IRS no longer targeting groups, fed watchdog says

The government watchdog investigating the IRS said the agency has made “significant” progress in cleaning up the problems that led to improper scrutiny of Tea Party groups.

Treasury’s inspector general for tax administration said the IRS is no longer asking inappropriate questions of groups seeking a tax exemption, and is moving much more quickly to approve groups seeking 501(c)(4) status.

{mosads}The Treasury inspector general first detailed the IRS’s singling out of Tea Party groups in May 2013, through the agency’s use of so-called Be on the Lookout Lists, or BOLOs.

Lois Lerner, the former agency official at the center of the controversy, apologized for the IRS’s actions that May, setting off congressional and Justice Department investigations that remain largely unfinished almost two years later.

John Koskinen, the IRS commissioner, has said for months that the agency had worked to implement the inspector general’s recommendations. On Thursday, the agency said it appreciated the watchdog’s “acknowledgement of the significant actions we took.”

The report comes just days after congressional committees said that the Treasury inspector general had found thousands of emails either to or from Lerner that will likely be new to investigators. 

Congressional investigators say they’ve been held up by a two-plus year gap in Lerner’s email history, which the IRS said was caused by a 2011 computer crash.

The inspector general’s original report found that the IRS had isolated 298 groups for special scrutiny, with many facing years of delay. Of those groups, 72 had Tea Party in their title, 13 used “patriot” and 11 had “9/12.”

As congressional Democrats have noted, some liberal groups also faced extra scrutiny. But Russell George, the tax administration inspector general, found that all the organizations that labeled themselves in the Tea Party were far more likely to get singled out than those with “progressive” in their name.

George, a former GOP aide on Capitol Hill nominated to his position by former President George W. Bush, came under criticism from Democrats for those findings.

In its newest report, the inspector general said the IRS no longer uses the BOLO lists, and had cut down on unnecessary information requests from tax-exempt applicants. On top of that, the agency had made a decision on all but 11 of the 160 applications that the inspector general had found were facing lengthy delays in December 2012.

Still, the inspector general also said that applicants faced largely subjective tests from the IRS over whether they deserved tax-exempt status. 

That’s in large part because the Obama administration pulled back on draft regulations seeking to impose a clearer definition on how much political activity 501(c)(4) groups can conduct. Currently, IRS rules say those groups should make promoting social welfare their primary goal. Groups on both the left and the right criticized the previous Obama administration rules as too broad. 

House Ways and Means Committee Chairman Paul Ryan (R-Wis.) said the report “shows that only effective oversight can prevent abusive behavior like we saw in the IRS targeting scandal.”

“We would not have known about this scandal without the work our committees have done,” Ryan added. “But our investigation is ongoing, and we still have a lot of work to do to hold the IRS accountable.”

This story was updated at 8:45 p.m.