over the past week and hearings will be held next week. Miller is losing his job. The Justice Department has started a criminal probe that could ensnare senior officials for lying to Congress and lower-level workers for other potential offenses.

Miller revealed some new details today about what happened at the IRS and the agency’s response. He said one employee was reassigned while another was given “oral counseling.” He also said he didn’t know the name of the employee who created a list that subjected groups with “Tea Party” or “patriot” in their names to extra scrutiny.

In Advance
He also said that IRS officials had talked in advance with a Washington lawyer, Celia Roady, who asked the question at a May 10 tax conference that brought the controversy into the public eye. Lois Lerner, a mid-level official who oversees tax-exempt groups, answered Roady’s question, detailing what the IRS had done, and apologized.

Republicans sought to broaden the IRS controversy on tax-exempt groups to include other missteps at the agency and the Obama administration.

The IRS scandal is the “latest example of a culture of cover-ups” at the agency and in the Obama administration, said Representative Dave Camp, chairman of the House Ways and Means Committee.

Camp, a Michigan Republican, is leading the hearing today on the selective scrutiny of applications for tax-exempt status. In his opening statement, Camp cited other accusations against the agency, including the release of confidential information about nonprofit groups.
Miller and Russell George, inspector general for the IRS, are the only two witnesses testifying.

‘Systematic Abuse’
“This systematic abuse cannot be fixed with just one resignation or two,” Camp said. “And, as much as I expect more people need to go, the reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful.”

Representative Paul Ryan of Wisconsin, the 2012 Republican vice presidential candidate and a panel member, focused on Miller’s July 25, 2012, testimony to a Ways and Means subcommittee in which he didn’t explain how the grouping of organizations for further scrutiny was done.

“How can we not conclude that you misled this committee?” Ryan asked.

Miller said he answered the question truthfully.

“I did not mislead Congress or the American people,” Miller told the panel. “I answered questions as they were asked.”

Representative Sander Levin, the top Democrat on the Ways and Means panel, said he and other lawmakers are “angry” at the IRS for not being forthright. He is calling for the departure of Lerner.

Informed Lawmakers
Levin said Miller and former IRS Commissioner Douglas Shulman should have informed lawmakers when they found out in May 2012 about the targeting of these groups seeking tax-exempt status.

Still, Levin said the Republican-led panel should seek the “truth” and not use the opportunity for “political gain.”

Less than an hour after the hearing started, the National Republican Congressional Committee, the political arm of House Republicans, blasted an e-mail and is running paid ads on Facebook Inc.’s social network site that target Democrats for accepting campaign donations from the National Treasury Employees Union, which represents IRS employees.

The Republican groups in the ads are saying President Barack Obama, the Democratic Congressional Campaign Committee and a list of Democratic lawmakers, including James Clyburn of South Carolina and Debbie Wasserman Schultz of Florida, should return $700,000 in campaign contributions received from the organization.

Werfel Chosen
Obama yesterday announced that he’d chosen Danny Werfel, controller of the White House budget office, to replace Miller as acting IRS commissioner effective May 22.

Miller is a lawyer and a 25-year career employee of the IRS. At one point, he was in charge of overseeing tax-exempt organizations. Most recently, he was deputy commissioner for services and enforcement, a position that gave him broad authority over individual and corporate tax returns.

The inspector general’s May 14 report showed that IRS employees used terms such as “Tea Party” and “patriot” to select which applications would receive tougher questioning.

“The IRS leadership has demonstrated a total disregard for the oversight role of Congress and this committee,” he said.

‘Troubling’ Questions
George said the investigation raised “troubling” questions about whether the IRS has effective management oversight and control, “at least” when dealing with exempt organizations.

Miller said the IRS will implement all the recommendations made by the inspector general after its review of the incident. In its official response released May 14, the IRS had been resisting some of the recommendations.

Obama hasn’t nominated an IRS commissioner. Shulman, Miller’s predecessor, was appointed by President George W. Bush and announced in April 2012 that he wouldn’t seek a second term. Miller replaced him as acting commissioner in November. A nominee for IRS commissioner must be confirmed by the U.S. Senate. An acting commissioner doesn’t need confirmation.

Joseph Grant, who had been appointed to oversee tax-exempt groups and government entities on May 8, announced he would retire as of June 3.

House Speaker John Boehner yesterday cited a section of the tax code that provides criminal penalties of as much as five years in prison for people who commit “extortion or willful oppression under the color of law.”

The IRS inspector general, which already released one report May 14, will be recommending another investigation, Obama said yesterday. Karen Kraushaar, a spokeswoman for the inspector general, said she was prohibited by law from confirming the existence of an investigation.