Obama fires chief of tax agency IRS over ‘tea party’ scandal

US President Barack Obama on Wednesday sacked the acting chief of the Internal Revenue Service, Steven Miller, as he sought to insulate his administration from the scandal after the tax agency admitted that its auditors had unfairly targeted conservative 'tea party' groups.

Attorney general Eric H Holder J has meanwhile warned top IRS officials that a Justice Department inquiry would examine any false statements to see if they constituted a crime.

Announcing the dismissal of Miller as acting head of what is arguably the most detested branch of the US government, a visibly angry Obama pledged further steps to ensure the ''inexcusable'' breach of public trust would never happen again.

Speaking in the White House's formal East Room, Obama said treasury secretary Jacob J Lew had asked for and accepted the resignation of Miller, who as deputy commissioner was aware of the agency's efforts to demand more information from conservative groups seeking tax-exempt status in early 2012.

Miller learned last May of the probes of tax-exemption applications targeting a wide range of conservative political groups, but did not disclose the fact until last Friday, when he issued a public apology on behalf of the revenue agency.

The ensuing furore has rocked back the Obama administration on its heels.

''Americans have a right to be angry about it, and I'm angry about it,'' Obama said. ''It should not matter what political stripe you're from. The fact of the matter is the IRS has to operate with absolute integrity.''

Obama renewed a pledge made earlier Wednesday by attorney general Holder when he told the House Judiciary Committee that IRS officials could potentially face criminal charges as the investigation deepens.

The Treasury Department, said Obama, would work ''hand in hand'' with Congress as it performs its oversight role. ''We're going to hold the responsible parties accountable,'' he said.

The scandal involves at least two employees of an IRS field office in Cincinnati believed to have gone ''rogue,'' launching an 18-month campaign of paying special attention to conservative political groups in the run-up to the 2012 US election.

While there is no evidence of White House complicity in the IRS actions, tea party activists have glossed over this part in fundraising emails since the story broke last week.

''The Obama administration has really stepped in it this time with the IRS admitting to going after organizations with the words 'Tea Party,' 'patriot' and 'conservative' in their name,'' wrote former congressman Allen West, an arch-conservative who lost his hotly-contested Florida seat last November.

West's email pleaded for cash to ''elect 12 hard-charging conservatives who will make it their mission to protect the Constitution'' against Obama.

Another tea party favourite, Minnesota Republican Michele Bachmann, linked the IRS scandal to 'Obamacare', wondering whether the White House might manipulate the tax agency to ''deny or delay access to health care'' for conservatives.

Miller, who told agency employees that he would leave the administration in early June, is scheduled to testify Friday before the House Ways and Means Committee in the first of a series of hearings on the IRS activities.

In an internal message to employees, Miller, a 25-year veteran of the IRS, wrote, ''This has been an incredibly difficult time for the IRS, given the events of the past few days, and there is a strong and immediate need to restore public trust in the nation's tax agency. I believe the service will benefit from having a new acting commissioner.''

Holder's warning came as lawmakers stated unequivocally that IRS officials had lied to them in failing to disclose the added screening despite being pressed repeatedly.

At a hearing of the House Judiciary Committee on Wednesday, Holder said the Justice Department would investigate whether the civil rights of groups or individuals, and statutes governing IRS conduct, had been violated. But he also said, ''False-statement violations might have been made, given at least what I know at this point.''

Members of Congress from both parties, meanwhile, prepared a gantlet of hearings for IRS leaders in the coming days. The House Ways and Means Committee will hold the first hearing on Friday, featuring Miller, who was aware of the problem in March 2012, yet told Republican senators a month later that no such singling out had occurred.