IRS: Targeting went on through May

The IRS was still improperly screening groups seeking tax-exempt status when its acting chief took over in May — close to two weeks after the nation first learned that the agency had targeted conservative groups.

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Top congressional Democrats said Monday that, based on information provided by the Internal Revenue Service, the agency also singled out liberal groups on the “be on the lookout” lists it used to flag applications that needed more attention. 

Danny Werfel, the acting IRS chief, told reporters Monday he was suspending the use of those so-called BOLO lists. 

“We believe there continued to be inappropriate or questionable criteria,” Werfel, who took the helm at the IRS on May 22, told reporters. “Once we came to that conclusion, we took immediate action.”

Werfel gave little detail about the ideology or interests of groups receiving additional scrutiny, saying the IRS hopes to circulate more information about the lists after it takes more steps to protect confidential information.

The list that IRS officials used to search for groups that had “Tea Party” or “patriots” in their name has proven to be a key detail in the current investigation over the agency’s singling out of conservative groups.

But Rep. Sandy Levin (Mich.), the top Democrat on the tax-writing House Ways and Means Committee, said that the IRS told Congress for the first time on Monday that “progressive” was also a term used on BOLO lists. 

In a release, Ways and Means Democrats stressed that liberal groups were among almost 300 groups seeking tax-exempt status that Treasury’s inspector general for tax administration reviewed for the May audit outlining the targeting of Tea Party groups. 

Levin said Monday that the audit left that information out, and called for Ways and Means Committee Chairman Dave Camp (R-Mich.) to bring Treasury Inspector General for Tax Administration Russell George back for more testimony. 

“The audit served as the basis and impetus for a wide range of Congressional investigations and this new information shows that the foundation of those investigations is flawed in a fundamental way,” Levin said in a statement.

Bloomberg News reported on Monday that “Israel” and “occupy” also were included on BOLO lists. Levin’s office released a November 2010 BOLO list that states progressives “are partisan and appear as anti-Republican.” That BOLO also included an entry for medical marijuana, another that touched on “disputed territories in the Middle East” and a few that dealt with the Democratic healthcare law.

The announcement that the IRS was suspending the use of BOLO lists came as Werfel rolled out a review of the agency’s handling of tax-exempt applications and its targeting of Tea Party groups — an appraisal that Werfel termed critical to the agency’s efforts to regain the trust of the taxpayers.

Werfel sharply criticized his predecessors at the agency, saying those officials had made significant managerial mistakes. The report also says that the IRS is seeking to streamline the application process for groups seeking tax-exempt 501(c)(4) status, by allowing certain groups fast-track approval.

The agency, the report added, is also implementing new safeguards that Werfel said would bring problems to the attention of top IRS officials more quickly.

But Werfel also stressed that — while investigations into the targeting are ongoing — there is no evidence yet that officials outside the IRS were involved, nor is there any reason yet to believe that there was “intentional wrongdoing” among agency officials.

Werfel, whose official title now is principal deputy commissioner, also said there was no evidence to date that suggests there were similar problems in other areas of the IRS.

But because of the management problems, Werfel said, the IRS has installed new officials at several positions overseeing tax-exempt applications — including at the spots once held by Lois Lerner and Holly Paz, two staffers who have been at the center of the investigation.

“Based on the evidence that we have to date,” said Werfel. “we believe that these individuals should no longer hold a position of trust in IRS.”

Werfel is scheduled to discuss the report’s findings with Ways and Means on Thursday. He told reporters Monday that he had already briefed President Obama and Treasury Secretary Jack LewJack LewOvernight Finance: GOP makes its case for impeaching IRS chief | Clinton hits Trump over housing crash remarks | Ryan's big Puerto Rico win The Hill's 12:30 Report House bill cuts IRS funding MORE, who requested the top-to-bottom review.

Camp said in a Monday statement that the IRS review did not provide much clarity on key questions like who started the targeting, and why it continued for so long. 

“This culture of political discrimination and intimidation goes far beyond basic management failure, and personnel changes alone won’t fix a broken IRS,” Camp said.

Camp’s office issued another release acknowledging that BOLOs had screened for liberal groups. But the Michigan Republican, who has stressed in recent weeks that the targeting went far beyond what was in the May audit, also said there was no evidence that groups on the left had donors threatened, confidential information leaked or faced the sort of inappropriate questions that conservative groups faced. 

“It is one thing to flag a group,” a spokeswoman for Camp said. “It is quite another to repeatedly target and abuse conservative groups.”

The House Oversight chairman, Rep. Darrell Issa (R-Calif.), added that it was “premature” for Werfel to say that there was “no evidence that anyone at IRS intentionally did anything wrong.”

Both Lew and Jay Carney, the White House press secretary, said in statements that Werfel and his new team had taken an important step with the report. Lew added that he had also asked the acting leader to travel outside Washington to get taxpayer input on how to make the agency more efficient.

Senate Finance Committee Chairmen Max BaucusMax BaucusWyden unveils business tax proposal College endowments under scrutiny The chaotic fight for ObamaCare MORE (D-Mont.) and the panel’s ranking member, Sen. Orrin HatchOrrin HatchSenate GOP gears up for fight over Gitmo transfers House Republicans press case for impeaching IRS commissioner GOP seeks to remove funding to design Gitmo alternative MORE (R-Utah), commended Werfel as well.

In addition to Congress, the Justice Department and Treasury’s inspector general for tax administration are also looking into the targeting of Tea Party groups.

George said in his May audit outlining the IRS’s targeting that the agency did not just use BOLOs for political cases. In congressional testimony last month, George also suggested that there also could be broader issues with the BOLO list.

The inspector general’s audit, a spokesman said Monday, “focused on the criteria the IRS used to select cases for expanded review for potential political campaign intervention.”

— Published at 3:15 p.m. and last updated at 8:24 p.m.