Documents show IRS also screened liberal groups

WASHINGTON (AP) — The Internal Revenue

Service’s screening of groups seeking tax-exempt status was broader and

lasted longer than

has been previously disclosed, the new head of the agency

acknowledged Monday. Terms including “Israel,” ‘‘Progressive” and

“Occupy” were used by agency workers to help pick groups for

closer examination, according to an internal IRS document obtained

by The Associated Press.

The IRS has been under fire since last

month after admitting it targeted tea party and other conservative

groups that wanted

the tax-exempt designation for tough examinations. While

investigators have said that agency screening for those groups had

stopped in May 2012, Monday’s revelations made it clear that

screening for other kinds of organizations continued until earlier

this month, when the agency’s new chief, Danny Werfel, says he

discovered it and ordered it halted.

The IRS document said an investigation into why specific terms were included was still underway. It blamed the continued use

of inappropriate criteria by screeners on “a lapse in judgment” by the agency’s former top officials. The document did not

name the officials, but many top leaders have been replaced.

Democrats on the House Ways and Means

Committee released 15 lists of terms that the IRS agency used and has

provided to congressional

investigators. Some of the lists, which evolved over time, used

the terms “Progressive” and “Tea Party” and others including

“Medical Marijuana,” ‘‘Occupied Territory Advocacy,” ‘‘Healthcare

legislation,” ‘‘Newspaper Entities” and “Paying National


The lists were dated between August

2010 and April 2013 — the month before the IRS targeting of conservative

groups was revealed.

They ranged from 11 pages to 17 pages but were heavily blacked out

to protect sensitive taxpayer information.

Neither the IRS document obtained by

the AP or the 15 IRS lists of terms addressed how many progressive

groups received close

scrutiny or how the agency treated their requests. Dozens of

conservative groups saw their applications experience lengthy

delays, and they received unusually intrusive questions about

their donors and other details that agency officials have conceded

were inappropriate.

In a conference call with reporters, Werfel said that after becoming acting IRS chief last month, he discovered varied and

improper terms on the lists and said screeners were still using them.

He did not specify what terms were on the lists, but said he suspended the use of all such lists immediately. Lists from April

2013 that were released included the terms “Paying National Debt” and “Green Energy Organizations.”

“There was a wide-ranging set of categories and cases that spanned a broad spectrum” on the lists, Werfel said. He added that

his aides found those lists contained “inappropriate criteria that was in use.”

Werfel ordered a halt in the use of

spreadsheets listing the terms — called BOLO lists for “be on the

lookout for— on June

12 and formalized their suspension with a June 20 written order,

according to the IRS document the AP obtained. Investigators

have previously said that the lists evolved over time as screeners

found new names and phrases to help them identify groups

to examine.

Democrats on the House Ways and Means

Committee released one of the lists, dated November 2010, that the IRS

has provided

to congressional investigators. That 16-page document, with many

parts blacked out, shows that the terms “Progressive” and

“Tea Party” were both on that list, as well as “Medical

Marijuana,” ‘‘occupied territory advocacy” and “Healthcare legislation.”

Rep. Sander Levin of Michigan, top

Democrat on the Ways and Means panel, said he was writing a letter to J.

Russell George,

the Treasury Department inspector general whose audit in May

detailed IRS targeting of conservatives, asking why his report

did not mention other groups that were targeted.

“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.

Republicans said there was a distinction. A statement by the GOP staff of House Ways and Means said, “It is one thing to flag

a group, it is quite another to repeatedly target and abuse conservative groups.”

George’s report criticized the IRS for

using “inappropriate criteria” to identify tea party and other

conservative groups.

It did not mention more liberal organizations, but in response to

questions from lawmakers at congressional hearings, George

said he had recently found other lists that raised concerns about

other “political factors” he did not specify.

On Monday, Karen Kraushaar, a spokeswoman for the inspector general, said their May audit focused on terms the IRS used to

pick cases to be studied for political campaign activity, which might disqualify a group from tax-exempt status.

She said the inspector general has since found other “criteria” the agency used to list potential cases, and “we are reviewing

whether these criteria led to expanded scrutiny for other reasons and why these criteria were implemented.”

Democratic staff on Ways and Means said in a press release that they had verified that of the 298 groups seeking tax-exempt

status that George’s audit had examined, some were liberal organizations — something George’s report did not mention.

Many organizations seeking tax-exempt

designation were applying for so-called 501(c)(4) status, named for its

section of the

federal revenue code. IRS regulations allow that status for groups

mostly involved in “social welfare” and that don’t engage

in election campaigns for or against candidates as their “primary”

activity, and it is up to the IRS to judge whether applicants

meet those vaguely defined requirements.

Werfel’s remarks came as he released an

83-page examination he has conducted of his embattled agency. The

conclusions, which

Werfel cautioned are preliminary, have so far found there was

“insufficient action” by IRS managers to prevent and disclose

the problem involving the screening of certain groups, but no

specific clues of misconduct.

“We have not found evidence of intentional wrongdoing by anyone in the IRS or involvement in these matters by anyone outside

the IRS,” he told reporters.

The report found no indication so far of improper screening beyond the IRS offices, mostly in Cincinnati, that examine groups

seeking tax-exempt status.

Werfel’s report describes several new

procedures the agency is installing to prevent unfair treatment of

taxpayers in the

future. They include a fast-track process for groups seeking

tax-exempt status that have yet to get a response from the IRS

within 120 days of applying. He is also creating an Accountability

Review Board, which within 60 days is supposed to recommend

any additional personnel moves “to hold accountable those

responsible” for the targeting of conservative groups, Werfel’s

report said.

The top five people in the agency responsible for the tax-exempt status of organizations have already been removed, including

the former acting commissioner, Steven Miller, whom President Barack Obama replaced with Werfel.

“The IRS is committed to correcting its mistakes, holding individuals accountable as appropriate” and establishing new controls

to reduce potential future problems, Werfel told reporters.

IRS screening of conservative groups had sparked investigations by three congressional committees, the Justice Department

and a Treasury Department inspector general.

Werfel’s comments and report drew negative reviews from one of the IRS’s chief critics in Congress, Rep. Darrell Issa, R-Calif.,

chairman of the House Oversight and Government Reform Committee.

Issa said the review “fails to

meaningfully answer the largest outstanding questions about

inappropriate inquiries and indefensible

delays. As investigations by Congress and the Justice Department

are still ongoing, Mr. Werfel’s assertion that he has found

no evidence that anyone at IRS intentionally did anything wrong

can only be called premature.”

House Ways and Means Committee Chairman

Dave Camp, R-Mich., whose panel is also investigating the agency, said

the IRS “still

needs to provide clear answers to the most significant questions —

who started this practice, why was it allowed to continue

for so long, and how widespread was it? This culture of political

discrimination and intimidation goes far beyond basic management

failure and personnel changes alone won’t fix a broken IRS.”

Werfel had promised to produce a report within a month of taking over the agency.

Werfel said he briefed Obama and Treasury Secretary Jacob J. Lew on the report earlier Monday.

Werfel, initially named the IRS’s acting commissioner, is now the agency’s deputy principal commissioner because federal law

limits the time an agency can be led by an acting official.