Acting IRS Commissioner Danny Werfel, left, accompanied by Treasury Inspector General for Tax Administration J. Russell George, testifies on Capitol Hill in Washington, Monday, June 3, 2013, before the House Appropriations subcommittee on Financial Services and General Government hearing regarding a report that the IRS spent about $50 million to hold at least 220 conferences for employees between 2010 and 2012. (AP Photo/Charles Dharapak)
WASHINGTON (AP) — Democrats are unhappy that newly revealed Internal Revenue Service documents show the agency screened for progressive groups seeking tax-exempt status, not just the tea party organizations for which the IRS was already under fire.
Democrats also want to know why the Treasury Department inspector general who investigated IRS targeting of conservative groups didn't mention that terms like "Progressives" and "Healthcare legislation" were on the same lists agency workers used to find applications to review closely.
"The Inspector General seriously erred in not making clear in both the audit report and his testimony on this matter that 'Tea Party' and 'Progressives' were included" in the lists IRS workers used to screen applications, Rep. Sander Levin, D-Mich., wrote Monday in a memo his aides distributed. Levin is the top Democrat on the House Ways and Means Committee.
That Treasury investigator, J. Russell George, released a report in May detailing "inappropriate criteria" the IRS used to single out conservative groups for intensified treatment, and has testified to congressional committees several times. He never affirmed that progressive groups were sought out as well, although he cautioned lawmakers that he recently had found lists that raised concerns about other "political factors" he did not specify.
Levin's complaint came hours after Danny Werfel, the new IRS chief, told reporters that his agency's screening of groups seeking tax-exempt status was broader and lasted longer than has been previously disclosed.
In a conference call with reporters, Werfel said that after becoming acting IRS chief last month, he discovered "inappropriate criteria that was in use" and ordered the practice halted immediately. Previously, investigators have said agency officials ended the targeting of conservative groups in May 2012 — not revealing that screening for other political viewpoints had continued.
Werfel did not specify what terms were on the lists. But later Monday, Levin's Democratic staff released 15 lists that IRS screeners used to find groups that merited close attention, and lists from April 2013 included the terms "Paying National Debt" and "Green Energy Organizations."
Those lists, which changed over time and were dated between August 2010 and April 2013, also included the terms "Progressive" and "Tea Party" as well as "Medical Marijuana," ''Occupied Territory Advocacy," ''Healthcare legislation," ''Newspaper Entities" and "Paying National Debt." The lists ranged from 11 pages to 17 pages and were heavily blacked out to protect sensitive taxpayer information.
Neither the 15 IRS lists released by Democrats nor a separate IRS document obtained by The Associated Press 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.
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."
The term "Tea Party" appeared on the earliest IRS lists, though by 2012 it was replaced by more generic descriptions of political activity. IRS regulations allow it to grant tax-exempt status to groups mostly engaged in "social welfare," but not if participation in political election campaigns becomes their "primary" activity — guidelines that agency officials concede can be vague and confusing.
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 obtained by the AP.
That document also referred to terms including "Israel" and "Occupy" as being on the lists. Those terms did not appear on the lists released by Ways and Means Democrats.
The document obtained by the AP blamed the continued use of inappropriate criteria by screeners on "a lapse in judgment" by the agency's former top officials.
In a letter to George he wrote Monday, Levin asked him to describe why his May report omitted mentioning that "Progressives" appeared on the IRS lists.
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. Other terms were listed for other reasons, such as helping screeners find possible cases of fraud, she said.
Kraushaar said the inspector general was reviewing whether other criteria used by IRS officials led to expanded scrutiny for some groups "and why these criteria were implemented."
Werfel's remarks came as he released an 83-page examination he has conducted of his embattled agency. The conclusions, which Werfel cautioned were preliminary, so far have found there was "insufficient action" by IRS managers to prevent and disclose the problems but no specific cases 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.
Werfel's report describes new procedures aimed at preventing unfair treatment of taxpayers. They include a fast-track process for some groups seeking tax-exempt status and a new board that will recommend any additional personnel moves "to hold accountable those responsible" for the targeting of conservative groups.
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.
Werfel's comments and report drew negative reviews from one of the IRS' chief critics in Congress, Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee.
"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," Issa said.
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?"
Werfel, initially named the IRS' 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.
Associated Press writers Stephen Ohlemacher and Henry C. Jackson contributed to this report.
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