WASHINGTON — Ineffective management at the Internal Revenue Service allowed agents to improperly target tea party groups for extra scrutiny when they applied for tax exempt status, an internal Treasury Department report said Tuesday.
Lax managers allowed the practice to go on for more than 18 months, said the report from the Treasury inspector general for tax administration.
The IRS on Friday apologized for targeting tea party and other conservative groups. The report said that when asked by investigators, IRS supervisors said the criteria they used to decide which groups they examined were not influenced by people or organizations outside the IRS.
The agency started targeting groups with "Tea Party," ''Patriots" or "9/12 Project" in their applications in March 2010. The criteria later evolved to include groups that promoted the Constitution and the Bill of Rights. The practice ended in May 2012, according to a timeline in the report.
In some cases, the IRS acknowledged, agents inappropriately asked for lists of donors. The agency blamed low-level employees in a Cincinnati, Ohio, office, saying no high-level officials were aware.
An IRS unit in Cincinnati that decided whether groups qualified for tax-exempt status developed their inappropriate standards partly because their managers provided insufficient oversight, the report said.
IRS agents were trying to determine whether the political activities of such groups disqualified them for tax-exempt status. These groups were claiming tax-exempt status as organizations promoting social welfare. Unlike other charitable groups, they can engage in political activity. But politics cannot be their primary mission.
It is up to the IRS to make the determination.
But by using improper criteria, the IRS targeted some groups, even though there were no indications that they engaged in significant political activities, the report said. Other non-tea party groups that had significant political activities were not screened, the report said.
"The criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission," the report said.
The report comes on the same day that Attorney General Eric Holder announced a Justice Department investigation to determine whether IRS officials broke any laws.
He said he ordered the FBI to investigate Friday — the day the IRS publicly acknowledged that it had singled out conservative groups.
"Those (actions) were, I think, as everyone can agree, if not criminal, they were certainly outrageous and unacceptable," Holder said. "But we are examining the facts to see if there were criminal violations."
Numerous congressional committees already are investigating the IRS for singling out tea party and other conservative groups during the 2010 congressional elections and the 2012 presidential election. But Holder's announcement takes the matter to another level, if investigators are able to prove that laws were broken.
Holder said he wasn't sure which laws may have been broken.
In an opinion piece in Tuesday's editions of USA Today, acting IRS Commissioner Steven Miller conceded that the agency demonstrated "a lack of sensitivity to the implications of some of the decisions that were made." He said screening of advocacy groups is "factually complex, and it's challenging to separate out political issues from those involving education or social welfare."
Miller said the agency has implemented new procedures that will "ensure the mistakes won't be repeated."
On Monday, the IRS said Miller was first informed on May, 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra scrutiny.
At least twice after the briefing, Miller wrote letters to members of Congress to explain the process of reviewing applications for tax-exempt status without disclosing that tea party groups had been targeted. On July 25, 2012, Miller testified before the House Ways and Means oversight subcommittee but again did not mention the additional scrutiny — despite being asked about it.
Miller's op-ed did not address why he did not inform Congress after he was briefed.
Miller was a deputy commissioner at the time. He became acting commissioner in November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush.