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4 Takeaways from the IRS Inspector General's Report

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The IRS is about to become Washington’s favorite political target as hearings get under way about its targeting of conservative non-profit groups.

With the White House and lawmakers expressing outrage, a key report from the agency’s inspector general paints an unflattering view of the goings-on within the IRS. The report’s title gives some indication: “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review.” Today Attorney General Eric Holder testifies before the House Judiciary Committee, where he’s expected to receive questions about what he knew about the malfeasance.

After going through the report, we identified the four most politically significant details from the Treasury Inspector General for Tax Administration’s report.

1. Officials knew the IRS was targeting conservatives for nearly two years.

IRS officials found out that tea party groups were being targeted by agency staffers in 2011, months before the commissioner testified before Congress. In August 2010, the IRS unit in Cincinnati set up what it called a “Be on the Look Out” listing known as a “BOLO,” which singled out political groups applying for tax-exempt status using the words “tea party,” “Patriots” and “9/12 Project” as criteria.

“The criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission,” the report states.

In June 2011, Lois Lerner who led the tax-exempt group unit at the IRS, learned about the targeting and called for a review. The targeting criteria were changed twice more. In March 2012, then-Commissioner Douglas Shulman told a House committee that no targeting had gone on. The report does not mention officials by name and does not implicate the commissioner or suggest anyone in the White House knew about the targeting practice.

2. Over time, the IRS expanded its criteria to target additional groups.

The report rebukes the IRS, saying that the agency allowed “inappropriate criteria” to be used for over 18 months as employees questioned the tax-exempt-status applications of groups with tea party ties. The criteria changed at least three times, according to the report. The agency’s first targets included groups with “tea party,” in its name but that changed in July 2011 after Lerner’s review, then again in January 2012, when the criteria were broadened to “political type organizations involved in limiting/expanding government.” In May 2012, the targets were broadened to include “organizations with indicators of significant amounts of political campaign intervention.”

3. The IRS harassed tea party groups by asking unnecessary questions.

The targeting went further than profiling. After the 501 (c)(4) groups were singled out, the IRS asked the applicants for names of donors, the amount of donations, and for details about how those donations were used. The report concludes that 58 percent of the 170 applicants received requests for information that was later deemed unnecessary. The IRS also delayed processing more than half of the 296 applications for tax-exempt status for a range of 206 days to 1,138 days. “More than 20 months after the initial case was identified, processing the cases began in earnest” the report states. Meanwhile tea party groups are threatening to sue the IRS over the targeting, arguing that they were harmed by the delays and heightening an already fraught political situation.

4. The inspector general’s recommendations don’t include firing or reprimanding IRS employees.

The report makes nine recommendations, including training employees “before each election cycle,” but does not recommend dismissals or reprimands. This alone could prove political fodder given the wide scope of the scandal. With such sweeping mistakes, administration critics are demanding to know who will be fired for the malfeasance.

Michael Catalini

Michael Catalini is a staff correspondent covering the U.S. Senate at National Journal Daily. Previously at National Journal, he reported on national politics and was deputy editor of Influence Alley, covering Congress and K Street. Before joining National Journal he oversaw coverage of the Baltimore Ravens at The Baltimore Sun. While at The Sun, he also pioneered the use of live-streaming video, organized and edited online content and wrote breaking and feature news. He graduated from Penn State with a bachelor's degree in journalism and has a master's degree in government from Johns Hopkins.

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