IRS Scandal: When will the harassment end?

This is a rush transcript from "Hannity," June 7, 2013. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And welcome to the special studio audience edition of "Hannity." And tonight we're joined by a group of great Americans, most of whom have been unfairly targeted by the IRS because of their association with various conservative organizations.

Now, coming up, you're going to hear their stories about what they have gone through, also going to hear from the attorneys that are representing their respective groups.

But first one, of the most fascinating things to watch over the past few weeks has been the ever-changing timeline of who knew what when and where about the IRS scandal. At first, nobody seemed to know anything about it. But as the day goes by, well, that seems to be evolving quite a bit. Watch this.


REP. CHARLES BOUSTANY, R-LA., MARCH 22, 2012: Can you give us assurances that the IRS is not targeting particular groups based on political leanings?

DOUGLAS SHULMAN, FORMER IRS COMMISSIONER: Yes, I can give you assurances. There's absolutely no targeting.

LOIS LERNER, DIR. OF IRS EXEMPT ORGANIZATIONS, MAY 10: They added the names Tea Party and patriot to the list of cases that should be centralized in this group.

PRESIDENT BARACK OBAMA, MAY 13: I first learned about it from the same news reports that I think most people learned about this. I think it was on Friday.

OBAMA, MAY 15: I've reviewed the Treasury Department watchdog's report, and the misconduct that it uncovered is inexcusable

STEVEN MILLER, FORMER IRS COMMISSIONER, MAY 17: I'm sorry, sir. I'm not going to be able to answer.

J. RUSSELL GEORGE, IRS INSPECTOR GENERAL: I don't know the details, sir.


MILLER: I don't remember the precise date.

SHULMAN: I don't remember.

MILLER: It's not my area. I don't know.

SHULMAN: I personally don't remember.

LERNER: I will not answer any questions or testify about the subject matter of this committee's meeting.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY, MAY 20: We had to wait appropriately until the report was publicized, or published, for the president to be able to review it and respond as he did very quickly.

UNIDENTIFIED REPORTER: Someone was told on April 16 in the counsel's office?

CARNEY: There was a White House Counsel Kathy Ruemmler was notified on April 24th.

UNIDENTIFIED REPORTER: Who else besides Chief of Staff Dennis McDonough was told about this?

CARNEY: Some other members of senior staff.

UNIDENTIFIED REPORTER: Can you tell us who?

CARNEY: I don't have a list for you.

ED HENRY, FOX NEWS SENIOR WHITE HOUSE CORRESPONDENT: Because when you were asked about this in a briefing last week about White House officials being aware, you just mentioned the counsel's office. You never mentioned that the chief of staff and others were notified.

CARNEY: Well, I think I said that White House Counsel knew. I think I said that didn't know until Friday but, you know, I'm getting this information to you now.

UNIDENTIFIED WOMAN: It doesn't answer why the president wasn't told but Dennis McDonough was.

CARNEY: The counsel made the decision that this is not the kind of thing that you notify the president of, of an investigation that's not complete.

REP. NANCY PELOSI, D-CALIF., MAY 23: Well, the president doesn't know about everything in every agency of government. Should Mr. Boehner have known, this is in his neighboring district in Cincinnati where the IRS office is? I don't think you can hold him accountable.

CARNEY: I can't account for every conversation that might have been had outside the White House. I can't tell you how many people knew.


HANNITY: And while we have been told time and again that the taxpayer-funded witch-hunts ended more than a year ago, tonight there are people in this studio audience that are going to say they have been targeted as recently as two weeks ago.

Joining me now, the attorneys representing some of the Americans sitting in our studio tonight, Cleta Mitchell and from the American Center for Law and Justice, Jay Sekulow. Guys, welcome, both of you, to the show. Thanks.



HANNITY: All right. Jay, let me start with a time line here. Lois Lerner, correct me if I'm wrong, first knew about this in June of 2011. Is that right?

SEKULOW: That's correct. That's when she was first notified of the actual targeting that was taking place.

HANNITY: All right. But after consulting, the Treasury consulting with the White House, we didn't hear about it through her in a set-up question through the ABA (ph) until May 10th of 2013.

SEKULOW: Right. And also intervening in that period of time, she came up with another criteria to have the determinations unit used for tax exemption, which actually complicated and made it worse. And in fact, I think some of the groups sitting in the audience with you today got put in this dragnet because of Lois Lerner basically broadening out to other conservative organizations, not just Tea Party groups, to be in this dragnet of IRS special review.


SEKULOW: And she basically is responsible for doing that.

HANNITY: And Cleta, in March of 2013, Doug Shulman, then the head of the IRS, assured the American people and Congress that this is not happening, correct?

MITCHELL: Yes. In fact, he did that a year ago in response to questions from Congressman Jordan and others.

HANNITY: That's right. March 2012.

MITCHELL: Twenty twelve. Twenty twelve, uh-huh. That's right.

HANNITY: All right.

Now, one of the things, I want to ask both of you the same question, that is puzzling to me, is Shulman met -- went to the White House 157 times. Now his answer was that, well, I was there once for an Easter Egg Roll hunt, whatever it is. Nobody as I checked the records, the top cabinet members of Obama, Jay, they've not been there 157 times. What do you think --

SEKULOW: Sure a lot of conversations -- yes, I think, well, number one, inexplicable. I mean, I don't know how you explain 159 visits by the head of the IRS to the White House. They can't be possibly be talking about that much tax policy, because there weren't that many changes to the internal revenue code.

So, you wonder what was going on here. And you've asked the right questions from the beginning of this, Sean. And that is, it is who knew what and when. And I don't think until Cleta and I do our discovery in this litigation that we're both involved and that we're really going get an answer to that.

HANNITY: Cleta, what is it specifically that matters? In my mind, this is about intimidating people because of their freedom of association and freedom of speech. What do you think -- what are the issues at stake here in your mind?

MITCHELL: Well, I think the most important thing for all of us to remember is that we always talk about America being a nation of laws, not of men. And what the IRS has done here is essentially abandoned and abdicated the rule of law where there's a certain set procedure for groups to apply for tax exempt status. There's an application, it has 60 or 70 questions. Before they began this targeting in 2010, they would ask questions about the application itself.

And when you have a group of people, in an agency, who are allowed to just start making it up as they go along, they abandon any legal -- objective legal standard, it all becomes subjective, and that's what we have here -- and the explanation that the IRS has been coming out with is preposterous, number one, that it's some low-level employees in Cincinnati. I have cases that never went to Cincinnati, and they still have their tax exempt status after four years.



MITCHELL: And that's the rule of law.

SEKULOW: Exactly the same thing.

Well, Cleta is right. I mean, I've got, you know, we had this whole situation where the IRS was, you know, basically saying it's all Cincinnati. And what's so bizarre about that Sean, is I have got letters on cases, two offices in California and one out of Washington, D.C., and signed by a tax law specialist.

So, this whole, you know, low-level rogue agents nonsense narrative that the White House came out with was just factually incorrect. And let me reinforce something that Cleta just said which is critical here. They're acting as if -- and the inspector general kind of alluded to this that the agents themselves, those in the determinations unit, had no real concept of what the law actually is and how it's applied. But you know what? None of these groups have been denied. What they've done is granted some and put some in what I call terminal limbo here, where they're just not doing anything.

We had months, I mean six and nine months, where there was no response from the IRS. And that's inexcusable. We know now, we now have a much better idea why, that's because Washington was dictating the terms of this.

But the Cincinnati office is the largest office for tax exempt processing. When I was with Treasury a long time ago, in the office of chief counsel for the IRS, we represented tax exempt, that is not a small division. That's significant.

HANNITY: All right. What extent is -- I went through that timeline, they knew in June of 2011. They had finished in May of 2012, they finished their own internal investigation. The IG report we were supposed to get an interim report in September before the election. Do you connect this in any way to the election, preventing these groups from being able to raise money and be active politically in terms of getting out information about issues they care about? Do you think it's connected in any way, Cleta?

MITCHELL: I absolutely do, because the letters -- remember, Jay and I first started working together on this in February of last year when all of these groups, hundreds of groups, received these incredibly intrusive, expansive questions from the IRS, which had the absolute impact of intimidating them, frightening them, making them think they might be doing something wrong if they invited candidates to -- a candidate forum, which is completely legitimate for a 501(c)(4) organization.


MITCHELL: So, absolutely it had the effect of intimidating them. And I will actually remind everybody, these groups still don't have their tax exempt status.


MITCHELL: And some of my clients received additional letters a month before the election with even more questions.

HANNITY: Unbelievable. All right. Thank you both.

SEKULOW: Absolutely.

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