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IRS officials thought Obama wanted crackdown on tea party groups, worried about negative press

IRS employees were "acutely" aware in 2010 that President Obama wanted to crack down on conservative organizations and were egged into targeting tea party groups by press reports mocking the emerging movement, according to an interim report being circulated Tuesday by House investigators.

The report, by staffers for Rep. Darrell E. Issa, California Republican and chairman of the House Oversight and Government Reform Committee, quoted two Internal Revenue Service officials saying the tea party applications were singled out in the targeting program that has the agency under investigation because "they were likely to attract media attention."

In the report, the investigators do not find evidence that IRS employees received orders from politicians to target the tea party, and agency officials deny overt bias or political motives.

But the report says the IRS was at least taking cues from political leaders and designed special policies to review tea party applications, including dispatching some of them to Washington to be vetted by headquarters.

"As prominent politicians publicly urged the IRS to take action on tax-exempt groups engaged in legal campaign intervention activities, the IRS treated tea party applications differently," the staff report concludes. "Applications filed by tea party groups were identified and grouped due to media attention surrounding the existence of the tea party in general."

That finding contradicts Democrats on Capitol Hill, who argue that some liberal groups also were given special scrutiny, thus showing there was neither a witch hunt for conservatives nor political pressure from the White House.

"The fact is that not a single piece of evidence has been unearthed that suggests there was any political motivation or outside involvement," Democratic staffers on the House Ways and Means Committee said in a memo Tuesday outlining the state of the investigation. "Republicans, however, believe that if they continue to repeat their baseless accusations of a 'White House enemies' list, it will become true."

For years, Republicans in Congress charged that the IRS was targeting specific groups, but top agency officials denied it.

But four months ago, with an inspector general's report about to be released, the IRS carefully staged a question at a conference so officials could reveal that they had been treating tea party applications differently.

Several congressional committees have since opened investigations including open hearings, document requests and depositions of agency employees.

The latest oversight report is meant to take stock of where the investigation stands and to lay out what Republicans know and what they suspect. The report says the conclusions are preliminary and that tens of thousands of pages of documents have yet to be examined.

In one of the key findings, investigators said negative press coverage of the tea party was one reason why the IRS gave the groups special scrutiny.

"It was my understanding that the reason they were identified is because they were likely to attract media attention," Steven Grodnitzky, one of the employees in the exempt organizations division, told investigators.

Another supervisory employee in Washington, Ronald Shoemaker, also said press attention helped shape IRS policies, telling investigators that media attention to those cases "was the basis" for designating them as significant cases requiring special examination.

The Republican oversight report traces the growing pressure on the IRS to act, beginning with Mr. Obama's criticism of the Citizens United Supreme Court decision in his 2010 State of the Union address to calls from top members of Congress for the IRS to give special scrutiny to tea party applications.

Emails among IRS officials, and committee interviews with them, show agency employees were aware of the pressure, sending one another news reports and commenting — in sometimes derisive language — about the tea party applications.

One key question in the political debate has been how the IRS treated progressive groups and whether they received the same treatment as tea party organizations.

The committee report says the liberal groups were generally given quick approval, while some tea party applications are still awaiting approval three years after they were submitted.

"Despite repeated attempts to conflate the issues and downplay the IRS's treatment of conservative-oriented applications, the facts are clear that the IRS systematically processed conservative-oriented applications in a wholly disparate and unique manner," the investigators conclude. "The treatment received by Tea Party applicants was unprecedented for tax-exempt applicants engaged in political activity."

The latest report is particularly detailed in its look at Lois G. Lerner, the former head of the division charged with scrutinizing tax-exempt applications.

Investigators traced a pattern of antipathy toward nonprofit organizations being able to take part in political activity beginning with a 2010 speech at Duke University, where the committee said she was "echoing" Mr. Obama's criticism of the Supreme Court.

She said the court case "dealt a huge blow, overturning a 100-year-old precedent" — a legal reading that analysts have disputed — and indicated she would like to "fix the problem," though she said the IRS wasn't set up to do that.

A day after Ms. Lerner's Duke speech, a senior IRS official circulated a press release from Sen. Richard J. Durbin, Illinois Democrat, urging the IRS to investigate political spending by Crossroads GPS, a group associated with former George W. Bush political strategist Karl Rove.

Ms. Lerner, who has been removed from that post but remains on the payroll, refused to answer the committee's questions at a hearing this year, citing her right against self-incrimination.

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