Washington (CNN) - Officials at the Internal Revenue Service knew in June 2011 that their agents were targeting conservative groups for additional scrutiny on tax documents, an inspector general report to be released this week is expected to say, according to a congressional source familiar with the inquiry.
Further, an early timeline of events compiled by the inspector general and obtained by CNN indicates the agency's practice of singling out conservative groups began as early as March 2010, and in July of that year, unidentified managers within the agency "requested its specialists to be on the lookout for tea party applications." In August, specialists were warned to be on the lookout for "various local organizations in the tea party movement" applying for tax-exempt status. The specific criteria would change several times over the next two years, according to a portion of the report.
Following tea party complaints, IRS admits 'mistakes'
More: Palin blasts IRS 'corruption'
An IRS official on Friday admitted the agency made "mistakes" in the last few years with tax-exempt status applications and specifically those submitted by groups with the words "tea party" or "patriot" in their names. Multiple conservative groups have said their applications were delayed and returned with lengthy requests for supporting materials, sometimes including website printouts and lists of guest speakers.
The Treasury Department inspector general for tax administration launched an audit of the agency's practices, and spokesman David Barnes said the report is being finalized and is expected to be released this week.
Barnes said the review was requested by Rep. Darrell Issa, chairman of the House Committee on Oversight and Government Reform, and focused on programs and operations. An audit is separate from an investigation, which would assess wrongdoing such as violation of law or policies.
President Barack Obama's spokesman Jay Carney said Saturday that Obama believes the government should be staffed with "the very best public servants with the highest levels of integrity" and that "based on recent media reports, (the president) is concerned that the conduct of a small number of Internal Revenue Service employees may have fallen short of that standard."
"If the Inspector General finds that there were any rules broken or that conduct of government officials did not meet the standards required of them, the president expects that swift and appropriate steps will be taken to address any misconduct," he said in a statement.
Lois Lerner, director of tax-exempt organizations for the IRS, publicly admitted on Friday for the first time that agents used the keywords "tea party" and "patriot" to flag applications for further review, but she stressed that was done as a "shortcut" for picking the applications to review, not out of "political bias."
The IRS commissioner at the time said at a March 2012 congressional hearing that his agency did not target conservative groups for political reasons.
"I can give you assurances. We pride ourselves in being a nonpolitical, nonpartisan organization," Commissioner Douglas Shulman said. "There is absolutely no targeting. This is the kind of back and forth that happens when people apply for 501(c)(4) status."
The congressional source familiar with the inquiry understood that Lerner knew of the targeting in 2011 but sent letters to Congress earlier this year without disclosing the extent of her knowledge.
Lerner said on the Friday conference call that she "did not feel comfortable answering" as to when senior IRS officials became aware of the situation. She also said she could not give a time frame for when the IRS began looking into complaints.
She said the IRS has implemented changes to prevent similar mistakes in the future but could not say that any IRS employees had been disciplined.
The IRS said Sunday that the timeline in the inspector general's report was accurate, but that it "does not contradict" Shulman's March 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 statement from the IRS read. "The timeline supports what the IRS acknowledged on Friday that mistakes were made. There were not partisan reasons behind this."
The applications in question were processed by an office in Cincinnati that handles most applications for 501(c)(4) status and had seen the number of applications rise sharply between 2010 and 2012, Lerner said.
Some 75 conservative groups, flagged by agents because of their names, were among 300 groups singled out for this additional scrutiny, she said. The agency received more than 3,400 applications for 501(c)(4) status in 2012.
"They did pick the cases by names and that's absolutely inappropriate and not the way we should do things," she said, though stressing it was done as a "shortcut," not out of political bias.
Officials with some groups subjected to the scrutiny said they would have had to supply thousands of documents, stacked inches thick, to comply with the requests. Some chose not to, saying the agency was attempting to bury them in paperwork.
Tax-exempt groups are allowed to advocate for causes so long as their primary activities are dedicated to "social welfare," according to IRS rules. When an advocacy case is filed for further review, the IRS tries to determine if the group plans on sticking by that calculus.
IRS scrutiny of conservative applications appears to have begun well before the groups had any idea they were in the spotlight.
The timeline prepared by the inspector general and obtained by CNN redacts events before March 2010 as well as several between then and July 15, 2012, when the timeline concludes. But between the omitted content is a series of events showing what was happening inside the agency.
Initially, unidentified managers from the Determinations Unit of the IRS searched for "applications involving political sounding names (such as ) 'We the People' or 'Take Back the Country.'" In mid-March 2010, the agency identified 10 tea party-related cases, and by April 5, there was a list of 18, though "three had already been approved as tax exempt," the report read.
In late April and May, specialists from the Technical Unit were involved, and on June 7, the "Determinations Unit began training its specialists on emerging issues to watch for, including an emerging issue referred to as Tea Party Cases."
That summer, an e-mail and a "be on the lookout" note were sent to employees that included a "coordinator contact for the cases."
Over the next year, some responsibilities shifted and new staff joined the effort.
The timeline suggests the first hesitation within the agency regarding the process came in June 2011, when "the acting director, Rulings and Agreements, commented that the criteria being used to identify tea party cases may have resulted in over-inclusion." But part of that entry, as well as the preceding one, are redacted from the timeline.
Later that month the director of exempt organizations was briefed on the efforts, and the criteria for evaluating applications were adjusted, one of several times the criteria would be tweaked. A guide sheet for handling applications was developed, and in September, "A Technical Unit specialist reviewed the list (of applications) to determine if any cases could be closed on merit or closed with an adverse determination letter," meaning the application would be accepted or denied.
The timeline continues to show incremental changes to the criteria, additional reviews and the involvement of counsel after the entry labeled "February-March 2012."
"Numerous news articles began to be published with complaints from tea party organizations about the IRS's unfair treatment," it read. "Congress also began to show interest in the IRS's treatment of Tea Party organizations."
Congress asks questions
By March of 2012, Congress was asking questions of the IRS. That month, Shulman denied the agency targeted groups for political reasons at the congressional hearing.
There was also an exchange of letters involving Capitol Hill, Shulman and Lerner.
"News reports ... indicate that the IRS effort lacks balance, with conservative organizations being the target of the IRS's scrutiny," Issa wrote to Lerner in a March 27, 2012, letter obtained by CNN. He noted a Capitol Hill news outlet had "contacted several liberal groups ... (and) none had received the recently-sent questionnaire."
Lerner responded that the IRS sets aside "applications that require further development by an agent in order to determine whether the application meets the requirements for tax-exempt status.
"... The revenue agent uses sound reasoning based on tax law training and his or her experience to review the application and identify the additional information needed to make a proper determination of the organization's exempt status," she wrote deeper in the eight-page response.
She did not disclose in that letter that the IRS targeted conservative groups, even if for nonpolitical reasons.
Separately, a dozen U.S. senators, led by Sen. Orrin Hatch, R-Utah, and Sen. Rob Portman, R-Ohio, sent Shulman a letter asking for more information about this situation.
Shulman's six-year term ended in November and the agency is currently led by interim commissioner Steven Miller.
CNN's Athena Jones and Ashley Killough contributed to this report.
Will Obama be impeached over this or any other scandal. In no way shape or fashion. The first African-American president? Were he standing over a murdered person with a smoking gun and videotape to prove his guilt he wouldn't be impeached. And everybody on the left would be checking on the person's party. Not gonna happen.
However, these scandals will have some sticking power. 2014 and 2016. Dems in the few swing districts (Romney won, but Dem won seat) will not want to defend IRS, Benghazi, Imam condemning Seal Team 6 bodies and Obamacare. They will run away, away, way to save their seats.
2016? If you are Joe Biden or some other Dem hopeful who stands in your way? Hillary. The more she is damaged the better your chances.
Has anyone thought to ask the question whether these IRS employees did this on their own or were taking orders from above – such as the White House with Obama's approval?
This administration deflects any bad press, it will not own up to any wrong doing. He blames bush for anything bad and takes credit for anything good.
So funny all these posts trying to tie the President too this. Tell me was he also responsible for Viet Nam? Only in America is stupidity embraced go gallantly.
Has anyone thought to ask the question whether these IRS employees were taking orders from their superiors and whether the White House/Obama had anything to do with this?
The terms "Tea Party" and "conservatives" were just used as "short cuts?" Fine, then can the Obama Administration show where such "short cuts" were used to label, any of the other 300 investigated groups, as "liberal," "leftist" "socialist,' or "democrats?" Of course not! Special prosecutor needed. Heads should roll.
The Tea Party openly states that it is against paying taxes. If the IRS did nor investigate the activity of the Tea Party it would not be doing its JOB. If a group is against taxes it is only common sense to go over each account with a fine tooth comb. Whiny complaints!
So dems are as evil as reps when it comes to petty-ness. Go after anything that might threaten them. The parties in general are so corrupt it's not funny. I mean all parties, not just the two biggies. I'd rather see a "party-less" system where brains and integrity are measured and who you know means nothing.
Gee, I can't POSSIBLY imagine why the IRS would want to pay special attention to people who rail against paying taxes and then formi well-funded, tax-exempt groups.
Partisan behavior [which benefits either political party] is unacceptable in all government agencies.
The IRS wasn't targeting conservatives specifically, they were targeting "tea-party" style non-profits that sprung up like weeds after the '08 election; and rightfully so. This is IRS auditing, they are making sure people are paying their taxes and not stealing from taxpayers.
Not to mention the guy in charge was a Bush appointee; and that profiling is something the GOP embraces with open arms when it comes to crime and immigration.
This stinks of Issa and The Hill trying to rile up their constituents to play the victim card for them as per the ages old 'gubbamint is bad' party policy of the Right.
You mean the IRS targeted a group who's entire reason for existence is because they don't want to pay taxes? Huh, that's odd.
"They did pick the cases by names and that's absolutely inappropriate and not the way we should do things," she said, though stressing it was done as a "shortcut," not out of "political bias." .... Are you kidding me??? This is supposed to be a good excuse??? That's the same thing as a cop saying that he keeps everything on the up and up and strictly as a "shortcut" picks who he is going to issue a citation to based on what race or ethnicity the name of the driver sounds like. Michael O'Brien gets a pass but Tyrone Rodriguez-Hernandez Al-Chang gets three!!!!
So the liberals messiah apparently had an enemies list. When will this fraud be impeached? Solyndra , Fast and Furious, Benghazi coverup, IRS targeting his political enemies the list goes on and on and on.... !
Start the impeachment hearing NOW !!!
The was IRS paying extra scrutiny to organizations who are against paying taxes.
Sounds like they were doing their job.
Gee, this sounds like when people inn the previous administration were choosing people for positions based on their religious beliefs......but I guess that was OK.
What's the problem? The Tea Party exists to not pay taxes. On top of that, they have gone out of their way to make powerful enemies in the Government. I don't feel sorry for them, and I wouldn't apologize. If I were President, I'd give the IRS director a certificate of appreciation on behalf of the entire service JUST BECAUSE they singled out the Tea Party. But that's me.
Let's make the assumption that Tea Party organizations are stupid, racist, etc. Evil, ignorant or stupid. Regardless of what one thinks of their beliefs, they still have a right, in this country, to be incorrect.
Why must we be on watch against tyranny? NOT BECAUSE OF OBAMA. I don't believe him to be a tyrant. However, if you are independent and reading some of the posts you should know some of the people posting here ARE the reason we should always be on watch against tyranny.
Think about it. They are okay with government abuse (why else would the IRS apologize if it wasn't abuse). Ask yourselves, what far would some of the people who cheer on abuse of Tea Party groups go if they felt it advanced their agenda? It is never a problem...as long you don't dissent.
Wasn't it Hillary Clinton who said that "she was sick and tired of people who say that if you debate and you disagree with this administration somehow you're not patriotic. Wonder if she was a Tea Party member.
This happens from time to time, quit complaining and whiny. I have been audited from time to time! miki thinks is right! You bought part of this upon yourself!
After seeing some lefties are saying "Good, go after them." they're only proving their opponents point that they are dictirorial in nature. True leftists always have and always will crave a dictator because they're soooo convinced they're right and justified that their opponents should be extinguished by any means necessary. After all, since they're so unquestionably correct, silencing the opposition is all for the common good so there's nothing wrong with it anyway.
Is there one Tea Party resource anyone can point to that says Tea Party groups are against paying taxes? Saying the tax burden is too high is not the same as saying there should be no taxes.
I don't think anyone should qualify for 501(c)(4) status. These organizations all use resources, police, fire , government, that the rest of us pay taxes for. I'll guarantee you that a lot of criminals are trying to get tax exempt status, and the "Tea Party" and "Patriot" monikers aren't the only keywords the IRS is looking for, and SHOULD be looking for.
"heads should roll". "throw the bums off the fiscal cliff".
this is scary stuff... because the IRS is comprised of lazy, short-cutting, immoral people like the rest of this country we should behead people and desecrate their remains?
language is powerful, I wish people would think before they speak.
This administration along with Obama is probably one of the most corrupt administration since Nixon was in power. The difference is that Nxon got booted out of office....nothing will be done about Obama ...for the next 4 years we can expect more dishonesty and corruption than we can even imagine.