What did IRS insiders know and when did they know it?

This is a rush transcript from "Hannity," May 17, 2013. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Tonight, there is fresh fallout from the IRS enemies list targeting conservatives. Now, earlier today, lawmakers on Capitol Hill grilled the top official at the tax agency, ousted commissioner Steve Miller, during a fiery hearing. Now, there was several bomb shell revelations. For starters during his testimony today, Miller admitted that the apology made last week by IRS Lawyer Lois Lerner was staged. Watch this.


REP. DEVIN NUNES, R-CALIF.: Do you know Miss Celia Roady a member IRS' advisory council on tax exempt and government entities?


NUNES: Was Ms. Roady's question to Ms. Lerner about targeting conservative groups planned in advance?

MILLER: I believe that we talked about that, yes.


HANNITY: Now, Miller also acknowledged that the IRS knew about the scandal in May of last year. That was before the presidential election. And since you were not able to watch all of today's testimony, well, here are some of the highlights.


CHAIRMAN CAMP: We were repeatedly told no such targeting was happening. That isn't being misled. That is lying.

UNIDENTIFIED MAN: This is very chilling for the American people. I know that where you are at and you are going to -- you are resigning, you're walking away from it. But you this is not going to go away. This is the Pandora's Box that has been opened. I don't know if we can get the lid back on it.

UNIDENTIFIED MAN: Do you believe it is illegal for employees of the IRS to create lists to target individual groups and citizens in this country?

MILLER: I think the Treasury inspector general indicated that it might not be but you other will be able to tell that.

UNIDENTIFIED MAN: What do you believe?

MILLER: I don't believe it is.

UNIDENTIFIED MAN: I am really concerned. Now, I got to tell you, where you are sitting, you should be outraged but you are not. And the American people should be outraged and they are.

MILLER: I'm not arguing that the list was bad and the list was conservative based.

UNIDENTIFIED WOMAN: Then I would say, excuse me. I'm going to reclaim my time on this. Because then I would say, it is targeted. You can't have that both ways. That is targeting and there is 16 times in this report that says that there was targeting.

CAMP: This is a problem that the IRS being too large. Too powerful. Too intrusive and too abusive of honest hard working taxpayers.

UNIDENTIFIED MAN: This is a huge blow to the feat and trust the American people have in their government. Is there any limit to the scope of where you folks can go?

REP. CHARLIE RANGEL, D-N.Y.: This is wrong to abuse the tax system. This screams out for tax reform, does it not?

MILLER: I think it is an area ripe for redefinition and reform, yes, sir.

UNIDENTIFIED MAN: Do you want to know where a lot of this comes from? Look at Senator Levin's letter. Senator Levin specifically mentioned a bunch of the groups that you all targeted. You all were doing what Democratic senators were asking!

UNIDENTIFIED MAN: I just think the American people have seen what is going on right now in their government. This is absolutely an overreach and this is an outrage for all of America. I yield back.



HANNITY: Now, unfortunately, after today's hearing, we now have more questions than answers including the new revelation that Sarah Hall Ingram, the official who is in charge of the IRS Tax Exempt Organizations Office when the scandals was taking place, she is now the head of the IRS ObamaCare Implementation Office.

Joining me now, two of the lawmakers who participated in today's heated House hearing. Louisiana Congressman Charles Boustany and New York Congressman Joe Crowley. Guys, welcome to the program.

REP. JOE CROWLEY, D-N.Y., HOUSE WAYS AND MEANS COMMITTEE: Thank you, Sean. Good to be with.


HANNITY: Let me start with this woman, Ms. Ingram, she was in charge at the time. Do you think it is appropriate she is in charge of the implementation of ObamaCare?

CROWLEY: Sean, as a matter of fact, that is not true. She actually left that office six months prior to even subordinates knowing what took place there. So, she wasn't in the office when the subordinates were informed.

HANNITY: Wasn't she there between 2009 and 2012?

CROWLEY: Well, my understanding is she left six months prior to our subordinates knowing that this actually took place.

HANNITY: But we knew a couple of years ago and what we learned in the last couple of days is in fact they did know at the time that she was there.

CROWLEY: I think you have to check your facts. I think she left the office six months prior to her subordinates knowing --

HANNITY: Charles Boustany, what is your understanding of this? I understood that she did know.

BOUSTANY: That is my understanding as well, Sean. I think she was there during the time that this abusive practice was being perpetrated. So, I have real concerns and what we have to pinpoint and get more information about what her role was in all of this, there's no question about it. Because this whole idea about the IRS getting expansive powers under ObamaCare is deeply troubling in light of what we know now.

HANNITY: You showed a tape when you had your opportunity to speak today, Congressman Boustany, and you showed a tape of Douglas Shulman, the IRS commissioner answering the question about whether or not they were targeting groups. Tell us about that exchange.

BOUSTANY: Well, let me first say that the tape was from a March 2012 hearing we had -- I conducted an oversight with Commissioner Shulman. And because of the allegations that were out there, we'd already submitted letters to the IRS and we were not getting adequate responses. We're getting more processed arguments rather than detailed.

And so, I point blank ask him, are you indeed targeting these groups? And of course you heard the statement, he said he absolutely not, he categorically denied it. But he was aware of what was going on during this time frame because we know that a senior technical advisor have already been sent out to Cincinnati to investigate what was going on and to report back.

HANNITY: All right. So, when you asked the question and he said this no targeting based on what you know now, was he truthful?

BOUSTANY: Well, he was not truthful and, you know, we had a little exchange, I ran out of time, because today in the hearing, acting commissioner Miller said that he thought the statement was incorrect but not untruthful. I'd like to know what that distinction is. We believe that they knew what was going on at this point in time, both Miller and Shulman.

HANNITY: All right. Let me give you the time frame because.

CROWLEY: What's interesting Sean is that Mr. Miller is a George W. Bush appointee. He was not appointed by President Obama --

HANNITY: OK. I don't care who is appointee. I know that there are some people that are Democrats, some are Republicans.


HANNITY: Well, you want to turn this into politics?

CROWLEY: No, unfortunately, it has become partisan. I was hoping that we get to the committee meeting this morning and they would not be partisan.

HANNITY: The IRS commissioner Douglas Shulman testified in March of 2012 and he said, there's absolutely no targeting. But as we just pointed out, Miller testified today that they knew about it in May of last year.

CROWLEY: We know of targeting prior to that when Mr. Shulman and when his predecessor were there as well. They were also going up the NAACP and other groups.

HANNITY: But did he lie under oath?

CROWLEY: I believe he did.

HANNITY: You believe Mr. Shulman --

CROWLEY: I think Mr. Shulman did. If he's saying, you know, my understanding is that it was common knowledge if they were going after political groups back then.

HANNITY: What happens when you lie before Congress?

CROWLEY: Well, I think there were some repercussions, my understanding is there should be some repercussions if you lie before Congress, not only Mr. Shulman --

HANNITY: What would those repercussions be?


CROWLEY: Not only -- who last week and Mr. Boustany was there with me when I asked her a question. She failed to give us a proper answer only two days later. Then comes out with a stage question to apologize for information that the IRS had been engaged in these terrible, horrific activities --

HANNITY: Lois Lerner.

CROWLEY: Lois Lerner. Whether you're Democrat or Republican, what took place in the IRS is not tolerable. But what I think is important to note is that Mr. George, the inspector general for the Treasury, and again, not to be partisan was also a Bush appointee, a very honest guy. He said that there was no outside influences here, it was holy within the IRS, doesn't leak to the White House, it doesn't leak anywhere else but in the IRS itself.

HANNITY: Isn't that where we're trying to determine Congressman Boustany?

BOUSTANY: Well, we are trying to determine that and we know there were communications in June of 2012 between the commissioner and Treasury and that came out in the hearing today. And so, we need to dig further and understand what those communications were. It indicates to me that treasury knew what was going on if they were fully briefed on this and yet nothing was done at that point in time.

And so, this is really troubling, and I agree with Joe. Look, this is abusive practice by the IRS, we got to get to the bottom of it. And secondly, the IRS repeatedly, basically lied to Congress.

CROWLEY: Mr. Boustany, I think you also know though that Mr. Lew didn't learn anything that wasn't already on the public website. So, in terms of what he was told, that media was nothing to do --

HANNITY: I got a question though. Won't the real test of whether or not the administration -- they have expressed outrage, won't it be if they make all relevant documents available immediately and make sure that everyone involved is readily available for --


Hang on. Readily available for Congressional hearings?

CROWLEY: I think there should be more hearings. I think there should be more --

HANNITY: Immediately though.

CROWLEY: I think everything that is --

BOUSTANY: We've been requesting those documents from the beginning all the way back to early of 2011.

CROWLEY: I think that every document that is --

HANNITY: Immediately.

CROWLEY: That is privy to this investigation should be made available. I do believe --

HANNITY: Wait. Wait. By when?

CROWLEY: When the Congress asked for. We asked for the information. We expect to get it regardless of who the president, who the administration is.

HANNITY: And that means anybody else by the way, people should be made available for interviews.

CROWLEY: Listen, as the inspector general said, it was holy within the IRS, this is not -- I know everyone is fully considered, leak it to the White House. This is not --

HANNITY: He didn't read the -- maybe we read the different inspector general report -- I thought it was scathing, especially when the IRS refused to adopt to their recommendations.

CROWLEY: Again, the IRS we're talking about, it's again the White House, everyone is moving towards blaming the president, if the person walks and steps on an ant --

HANNITY: We haven't discussed the president --


Mr. Boustany?

BOUSTANY: Yes, we know communication was had with Treasury and if so, and of course with the chief counsel, general counsel of Treasury, you know, I have to wonder if it went higher than that. We don't know that yet. That's what we're looking for.

CROWLEY: The inspector general said, it was holy within the IRS, a Bush appointee said that.

HANNITY: But you'd want to know the truth.

CROWLEY: I want to know the truth. Yes.

HANNITY: So, it's a relevant question to ask, right?


HANNITY: OK. So, you can't say definitively.


HANNITY: OK. So, you don't know.

CROWLEY: I'm all for opening it up but not politicizing it. Let's ask the questions and let the facts leave to the conclusion, so we can all come --

HANNITY: OK. So, do you think we should ask the White House if they had involvement and look at any evidence that's available. Right?

CROWLEY: The inspector general said there was no outside involvement.

HANNITY: We still have a lot more --


CROWLEY: If Mr. George was not being correct or truthful with us -- that's a part of his report, we'll find out.

HANNITY: We got to go. All right. Guys, thank you very much.

BOUSTANY: It's very important to point out that the inspector general's report is an audit and not a full investigation.

CROWLEY: He was under oath today, though.

HANNITY: It's a good point.

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