IRS angers Obama, and Republicans

WASHINGTON - Political Washington reacted with bipartisan outrage Monday to reports that the Internal Revenue Service targeted conservative organizations applying for special tax-exempt status — though questions have been raised about politics and tax status since at least 2006.

President Obama said it was "outrageous" if true that the IRS gave extra scrutiny to right-leaning groups applying for tax-exempt status. "They have to be held fully accountable, because the IRS as an independent agency requires absolute integrity, and people have to have confidence that they're applying the laws in a nonpartisan way," he said at the White House.

"We need to get to the bottom of what happened here. I want to see all the facts," said Sen. Max Baucus, D-Mont., chairman of the Finance Committee. "The American people have questions for the IRS, and I intend to get answers."

The top Republican on the panel concurred. "Bipartisanship on this issue is critical since both Democrats and Republicans have expressed considerable interest in these matters over the past couple of years," said Sen. Orrin Hatch of Utah.

While the political leaders of the government reacted to the news, insiders noted that there had been complaints about IRS treatment of groups engaging in political activity since at least 2006. Then, it was scrutiny of liberal-leaning churches during the Bush administration. Now, it's the treatment of right-leaning groups during the Obama administration.

"There are Tea Party groups that went out of business because of these [IRS] letters," Tom Zawistowski, the executive director of the Tea Party in Portage County, Ohio, and president of the We the People Convention, told McClatchy. "How do you give [Tea Party and conservative] groups time and effort they put in back? I see a class-action suit."

At issue is a Cincinnati office of the IRS that determines whether applications for tax-exempt status are legitimate.

The timeline comes from an unreleased report from the Treasury Department's inspector general for tax administration, which is due out this week. That office began looking into a "campaign of intimidation" alleged in a June 28, 2012, letter and request for investigation from Rep. Darrell Issa, R-Calif., chairman of the House Committee on Oversight and Government Reform.

The inspector general, J. Russell George, responded July 11, pledging to look into Issa's concern, specifically "questionnaires that the IRS has issued which may exceed appropriate scrutiny and a potential lack of balance in the use of criteria for reviewing organizations that are applying for tax-exempt status."

Lois Lerner, who heads the IRS division overseeing tax-exempt groups, acknowledged Friday that organizations were singled out because of their names in their applications for tax-exempt status.

The controversy underscores the less than clear line in the tax code distinguishing between groups that are political in nature vs. those that broadly promote social welfare. The Senate Permanent Subcommittee on Investigations has for months been looking into IRS regulation of nonprofits engaged in politics. After Friday's announcement that the IRS had singled out some groups, Chairman Carl Levin, D-Mich., and ranking Republican Sen. John McCain of Arizona, said in a joint statement that the subcommittee should investigate that additional issue.

It was also revealed Monday that acting IRS Commissioner Steven T. Miller repeatedly failed to tell Congress that Tea Party groups were being inappropriately targeted, even after he had been briefed on the matter.

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 revealing that Tea Party groups had been targeted. Last July, Miller testified before a House subcommittee but again was not forthcoming on the issue — despite being asked about it.

The Associated Press contributed to this report.