Video: Hearing on Irs Report Splits on Partisan Lines

The first congressional hearing on IRS targeting of conservative groups began Friday with the House Ways and Means Committee looking at what it called political discrimination.

However, partisan politics became evident early when the top Republican and Democrat on the committee differed on the underlying purpose of the hearing.

Two key figures in the controversy -- the acting Internal Revenue Service commissioner forced to resign and the agency inspector general who uncovered the issue -- were sworn in as witnesses by panel chairman Rep. Dave Camp, a Republican from Michigan.

In his opening statement, Camp said the revelation "goes against the very principles of free speech and liberty" on which the nation was founded.

He also said the IRS lied to Congress about the targeting, and cited five violations of taxpayer rights by the agency's practice, including intimidation of conservative groups and leaking of confidential information.

"The reality is this is not a personnel problem," he said, instead calling it the result of an agency being too large and powerful, with the freedom to abuse that power. "Under this administration, the IRS has abused its power to tax and destroyed the faith of the American people" in the tax system.

Outgoing acting commissioner of the IRS, Steven Miller apologized,  "on behalf of the Internal Revenue Service for mistakes that we made and the poor service we provided." "The affected organizations and the American public deserve better," he said. Miller made the remark at a House and Ways and Means Committee hearing over extra scrutiny that the IRS gave to conservative groups seeking tax-exempt status. Miller, who said partisanship has "no place at the IRS," added that he doesn't believe partisanship motivated anyone who gave the conservative groups extra scrutiny. What happened, he said he believes, was that "foolish mistakes were made by people trying to be more efficient in their workload selection."

The Internal Revenue Service's management of tax-exemption applications has "completely failed the American people," U.S. Rep. Sander Levin, D-Michigan, said Friday at hearing of the House Ways and Means Committee. The committee is holding a hearing on extra scrutiny that the IRS gave conservative groups seeking tax exempt status. Levin is the committee's ranking member.

Democratic Rep. Sander Levin, also of Michigan, agreed that the IRS targeting was wrong, and he singled out former and current IRS officials for misconduct.

However, Levin specifically disagreed with Camp that the issue reflects a cultural problem in President Barack Obama's administration.

"If this hearing becomes essentially a bootstrap to continue the campaign of 2012 and prepare the campaign of 2014, we will be making a very, very serious mistake," Levin said.

Steven Miller, the acting IRS commissioner forced to resign over the scandal, and J. Russell George, the Treasury inspector general for tax administration, were the lone witnesses at Friday's hearing.

Meanwhile, the commissioner of the IRS' Tax Exempt and Government Entities Division also announced his retirement Thursday. Joseph Grant will leave in June, according to an internal IRS memo provided to CNN. Miller also is scheduled to exit then.

According to a report by the agency's inspector general released Tuesday, the IRS used faulty policy to determine whether applicants for tax-exempt status were engaged in political activities, which would disqualify them.

The policy went into effect in early 2010, the report said, and "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."

The report stated that IRS officials did not consult anyone beyond the agency about the development of the screening criteria.

On Thursday, Camp called the report "disappointing."

"We're seeing reported in the press that other individuals that weren't applying for tax-exempt status were brought into the IRS and questioned about views that were unrelated to their tax return," he told CNN. "So I think this may be larger."

The congressman added he's "very suspicious" that the targeting operation was politically motivated.

"We don't have the information to back (that suspicion) up," he said. "That's why we're going to need to conduct this hearing and others until we get to the bottom of it. And we're not going to stop until we know all the facts."

Camp said that Obama -- who has called the agency's misconduct "inexcusable" -- needs to take responsibility for IRS behavior.

"Ultimately, the president is responsible for the administration," Camp said. "And the IRS is part of the administration."

Levin, however, told CNN he's "always concerned these days that partisanship will take over."

"This should be an inquiry. We set it on a bipartisan path," Levin said. "I hope it stays that way."

The scandal has already leaked into the debate over House Republican efforts to repeal Obama's health care reform law. The IRS official in charge of that agency's implementation of the program, Sarah Hall Ingram, once headed the unit under scrutiny in the scandal.

Camp said he does not yet know if the scandal rises to the level of criminal conduct.

"But clearly this is serious," he said. "I think the penalties should be serious. I think Infringing on people's constitutional rights is not something we should look (at) as a trifling matter."

Camp promised more hearings to follow, partly to hear from former IRS Commissioner Doug Shulman, who was running the agency when the targeting program went into effect.

Shulman, who was at the helm of the agency during most of the period in question, will testify before the House Oversight Committee on Wednesday, a House GOP aide told CNN.

Shulman voluntarily agreed to attend. He is no longer in the government,.

Levin's opening statement Friday cited Shulman by name for improper conduct.

Another official at the heart of the scandal, Lois Lerner, has told the committee through an attorney that she is in Montreal, and it's unclear if she can make the hearing.

Lerner is the director for exempt organizations under Grant. Levin's opening statement said Lerner should lose her job.

CNN's Deirdre Walsh contributed to this report.