POSTED: Monday, May 13, 2013 - 10:00am
UPDATED: Monday, May 13, 2013 - 10:04am
CNN Washington — The Internal Revenue Service targeted other groups focused on government spending and the federal debt that were seeking tax-exempt status, in addition to tea party organizations, documents set to be released this week by the agency's watchdog show.
The IRS also applied extra scrutiny to applicants with statements that "criticize how the country is run" or that sought to educate the public on how to "make America a better place to live" -- designations that would have included conservative political groups looking to apply for 501(c)(4) status.
Those disclosures are included in the appendix of an inspector general's report obtained by CNN that is set to be released publicly this week, and that has caused widespread anger among Republican lawmakers and activists who have portrayed the federal government as unfairly targeting political rivals.
On Sunday, lawmakers blasted the IRS for its scheme, which was described by Sen. Susan Collins as a "truly outrageous" breach of public trust.
"It contributes to the profound distrust that the American people have in government," the Maine Republican said on CNN's "State of the Union," adding that President Barack Obama should offer a public condemnation of the IRS' practices.
Obama spokesman Jay Carney said Saturday the president believes that the government should be staffed with "the very best public servants with the highest levels of integrity" and that "based on recent media reports, (the president) is concerned that the conduct of a small number of Internal Revenue Service employees may have fallen short of that standard."
That doesn't go far enough for Collins, who said "the president needs to make crystal clear that this is totally unacceptable in America."
Rep. Mike Rogers, chairman of the House Intelligence Committee, called for a full investigation of the IRS' practices, something Republicans and Democrats have said is necessary after learning of the conservative targeting.
"I don't care if you're a conservative, a liberal, a Democrat or a Republican, this should send a chill up your spine," the Michigan Republican said on "Fox News Sunday."
A congressional investigation would probe who knew what and when, Rep. Darrell Issa told CNN on Sunday.
Issa chairs the House Committee on Oversight.
"The fact is if you're doing something and it's wrong, it's illegal, it's the kind of thing that scares the American people to their core, when Americans are being targeted for audits based on their political beliefs, that needs to change," the California Republican said.
The watchdog report is the product of an audit that was requested by Issa's oversight committee and focused on IRS programs and operations.
An audit is separate from an investigation, which would assess wrongdoing such as violations of laws or policies.
An IRS official on Friday admitted the agency made "mistakes" in the last few years with tax-exempt status applications, specifically those submitted by groups with the words "tea party" or "patriot" in their names.
Multiple conservative groups have said their applications were delayed and returned with lengthy requests for supporting materials, sometimes including website printouts and lists of guest speakers.
The applications in question were processed by an office in Cincinnati that handles most applications for 501(c)(4) status and had seen the number of applications rise sharply beginning in 2010, the year of the Supreme Court's Citizens United v. Federal Election Commission ruling, which blessed unlimited campaign spending by corporations.
Tax-exempt groups became a popular channel for the new wave of political spending.
The inspector general's report indicated the agency's practice of singling out conservative groups began as early as March 2010, and in July of that year, unidentified managers within the agency "requested its specialists to be on the lookout for tea party applications."
In August, specialists were warned to be on the lookout for "various local organizations in the tea party movement" applying for tax-exempt status.
In June 2011, a briefing paper noted that groups focused on government spending and debt, as well as organizations criticizing how the government was being run, were also singled out for extra inspection.
Officials at the Internal Revenue Service knew in June 2011 that their agents were targeting conservative groups for additional scrutiny on tax documents, the report indicates.
Lois Lerner, director of tax-exempt organizations for the IRS, publicly admitted Friday for the first time that agents used the keywords "tea party" and "patriot" to flag applications for further review, but she stressed that was done as a "shortcut" for picking the applications to review, not out of "political bias."
The IRS commissioner at the time said at a March 2012 congressional hearing that his agency did not target conservative groups for political reasons.
"I can give you assurances. We pride ourselves in being a nonpolitical, nonpartisan organization," said Commissioner Douglas Shulman, who was appointed by President George W. Bush. "There is absolutely no targeting. This is the kind of back and forth that happens when people apply for 501(c)(4) status."
A congressional source familiar with the inquiry understood that Lerner knew of the targeting in 2011 but sent letters to Congress earlier this year without disclosing the extent of her knowledge.
Lerner said in a Friday conference call that she "did not feel comfortable answering" as to when senior IRS officials became aware of the situation.
She also said she could not give a time frame for when the IRS began looking into complaints.
She said the IRS has implemented changes to prevent similar mistakes in the future but could not say that any IRS employees had been disciplined.
The IRS said Sunday that the timeline in the inspector general's report was accurate, but that it "does not contradict" Shulman's March testimony.
"While Exempt Organizations officials knew of the situation earlier, the timeline reflects that IRS senior leadership did not have this level of detail," the statement from the IRS read. "The timeline supports what the IRS acknowledged on Friday that mistakes were made. There were not partisan reasons behind this."