(Bloomberg) An Internal Revenue Service official apologized for what she called the tax agency’s improper flagging of some anti-tax Tea Party groups for extra scrutiny.

Lois Lerner, the IRS’s director of exempt organizations, said career employees singled out groups for further examination based solely on their names, not the information they gave when requesting tax-exempt status.

“They didn’t do it correctly,” Lerner said today at a conference of tax lawyers in Washington. “We would like to apologize for that.”

By being categorized as nonprofit groups under Section 501(c)(4) of the tax code, organizations don’t have to disclose their donors even when engaging in political activity. Spending by groups that don’t identify their contributors has increased since the U.S. Supreme Court, in its 2010 Citizens United decision, removed limits on independent spending by corporations and labor unions.

Nonprofit groups spent $1 billion in 2012 on campaigns, with more than two-thirds benefiting Republican candidates, according to the Center for Responsive Politics, a Washington-based research group that tracks campaign spending. That was triple the $300 million they spent in 2008.

House Republicans immediately pressed the IRS for more information. House Ways and Means oversight subcommittee chairman Charles Boustany Jr. of Louisiana asked for the names of the IRS officials who singled out the Tea Party groups and said he wants all communications involving the words “Tea Party,” “patriot” or “conservative.”

Sought Investigation
House Oversight and Government Reform Chairman Darrell Issa of California, who already had sought an inspector general investigation into the IRS questionnaires, said today the committee will “aggressively follow up” on the report.

“The fact that Americans were targeted by the IRS because of their political beliefs is unconscionable,” Issa and Representative Jim Jordan of Ohio, chairman of the regulatory affairs subcommittee, said in a statement.

Senate Republican leader Mitch McConnell of Kentucky today called on President Barack Obama to “conduct a transparent, government-wide review aimed at assuring the American people that these thuggish practices are not underway at the IRS or elsewhere in the administration against anyone, regardless of their political views.”

A national anti-tax Tea Party group today rejected Lerner’s apology.

‘Outrageous Abuse’
“The IRS has demonstrated the most disturbing, illegal and outrageous abuse of government power,” Jenny Beth Martin, national coordinator for the Tea Party Patriots, said in an e- mailed statement. “This deliberate targeting and harassment of Tea Party groups reaches a new low in illegal activity and overreach.”

The IRS is under pressure from Senate Democrats and watchdog groups to crack down on spending by such nonprofit groups. Senator Carl Levin, a Michigan Democrat, said in an interview last month that he would hold hearings on why nonprofit groups are being allowed to spend their money on elections.

Republicans have pressured the IRS to leave these organizations alone. In March 2012, a group of Senate Republicans expressed concern that the IRS had singled out some Tea Party organizations seeking nonprofit status. IRS Commissioner Douglas Shulman told a House subcommittee that month that the agency wasn’t “targeting” particular groups.

300 Organizations
The Tea Party organizations were among about 300 organizations seeking nonprofit status that received a higher level of attention by IRS employees, according to the IRS.

“While I’m glad to see the IRS apologize for unfairly targeting conservative groups, this frankly isn’t enough,” said Senator Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. “We need to have ironclad guarantees from the IRS that it will adopt significant protocols to ensure this kind of harassment of groups that have a constitutional right to express their own views never happens again.”

The watchdog group Citizens for Responsibility and Ethics in Washington is suing the IRS and petitioning the agency to ban nonprofit organizations from political spending because it says the law requires such groups to be “operated exclusively” for social welfare activities.

In addition, Representative Chris Van Hollen, a Maryland Democrat, has sued the Federal Election Commission to require nonprofit groups to disclose the donors of money they spend on political campaigns.

Sensitivity Level
Lerner said political spending by nonprofits “can’t be their primary activity” and the agency has a responsibility to review applications. In this case, though, about 75 of the 300 organizations singled out for scrutiny by career employees were added to the list solely because of their names, such as “Tea Party,” not the information they provided.

“They didn’t do this because there was any political bias going on,” Lerner said. “They didn’t have the appropriate level of sensitivity.”

Lerner said the groups were asked inappropriate questions, including to identify their contributors. She said new IRS questionnaires were sent to some groups, while others didn’t need to supply new information.

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