Justice inspecting tax targeting of tea party

WASHINGTON (AP) -- The Justice Department is opening a criminal investigation of the federal tax collection agency just as another probe concludes that lax management enabled agents to improperly target conservative groups for extra scrutiny when they applied for tax exempt status. Attorney General Eric Holder said he ordered the FBI to investigate last Friday -- the day the Internal Revenue Service 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." Three 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 would take the matter to another level if investigators are able to prove that laws were broken. Ineffective management at the IRS allowed agents to improperly target tea party groups for more than 18 months, said a report released Tuesday by the Treasury inspector general for tax administration. The report lays much of the blame on IRS supervisors in Washington who oversaw a group of specialists in a regional office who screened applications for tax exempt status. It does not indicate that Washington initiated the targeting of conservative groups. But it does say a top supervisor in Washington did not adequately supervise agents in the field even after she learned the agents were acting improperly. "The report's findings are intolerable and inexcusable," President Barack Obama said in a statement. "The federal government must conduct itself in a way that's worthy of the public's trust, and that's especially true for the IRS. The IRS must apply the law in a fair and impartial way, and its employees must act with utmost integrity. This report shows that some of its employees failed that test." The agency started targeting groups with "Tea Party," "Patriots" or "9/12 Project" in their applications for tax exempt status in March 2010, the inspector general's report said. By August 2010, it was part of the written criteria used to flag groups for additional scrutiny. Tea party groups emerged after Obama took office in 2009 and take their name from the Boston Tea Party, a 1773 protest by American colonists against taxation without representation in the British government. The conservative groups generally advocate limited government. Lois Lerner, who heads the IRS division that oversees tax exempt organizations, had been briefed on the matter in June 2011. She ordered the initial tea party criteria to be scrapped, but it later evolved to include groups that promoted the Constitution and the Bill of Rights. The practice was ended in May 2012, 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 additional screening resulted in long delays as IRS agents asked intrusive, sometimes inappropriate questions, or merely let applications languish, the report said. Inappropriate questions included requests for lists of donors and the political affiliation of officers. The IRS last Friday apologized for singling out tea party and other conservative groups. Published: Thu, May 16, 2013