(Bloomberg) An inspector general who disclosed the Internal Revenue Service’s extra scrutiny of Tea Party groups ignored the tax agency’s similar focus on groups backing Democrats, according to a report released today by Senate Democrats.

The IRS’s mismanagement of the groups’ applications for nonprofit status was compounded by the inspector general’s audit, which didn’t mention the IRS used terms such as “progressive” to select Democratic-leaning groups for scrutiny, the report said. The audit by the Treasury Inspector General for Tax Administration, released in May 2013, triggered outrage by Republicans and a change of leadership at the IRS.

“By excluding any analysis of how liberal groups were handled and failing to provide critical context for its findings, the TIGTA audit inaccurately and unfairly damaged public confidence in the impartiality of the IRS,” it said.

The report by the Democratic staff of the Senate Permanent Subcommittee on Investigations is the first complete look by a congressional panel at IRS treatment of politically involved groups seeking nonprofit status.

The committee’s Republican staff declined to join the report, saying the IRS treatment of Republican-aligned Tea Party groups was more intrusive and widespread than its handling of Democratic-leaning groups.

‘Scant Few’
“The inclusion of a scant few liberal groups by the IRS does not bear comparison to the targeting of conservative groups,” the Republicans wrote.

The subcommittee chairman is Carl Levin, a Michigan Democrat. The top Republican is John McCain, an Arizona Republican.

Days before the inspector general’s report, the IRS said it had given Tea Party groups extra scrutiny and apologized. The revelation led to a U.S. Justice Department criminal investigation.

Like other summaries of IRS activities, the report said IRS employees struggled to set criteria for determining which groups qualify for tax exemption under section 501(c)(4) of the tax code. The law says such groups must be “exclusively” organized to promote social welfare; IRS regulations said they can’t be primarily political.

In some e-mails, IRS employees lumped Tea Party groups and Democratic-aligned groups together.

‘Targeted’ Dropped
According to today’s report, the inspector general’s staff decided not to say the IRS “targeted” Tea Party groups for extra scrutiny after chief counsel Michael McCarthy suggested the word didn’t fairly describe the findings.

The report said there was evidence that IRS officials had tried to tell the inspector general’s office before the audit’s release that they had scrutinized groups from both sides.

Inspector General J. Russell George told investigators that he first learned of IRS guidance flagging Democratic-leaning groups for scrutiny a week after the audit was released. George said he asked senior staff members how terms such as “occupy” were used to designate Democratic-aligned groups for scrutiny and that they didn’t know.

Officials from the inspector general’s office “gave incomplete and inaccurate testimony” to Congress on this point, the report says.

In a letter to the Senate committee, inspector general George wrote that he found no evidence that the term “progressive” led to enhanced scrutiny during the time period he was examining.

Not Characterized
The inspector general “did not characterize any organizations as liberal or conservative,” he wrote. “Nor did we assess whether liberal groups were treated in a manner different than Tea Party groups.”

Republicans contend that their groups received more intrusive questions about their activities than other organizations seeking tax-exempt status. The committee said it doesn’t have a complete answer to that issue, partly because it didn’t have access to the groups’ identities.

Several other congressional committees are investigating, and details about IRS actions are still being uncovered. Yesterday, the watchdog group Judicial Watch released internal IRS e-mails obtained through a freedom-of-information lawsuit.

One message described a “secret research project” using donor information that the IRS had sought and later said it shouldn’t have requested, according to Judicial Watch.

The Republican response said further investigation is needed because some information hasn’t been released and e-mails from former IRS official Lois Lerner are still missing.

In a letter to lawmakers today, the IRS listed five employees beyond Lerner who were involved somehow in the issue and experienced a “probable loss” of e-mails. The IRS said it had found no evidence of intentional destruction.

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