(Bloomberg) President Barack Obama called it “outrageous” for the IRS to target groups promoting limited government for special attention, as a Democratic panel chairman became the latest to announce a congressional probe.

“If, in fact, IRS personnel engaged in the kind of practices that have been reported on, and were intentionally targeting conservative groups, then that’s outrageous, and there’s no place for it,” Obama said today at a news conference at the White House.

The president said he first learned of the IRS targeting through news reports May 10. On that day Lois Lerner, the IRS official in charge of overseeing tax-exempt groups, acknowledged that the agency had targeted for special review groups promoting limited government and issued an apology.

The extra IRS scrutiny was given to organizations seeking tax-exempt status if they had “tea party” or “patriot” in their name.

Calls for congressional probes of the matter followed. They intensified after disclosures over the weekend that a Treasury Department inspector general’s report found that IRS officials knew of the targeting of the groups as early as June 2011, nine months before the agency’s head told lawmakers it wasn’t occurring.

It’s ‘Intolerable’
Senate Finance Committee Chairman Max Baucus said today his panel would investigate. “Targeting groups based on their political views is not only inappropriate but it is intolerable,” the Montana Democrat said in a statement.

Senate Majority Leader Harry Reid, said the allegations, if true, “would be a terrible breach of the public’s trust.” He said he had “full confidence” Baucus’s panel would “get to the bottom of this matter and recommend appropriate action.”

Obama said the IRS must be “fully accountable” because “the IRS as an independent agency requires absolute integrity” so people can be confident it is “applying the laws in a nonpartisan way.”

“We’ll wait and see what exactly all the details and the facts are,” Obama said. “I will not tolerate it, and we will make sure that we find out exactly what happened on this.”

White House press secretary Jay Carney said the IRS alerted the White House counsel’s office about the situation during the week of April 22. Carney told reporters the administration “doesn’t have access to, nor should we” have the inspector general’s report.

Power ‘Abuse’
House Oversight and Government Reform Committee Chairman Darrell Issa has said his panel will hold hearings on the IRS’s actions, which he said represent a clear “abuse of power.”

“Making sure there are not just rules but checks—real safeguards to keep this from happening, at the low level, the medium level, or at the top is essential for the American people,” Issa, a California Republican, said today in an interview with Bloomberg Television.

He said there must be “swift action” and raised the possibility that “heads have to very appropriately roll.”

Representative Mike Turner, an Ohio Republican on Issa’s committee, today is set to introduce legislation criminalizing IRS discrimination against individuals or groups based on political speech or expression.

“Americans should not have to wonder if their government is actively looking to subvert them or their political views,” Turner said in a statement.

Expanded Inquiry
The Senate Permanent Subcommittee on Investigations is expanding its inquiry as to whether the IRS didn’t enforce the law on tax-exempt groups to include the extra scrutiny it gave to Tea Party-affiliated groups.

Committee Chairman Carl Levin, a Michigan Democrat, and Senator John McCain of Arizona, the panel’s top Republican, said in a joint statement today that the committee will delay a hearing tentatively planned for June so it can examine the targeting allegations.

Steven T. Miller, acting IRS commissioner since November, told lawmakers in July that the agency had grouped together advocacy organizations seeking nonprofit status “to ensure consistency, to ensure quality” without saying that some groups had been scrutinized for having words like “tea party” in their names.

According to a timeline from the inspector general’s report, Miller became involved in the issue as early as March 8, 2012. That was 19 days before his predecessor, Douglas Shulman, testified to Congress that the IRS hadn’t targeted groups based on ideology.

Insulating Itself
Shulman may not have known details about what happened in part because the IRS attempts to insulate itself from politics, said Floyd Williams, who retired in June 2012 after 16 years as the agency’s liaison to Congress.

Because the commissioner is one of just two presidential appointees at the IRS, the agency tries to limit any appearance of politics by keeping its leader out of day-to-day decisions on individual cases, Williams said. Shulman, now a guest scholar at the Brookings Institution in Washington, didn’t respond today to an e-mailed request for comment.

In a letter today to Treasury Secretary Jack Lew, Senator Marco Rubio urged Lew and Obama to demand Miller’s resignation.

“No government agency that has behaved in such a manner can possibly instill any faith and respect from the American public,” wrote Rubio, a Florida Republican.

Oversight Panel
The House Ways and Means Committee will hold a hearing on the issue. Representative Charles Boustany, a Louisiana Republican and chairman of the oversight subcommittee, sent a letter to Miller demanding by May 15 all agency communication containing the words “tea party” and “patriot” as well as the names “of all individuals involved in this discrimination.”

Anti-tax Tea Party groups, some of which include the word “patriot” in their names, formed after Obama took office in January 2009 and helped fuel gains by Republicans in the 2010 midterm election that gave the party control of the U.S. House.

In addition to groups with “tea party” and “patriot” in their names, other organizations selected for the additional IRS review included those in which “statements in the case file criticize how the country is being run,” according to a June 29, 2011, briefing given to Lerner, the timetable says.

‘Immediately Revised’
Lerner “raised concerns over the language,” and instructed the criteria “be immediately revised,” according to the timeline.

“The timeline supports what the IRS acknowledged on Friday that mistakes were made,” Michelle Eldridge, an IRS spokeswoman, said in an e-mailed statement yesterday. “There were not partisan reasons behind this.”

“IRS senior leadership was not aware of this level of specific details at the time of the March 2012 hearing,” Eldridge said.

The IRS has been under pressure to regulate political spending by nonprofit groups, in particular those falling under Section 501(c)(4) of the U.S. tax code. Organizations qualifying for that status don’t have to disclose donors even when engaging in political activity.

The timeline suggests a continuing discussion on defining an appropriate standard for review of such groups.

A Jan. 25, 2012, timeline entry described a standard that included “political action type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement.”

In May 2012, the standard shifted to “organizations with indicators of significant amounts of political campaign intervention (raising questions as to exempt purpose and/or excess private benefit).”

Nonprofit groups spent $1 billion on the 2012 campaign, 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 amount spent in the 2008 campaign.

—With assistance from Jonathan D. Salant, James Rowley and Andrew Zajac in Washington. Editors: Jodi Schneider, Laurie Asseo

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