Documents show IRS also screened liberal groups

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.

The IRS has been under fire since admitting last month that it targeted for tough examinations tea party and other conservative groups seeking the tax-exempt designation. While investigators have said agency screening of those groups stopped in May 2012, Monday’s revelations made it clear that screening for other kinds of organizations continued until earlier this month. That is 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 since the uproar began.

In a conference call with reporters, Werfel said that after becoming acting IRS chief last month, he discovered screeners were still using lists with varied and improper terms. He did not specify what the terms were, but said he suspended the use of all such lists immediately.

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

He 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 in a June 20 written order, according to the IRS document.

Democrats on the House Ways and Means Committee released a November 2010 list that the IRS provided to congressional investigators. That 16-page document includes the terms “Progressive” and “Tea Party,” as well as “Medical Marijuana” 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 that other groups had been 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.

George’s report criticized the IRS for using “inappropriate criteria” to identify tea party and other conservative groups. It did not mention liberal organizations.

Democratic Ways and Means staffers said in a press release they had verified that liberal organizations were among the 298 groups seeking tax-exempt status that George’s audit had examined.

Many organizations seeking tax-exempt designation were applying for so-called 501(c)(4) status, named for the section of the federal revenue code that spells out its requirements. IRS regulations allow that status for groups that are mostly involved in “social welfare” and do not engage in election campaigns as their “primary” activity. It is left to the IRS to determine whether applicants meet that vague requirement.


Werfel’s remarks came as he released an 83-page examination he has conducted of his embattled agency. The conclusions, which he cautioned were preliminary, found there was “insufficient action” by IRS managers to prevent and disclose the screening problems, but no specific signs 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,” Wefel 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 described several new procedures the agency is installing to prevent unfair treatment of taxpayers. 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. Werfel 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.

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.