- The Washington Times - Monday, June 24, 2013

In another damaging revelation, the new head of the Internal Revenue Service said Monday that an internal probe had uncovered more instances of agents using “inappropriate” political lists to single out tax-exempt applications for extra scrutiny, and he acknowledged that the practice went on far longer than previously reported.

While previous accounts of IRS targeting focused on tea party and conservative groups, the agency’s own investigation reportedly found that agents also were going after groups with terms such as “Israel,” “Progressive” and “Occupy” in their names.

The IRS screeners referred to the practice as its “be on the lookout” list, or BOLO, of potentially problematic applications.

IRS Commissioner Danny Werfel told reporters on a conference call Monday that IRS agents still were using inappropriate and politically loaded screening terms when he took over the troubled agency last month. He did not specify what terms were on the lists, but said he suspended the use of all such lists immediately.

“There were a series of these types of lists being used in this part of the IRS as part of their review of tax-exempt applications,” Mr. Werfel told reporters in a conference call. “We believe there continued to be inappropriate or questionable criteria on these BOLO lists.”

The IRS and the Obama administration are facing several congressional probes and a Justice Department criminal investigation into revelations that the agency gave extra scrutiny to conservative groups applying for tax-exempt status from early 2010 through early 2012. The scrutiny began in the Cincinnati office, where tax-exempt applications are reviewed, but Washington IRS officials provided early direction, according to congressional interviews of IRS employees.

Many tea party groups said they are waiting for the applications to be processed years after they first applied, and that many of the IRS questions were intrusive and inappropriate.

Mr. Werfel declined to describe the criteria for the additional red-flag lists, but The Associated Press obtained an internal IRS document stating that the lists used by screeners to pick groups for close examination also included the terms “Israel,” ”Progressive” and “Occupy.” The document said an investigation into why specific terms were included was still underway.

Though the agency’s internal investigation remains incomplete, Mr. Werfel said that he hadn’t found evidence that people outside the IRS Cincinnati office, such as the Obama campaign or senior IRS officials in Washington, had pressured the tax agency to target conservative groups. He briefed President Obama, who appointed him to the post in May after the scandal broke, and Treasury Secretary Jack Lew on the report Monday.

“The fact that no evidence is surfacing as wrongdoing is an important conclusion to reach as long as it is qualified by the fact that more reviews are underway,” Mr. Werfel said. “And so, I’ll be as clear as I can right now. I’m not providing a definitive conclusion that no intentional wrongdoing occurred. But I’m suggesting that based on the ongoing reviews to date, no evidence has yet surfaced.”

Republican reaction

Top Republicans on the House Ways and Means Committee said the IRS leadership needs to provide more answers about its practices.

“Who started this practice, why was it allowed to continue for so long and how widespread was it?” asked committee Chairman Dave Camp, Michigan Republican. “This culture of political discrimination and intimidation goes far beyond basic management failure, and personnel changes alone won’t fix a broken IRS. Congress will continue the investigation into the IRS’ actions and hold the agency accountable so we can ensure no American is targeted again.”

Rep. Charles W. Boustany Jr., a Louisiana Republican who heads the Ways and Means oversight subcommittee, called the agency’s actions, including a reported $70 million in planned bonuses for employees, “outrageous.”

“It is particularly galling that the report concludes that part of the solution to the IRS’s problems is that it receive $1 billion more in taxpayer dollars,” Mr. Boustany said in a statement.

House Government Reform and Oversight Committee Chairman Darrell E. Issa, the California Republican who has been among the most aggressive critics of recent administration scandals, said the IRS self-investigation “fails to meaningfully answer the largest outstanding questions about inappropriate inquiries and indefensible delays.”

Mr. Issa added: “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.”

Congressional Democrats said Monday that they have uncovered evidence for the first time showing that the IRS also targeted liberal groups, not just conservatives. They said the BOLO lists included the word “progressives” as a red flag.

Rep. Sander M. Levin of Michigan, the ranking Democrat on the House Ways and Means Committee, said the omission of this information from an initial inspector general’s report on the IRS scandal shows that the foundation of subsequent probes “is flawed in a fundamental way.”

Mr. Werfel’s remarks accompanied a 60-page internal IRS report concluding that “significant management and judgment failures occurred” at the agency.

The IRS is redacting certain personal data from documents relating to the BOLO lists so that information can be turned over to key congressional panels investigating the IRS scandal, Mr. Werfel said.

“I want to get to the bottom of this, and I want this information out … as quickly as possible so we can air these issues,” he said.

New procedures

The agency has created a voluntary process for groups that have been waiting more than 120 days for tax-exempt status to “self-certify” that they will abide by rules that restrict their political activities. Such groups must agree that they will not spend more than 40 percent of their time or money on political campaigns.

“We need to earn and maintain the trust of the American people in order to accomplish our mission,” Mr. Werfel said.

Mr. Obama has maintained that he knew nothing about political targeting at the IRS and condemned the practice. The White House on Monday called the interim review “an important step in ensuring accountability.”

“As the president has made clear, the misconduct identified in last month’s inspector general’s report is unacceptable,” White House press secretary Jay Carney said. “He will not tolerate inappropriate behavior in any agency, and the president believes that IRS personnel must operate with absolute integrity, fairness and neutrality.”

Mr. Lew said he has asked Mr. Werfel to “spend some time outside Washington in the coming weeks to meet with taxpayers, business leaders and community officials and to uncover new ways to make the IRS more efficient and consumer-friendly.”

There have been previous indications that some liberal or progressive groups might have been singled out for scrutiny along with politically conservative applicants. Former IRS executive Holly Paz told congressional investigators last month that the agency’s “be-on-the-lookout” list for employees had categories for liberal-sounding groups as well.

• Dave Boyer can be reached at dboyer@washingtontimes.com.

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