Lew: 'I Will Not Cross That Line Into the Administration of the Tax System'

By Susan Jones | May 21, 2013 | 11:39 AM EDT

U.S. Treasury Secretary Jack Lew (AP File Photo)

(CNSNews.com) - Treasury Secretary Jack Lew told the Senate Banking Committee Tuesday the IRS has to be "beyond politics," and he warned that the "cure could be worse than the disease" if that line is crossed in the attempt to fix the agency's problems.

"The thing I will not do -- I will not cross that line into the administration of the tax system, because the cure could be worse than the disease. We need to make sure there's no political involvement in the administration of the tax system," Lew said.

And while the treasury secretary is responsible for the management of the IRS, Lew said the administration of the tax system "has to be within the IRS and apart from politics.”

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Lew was on Capitol Hill to brief Congress on threats to U.S. financial stability, but Sen. Mike Crapo (R-Idaho) questioned him about the IRS singling out conservative groups for greater scrutiny when those groups applied for tax-exempt status.

"Now there's a certain distance between Treasury and IRS in the administration of the tax system for proper reasons," Lew told Crapo. "The IRS has a semi-independent character because there's the concern that in past decades, there was political interference in the IRS."

Lew said he will take "every step that I can" to make sure the IRS never repeats the improper scrutiny of organizations applying for tax-exempt status.

"I've already had that conversation with the new acting commissioner (Daniel Werfel) who takes over tomorrow, and he has a very short period of time to help identify who should be held accountable, how we get to the bottom of how the management and communications systems broke down for this to happen, and to look systemically at what other steps need to be taken."

Lew has given Werfel 30 days to report back to him.

Lew said he first became aware of the probe into activities at the tax exempt office on March 15, when he had a "getting to know you meeting" with the inspector general for tax administration. "The IG flagged a number of items without going into great detail, he mentioned that there was an audit of 501(c)(4) activities, told me that there might be troubling findings, but did not describe them in detail. I then did not learn any more about it until it became public."

In a statement last week, Lew said "misconduct" at any agency, and especially the IRS, "is inexcusable and unacceptable. And I will not tolerate it." Lew promised that the IRS will implement "new safeguards" to restore Americans' trust that the IRS "administers the tax code fairly and without bias."