“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.
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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.