WASHINGTON — A top Internal Revenue Service official knew as early as June 2011 that conservative groups seeking nonprofit status were being singled out for additional scrutiny, raising questions about when senior officials were informed and why the IRS allowed the agency's commissioner to deny the targeting effort in March 2012 testimony before Congress.
The IRS has said the commissioner was not aware of the targeting at the time, but it has not explained why the testimony was never corrected. Lois Lerner, who heads the IRS division that oversees tax-exempt organizations, told reporters Friday that the agency had targeted conservative groups, but she struggled with questions about when she learned of the effort.
A report from the Treasury Department's inspector general for tax administration, which is expected to be released this week, concluded Lerner had known about the effort, which she acknowledged Friday was "absolutely inappropriate," for almost two years.
Rep. Charles Boustany Jr. (R-La.), chairman of the House Ways and Means Committee's oversight subcommittee, said the report "raises serious questions as to who at IRS, Treasury and in the administration knew about this, why this practice was allowed to continue for as long as it did, and how widespread it was."
On June 29, 2011, Lerner was told at a meeting that groups with "tea party," "patriot" or "9/12 Project" in their names were being flagged for additional review of their applications for tax-exempt status, according to a section of the inspector general's draft report obtained by the Associated Press. The 9/12 Project was started by conservative TV personality Glenn Beck.
Lerner instructed agents to change the criteria for flagging groups "immediately," the report says.
It wasn't until Jan. 25, 2012, however, that the criteria for flagging which groups to review was changed, the report says.
Efforts to reach Lerner on Saturday were not successful.
Throughout this period, conservative groups complained they were being harassed by the IRS and asked to fill out lengthy, intrusive questionnaires that sought information about donors and about members' political activities.
Several committees in Congress sent letters to IRS Commissioner Douglas Shulman to express concern. At a congressional hearing on March 22, 2012, Shulman was adamant: "There's absolutely no targeting."
The IRS has not said when Shulman, who was appointed by President George W. Bush, found out tea party groups were targeted. Shulman's six-year term ended in November.
The IRS said in a statement Saturday that the agency believes the timeline in the report is correct.
"IRS senior leadership was not aware of this level of specific details at the time of the March 2012 hearing," the statement said. "The timeline does not contradict the commissioner's testimony. While exempt-organizations officials knew of the situation earlier, the timeline reflects that IRS senior leadership did not have this level of detail."
The IRS said lower-level staff at its Cincinnati office came up with the plan to flag keywords to deal with a surge in applications for nonprofit status in 2012, an outgrowth of Supreme Court decisions that allowed nonprofit social-welfare organizations, which do not have to disclose their donors, to participate directly in political activities. Those organizations, however, must have social welfare, not political activity, as their primary purpose. The IRS reviews sought to determine the primary purpose of the groups.
In all, about 300 organizations were set aside for additional review, Lerner told reporters on Friday. Of those, she said 75 were singled out because they had "tea party" or "patriot" somewhere in their applications.
Staff writers Lisa Mascaro and Richard Simon contributed to this report.