Gregory Korte

USA TODAY

WASHINGTON — A Senate subcommittee has confirmed findings that the Internal Revenue Service used inappropriate criteria target Tea Party groups, but also found "no evidence of IRS political bias" in selecting those groups for added scrutiny.

"The lack of political bias doesn't mean, however, that the IRS acted properly," said Sen. Carl Levin, D-Mich, the chairman of the Senate Permanent Subcommittee on Investigations. His report found mismanagement and poor communication were responsible for "inappropriate, intrusive, and burdensome questioning of groups," but said conservative groups were not the only ones targeted.

In fact, liberal groups often "experienced the same mistreatment," according to the majority report by subcommittee Democrats. Republicans and Democrats on the subcommittee reached a split verdict, however. A dissenting report by Republicans noted that 83% of the groups being held up by the IRS were right-leaning.

The subcommittee's dueling reports, released Friday, are the first from four congressional committees investigating the affair, and comes nearly 16 months after the scandal first erupted. The Democratic-controlled subcommittee had already been investigating how the IRS enforces rules on political activity by so-called tax-exempt social welfare organizations — known as 501(c)(4) groups — when a Treasury watchdog's audit found that the IRS held up Tea Party groups.

The subcommittee's report was especially critical of that audit, which left out the results of an investigation that failed to find any political motivation for the targeting, Levin said. And even after Treasury inspectors learned that liberal groups were also targeted, they "failed to disclose the new information for weeks," he said.

Russell George, the Treasury Inspector General for Tax Administration, defended his audit in a statement Friday. "I firmly stand behind the audit report that we issued last year showing the inappropriate treatment of applicants for 501 (c)(4) status, for which the IRS apologized," he said.

He said the IRS treatment of tax-exempt advocacy groups was an "ongoing matter" and "facts are still coming to light."

Sen. John McCain of Arizona, the ranking Republican on the committee, said the affair "raises serious concern about the integrity of our nation's tax collectors."

"Our tax system should not — and cannot — be used as a weapon to target political opponents, as the IRS has clearly done, especially when that agency is, at times, tasked with administering laws that involve political free speech," McCain said in a statement.

McCain's 37-page dissenting report notes that a key figure in the alleged targeting, former IRS Exempt Organizations Director Lois Lerner, has refused to testify to Congress, and an undisclosed number of her e-mails may be missing from a hard drive crash in 2012.

In a letter to Congress Friday, the IRS gave a fuller accounting of those missing e-mails. Of 82 IRS employees whose e-mails were subpoenaed by Congress, 18 had some kind of technical problem during the time covered by the investigation. Of those, five appeared to have lost e-mails, including Lerner.



The IRS said it was able to recover 14,000 of those e-mails through other IRS employees who were copied on them.

That answer didn't satisfy the chairman of the House Oversight and Government Reform Committee. Rep. Darrell Issa, R-Calif., said the IRS is still giving "conflicting information" and called for a special prosecutor to investigate.

"The IRS's ever-changing story is practically impossible to follow at this point, as they modify it each time to accommodate new facts," he said. "This pattern must stop."

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