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IRS chief reveals additional targeting of groups

Internal Revenue Service Principal Deputy Commissioner Danny Werfel said Monday that the IRS had continued to use other “inappropriate” or “questionable” criteria in their targeting of applicants for tax-exempt status, even after its already-admitted scrutiny of self-described Tea Party, Patriot and 9/12 groups, as disclosed in a Treasury inspector general’s audit last month. 

That disclosure prompted congressional hearings and multiple investigations into the controversy by Congress, the Justice Department and the IRS itself.

At issue is the use of so-called “be-on-the-lookout,” or BOLO lists in the application process for tax-exempt status, the use of which Werfel said has now been suspended.

Werfel's report said, "Documents produced by the IRS during our 30‐day review (and provided to Congress in response to their requests) revealed the use of political and other inappropriate labels in BOLO lists used by the EO (tax-exempt organizations) unit, beyond those inappropriate labels" that were identified in the inspector general's report.

A congressional aide told NBC News Monday that the BOLO directives used by the IRS in screening tax-exempt applications have been sent to congressional committees. The BOLO list includes the term "progressives" which was used as an identifier in categorizing groups' applications for tax-exempt status.

“When I got to the IRS, we started a more comprehensive review of the operations of this part of the IRS,” Werfel, who arrived at the agency in May, told reporters.  “And we did determine and discover that there are other BOLO lists in place.  And, upon discovering that, we also found that we believe there continued to be inappropriate or questionable criteria on these BOLO lists.”

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Werfel did not disclose the nature of what kinds of applications those lists covered but his comments are likely to add fuel to the furor over the IRS scrutiny of political groups. 

The House Ways and Means Committee will hear testimony from Werfel on Thursday.

House Ways and Means Committee Chairman Rep. Dave Camp, R- Mich., said, "Though the IRS report details some immediate first steps that have been taken to correct management flaws at the agency, the IRS still needs to provide clear answers to the most significant questions -- who started this practice, why was it allowed to continue for so long, and how widespread was it? This culture of political discrimination and intimidation goes far beyond basic management failure and personnel changes alone won't fix a broken IRS.".

Werfel said an initial internal IRS review found no evidence of intentional wrongdoing by IRS personnel or involvement by parties outside the IRS. However, Werfel’s report notes that investigations are still under way.

In addition to the internal IRS probe, congressional committees are investigating how and why the targeting took place and who ordered it.

In late May former IRS official Lois Lerner, who led the IRS tax-exempt unit, invoked her Fifth Amendment right against self-incrimination when she was called before the House Oversight and Government Reform Committee.

Werfel also announced Monday that he had set up a new process to help applicants gain fast-track approval to operate as a 501(c)(4) tax-exempt group. The new process would apply to groups whose applications for tax-exempt status have been in the IRS application backlog for more than 120 days. 

Werfel was appointed by President Barack Obama on May 16 after a report from the Treasury Inspector General for Tax Administration found that starting in 2010 the IRS had used “inappropriate criteria to identify applications from organizations with the words Tea Party in their names.”

Later, IRS officials “expanded the criteria to inappropriately include organizations with other specific names (Patriots and 9/12) or policy positions.”

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