WASHINGTON — The IRS has taken “significant actions” to stop agents from targeting political groups based on their names and policy positions, according to a report issued Thursday by the government watchdog who disclosed the inappropriate activity two years ago.
The agency’s inspector general says the IRS is doing a better job of processing applications for tax-exempt status. His report said the IRS has eliminated intrusive, unnecessary questions, and has cleared a backlog of applications that had languished for months and years.
The IRS has improved training for agents, though the inspector general recommended even more training.
The report is a follow-up to the inspector general’s 2013 audit, which said agents had inappropriately singled out tea party and other conservative groups for extra scrutiny when they applied for tax-exempt status during the 2010 and 2012 elections.
The 2013 audit blamed poor management. It ignited a firestorm that led to numerous congressional investigations and the replacement of much of the agency’s top management.
Most of those investigations continue, including another one by the inspector general looking into thousands of lost IRS emails that could be related to the tea party controversy.
“The IRS has taken significant actions in response to the recommendations made in” the 2013 report, said J. Russell George, the Treasury inspector general for tax administration.
The 2013 audit found that agents were singling out groups with “tea party” or “patriot” in the name. They also singled out groups that talked about “limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement,” the audit said.
These terms appeared on “be on the lookout” lists that agents used when scrutinizing applications for tax-exempt status under section 501 (c) (4) of the federal tax code, which is for social welfare groups.
Some progressive and liberal groups also faced long delays in having their applications processed, and several progressive terms appeared on the “be on the lookout” lists. However, investigators have said it does not appear that progressive groups faced the same level of scrutiny as conservative ones.
George said the IRS no longer uses these lists.
The IRS issued a statement saying it appreciates the inspector general’s “acknowledgement of the significant actions we took” to address the recommendations in the 2013 audit.
The scandal erupted just as many of these so-called social welfare groups were playing a bigger role in electoral politics. Unlike other charitable groups, social welfare groups can participate in political activity, but it can’t be their primary mission.
It is up to the IRS to make the determination.
Donations to these groups are not tax deductible. But groups can keep the names of their donors private.
The Treasury Department is in the process of drafting new rules for these groups. Treasury’s first stab at new rules was criticized by both conservatives and liberals, generating a record 150,000 comments.
The department pulled the rules back last year and decided to try again. It is unclear when new rules will be unveiled.
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