The woman at the center of the IRS scandal refused to testify to Congress on Wednesday, but House Republicans said Lois Lerner botched her attempt to invoke her right against self-incrimination and said they likely will force her to come back and explain why the agency targeted conservative political groups.
Ms. Lerner’s refusal to testify shifted attention to her onetime boss, former Commissioner Douglas H. Shulman, who apologized to the House Oversight and Government Reform Committee but refused to take responsibility, leaving furious lawmakers warning that the Internal Revenue Service could end up facing a special prosecutor.
Meanwhile, the top Treasury Department official who oversees the IRS said the agency’s behavior was “unacceptable” but denied any responsibility.
At the outset, a Democrat on the panel warned that there would be “hell to pay” if witnesses withheld information or danced around lawmakers’ questions.
“We know where that will lead. It will lead to a special prosecutor,” said Rep. Stephen F. Lynch of Massachusetts.
Ms. Lerner, director of tax-exempt organizations for the IRS, began the witnesses’ testimony by denying that she acted improperly, and then invoked her Fifth Amendment right against self-incrimination.
“I have not done anything wrong. I have not broken any laws,” she said. “I have not violated any IRS rules or regulations, and I have not provided false information to this or any other congressional committee.”
Her attorney said before the hearing that she would decline to answer questions because the Justice Department announced a potential criminal investigation.
Committee Chairman Darrell E. Issa, California Republican, dismissed Ms. Lerner from the witness table, but Rep. Trey Gowdy, South Carolina Republican, objected, saying that since she made a brief statement in her defense, that effectively waived her right to invoke the Fifth Amendment.
“She just testified. She just waived her Fifth Amendment right to privilege,” said Mr. Gowdy, a former federal prosecutor. “You don’t get to tell your side of the story and then not be subjected to cross-examination. That’s not the way it works. … She ought to stand here and answer our questions.”
Hours later, at the end of the hearing, Mr. Issa said Mr. Gowdy may be correct and that the committee may compel Ms. Lerner to return. He said he would review the legal situation, and he recessed the hearing rather than adjourning it as a way of preserving the option of bringing her back.
He was stronger in comments to Politico, a paper that covers Capitol Hill, saying he believes Ms. Lerner did waive her rights.
“When I asked her questions from the very beginning, I did so she could assert her rights prior to any statement,” Mr. Issa said. “She chose not to do so — so she waived.”
Ms. Lerner tried to stop the Cincinnati field office’s targeting of tea party and other right-leaning groups by directing specialists in 2011 to broaden their criteria so that it did not appear partisan, according to an audit by J. Russell George, the Treasury inspector general for tax administration.
Yet the audit says the behavior resurfaced and had to be fixed once more in May 2012.
Ms. Lerner apologized at a May 10 event with the American Bar Association for burdening the conservative groups from early 2010 to May 2012, an admission that set off a firestorm on Capitol Hill.
The announcement — staged through a prearranged question from the audience — was made days before the inspector general released the audit that confirmed Republican lawmakers’ suspicions in 2012 that conservative groups had been singled out.
Wednesday’s hearing was the third since Ms. Lerner revealed the inappropriate activity two weeks ago, and it underscored the remarkable, sustained anger at the tax agency from both sides of the aisle.
An inspector general said the IRS gave special scrutiny to applications for tax-exempt status filed by groups that had “tea party,” “patriot” or “9/12” in their names. The IRS is holding up dozens of those applications, some of which were filed three or four years ago.
IRS officials, including Mr. Shulman, previously told Congress that there was no effort to target conservative groups. On Wednesday, Mr. Shulman said he told the truth as he believed it at the time.
He testified that he had “some of the facts, not all of the facts,” and that he did not want, as a political appointee, to give the impression that he was interfering with the inspector general’s review of the situation.
“If there’s someone wielding a knife in the parking lot, are you going to call the inspector general?” Mr. Gowdy said. “Are you going to wait until his or her investigation’s over before you stop it?”
Mr. Shulman reiterated his point about the inspector general and said he was under the impression last year that the offending behavior was being stopped.
Lawmakers said that strained belief and that once Mr. Shulman learned that the inspector general was looking into the reports, he should have alerted Congress, which was clearly interested. Lawmakers said they sent 132 letters to the IRS asking about the situation.
“Congress was misled,” Mr. Issa said. “The American people were misled.”
Lawmakers also chastised Mr. Shulman for failing to take any action within his agency.
Rep. Tammy Duckworth, Illinois Democrat and a veteran who lost both legs in combat, said there are “25-year-old buck sergeants and second lieutenants who know you can delegate authority, but you can never delegate responsibility and that you’re always responsible for the performance, the training, the actions of the men and women under you.”
Mr. Issa also took the inspector general to task for the length of time it took for him to release his findings, or at least inform his committee of any wrongdoing.
Deputy Treasury Secretary Neal S. Wolin addressed the scandal before lawmakers for the first time. He deemed the political targeting “absolutely unacceptable and inexcusable,” but denied responsibility or knowledge of the actions that led to the scandal.
Treasury Secretary Jack Lew and President Obama took immediate action by demanding and accepting the acting commissioner’s resignation, he said, and Mr. Lew ordered Daniel Werfel, the newly appointed commissioner, to conduct a thorough review how the agency handles applications for tax-exempt status.
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