"There was political targeting here. I don't think there's any way to deny that," declared GOP Sen. John Thune of South Dakota.
What the White House knew
At the White House, spokesman Jay Carney revealed new details about the administration's response to the IRS controversy for a second straight day.
Carney told reporters that White House and Treasury officials discussed the timing of the release of the inspector general's report and its findings after General Counsel Kathryn Ruemmler learned about it on April 24 and told others, including Chief of Staff Denis McDonough.
However, Carney said Obama was deliberately kept out of any discussions on the issue to prevent any possible suspicion of presidential meddling in an upcoming report by an independent watchdog.
His comments followed Miller's disclosure earlier Tuesday about the planted question at the ABA meeting on May 10 that provided Lerner, who oversaw the IRS division handling requests for tax-exempt status, to publicly apologize for targeting conservative groups ahead of the report's release.
Asked if the White House had any involvement in the planted question, Carney said "we were not aware of what ultimately led to the first reporting of this on May 10th."
On Monday, Carney had first revealed the date Ruemmler learned details of the upcoming report and that she told McDonough, among others. It was the first time the White House acknowledged that McDonough was aware of the report before it became public more than two weeks later.
Carney insisted no one -- including Ruemmler and McDonough -- told Obama anything about the inspector general's pending report before media reports about it began appearing on May 10.
However, the new information on Monday and Tuesday continued a perception of a White House on the defensive over the issue.
A second conservative group filed a lawsuit Tuesday against the IRS over the political targeting. True the Vote asked a federal court in Washington to grant its request for tax-exempt status that has been held up by the IRS for three years, and to award damages.
On Monday, a Northern California tea party group has filed the first lawsuit against the U.S. government stemming from the IRS targeting.
Baucus and Hatch sent a letter to the IRS on Monday seeking an exhaustive list of information about the case as part of a full investigation by their committee. Their panel's hearing followed a similar grilling of Miller and Treasury Inspector General J. Russell George last week by the House Ways and Means Committee.
Worry about impact and public trust
At Tuesday's hearing, senators from both parties worried that the controversy destroyed public trust in the IRS and wondered how the improper acts could have continued for so long without detection or correction.
George, who wrote the report on the targeting, explained that his mission was to conduct an audit that would examine if wrongdoing occurred, rather than to necessarily identify who was responsible.
George said further examination of the case would take place, but he refused to provide any details.
Carney noted Monday that the inspector general's report found that there was no outside intervention regarding what he called "inappropriate scrutinizing of conservative groups" seeking tax-exempt status, and that no one in the White House intervened in the inspector general's review or "did anything that could be see as intervening."
In addition, Carney said, the misconduct had stopped in May 2012, almost a year before Ruemmler or anyone else at the White House was told of it by anyone at Treasury.
For his part, Miller denied deliberate discrimination for the targeting cited by the inspector general's report, calling the acts "foolish mistakes" made by overworked staffers struggling to enforce unclear regulations involving what political activity is permissible by tax-exempt groups.
"We are down a billion dollars over the last couple of years, the IRS is, and that's caused us to cut training in some areas," he said, adding that the agency deals with 70,000 applications for tax-exempt status. "Do we have the resources to get the job done. I don't believe we do at this point."
Democratic senators also focused on the ambiguity in the tax code and IRS regulations on the matter, saying the tax code needs to be altered. Republicans also called for tax code reforms, but with the goal of slashing the responsibilities of the agency as part of the party's longstanding push for smaller government and a reduced taxing authority.
IG blames a faulty policy
According to the inspector general's report, the IRS developed and followed a faulty policy to determine whether the applicants were engaged in political activities, which would disqualify the groups from receiving tax-exempt status.
The controversial move began in early 2010 and continued for more than 18 months, the report said, declaring that "the IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention."