U.S. IRS official at heart of 'Tea Party' review scandal retires

By Patrick Temple-West WASHINGTON (Reuters) - A U.S. Internal Revenue Service official who was a key figure in the controversy over the tax agency's scrutiny of conservative groups retired on Monday just as an IRS review board was poised to recommend she be fired. Lois Lerner was at the center of an uproar that shook the IRS for weeks starting in mid-May after she apologized in public for the tax agency's treatment of political groups with "Tea Party" and other conservative terms in their names. The apology - made unexpectedly at a legal conference - triggered a fury among congressional Republicans. Accusing the IRS of political bias against conservatives, the lawmakers launched investigations and held high-profile hearings. "We can confirm today that Lois Lerner has retired," the IRS said on Monday in a statement about the former head of its tax-exempt division. Lerner had been placed on leave in May. Neither Lerner nor her lawyer could be reached for comment. Her IRS salary was about $177,000 a year, according to a congressional investigator. Lerner is expected to receive her full pension, said a Democratic staff member at the Ways and Means Committee. An IRS spokeswoman declined to comment on Lerner, citing employee privacy. Her retirement came just as the IRS' internal Accountability Review Board completed its report and was set to propose Lerner be fired on the basis of "neglect of duties" during her tenure, said Representative Sander Levin, the top Democrat on the tax-writing Ways and Means Committee, in a statement. The IRS review board said it found no political bias on her part, Levin's statement said. ISSA'S INTEREST UNDIMINISHED Lerner's retirement does not "diminish the committee's interest in hearing her testimony," said Republican Representative Darrell Issa, chairman of the House of Representatives Oversight and Government Reform Committee, which has led congressional inquiries into the affair. At one session, Lerner memorably refused to testify, citing her constitutional right, and drawing heavy criticism from House of Representatives Republicans in the televised hearing. As part of its job, the IRS regularly reviews applications from groups seeking tax-exempt status. U.S. law sets certain limits on the political involvement of tax-exempt groups, depending on the kind of exemption they seek or obtain. The controversy over the IRS "Tea Party" affair has faded in recent months, but the agency is still recovering from it. Its acting commissioner resigned during the controversy. A temporary replacement is on the job now. A permanent chief has been nominated by President Barack Obama, pending Senate approval. (Additional reporting by Kim Dixon; Editing by Kevin Drawbaugh, Xavier Briand and Lisa Shumaker)