IRS used ‘inappropriate criteria’ and had ‘ineffective management’

A criminal investigation is the next step, following a report by the Treasury Inspector General for Tax Administration saying the IRS used "inappropriate criteria" for investigating applications for tax exemptions.

A government oversight agency has determined that the Internal Revenue Service’s behavior was “inappropriate.”

The IRS was found to have applied extra scrutiny to conservative and Tea Party groups applying for 501(c)4 status.

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In a Tuesday report [PDF] called “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review,” the Treasury Inspector General for Tax Administration—which is in charge of oversight for the IRS—finds that “ineffective management … allowed inappropriate criteria to be developed and stay in place for more than 18 months,” according to report highlights [PDF]. Additionally, the offending policies “resulted in substantial delays in processing certain applications,” and “allowed unnecessary information requests to be issued.”

As a result, the Inspector General recommends that the IRS more fully document why certain applications are given additional scrutiny, and provide more training and internal oversight to employees conducting those reviews. The Inspector General reports that the IRS agreed to seven out of their nine recommendations.

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Also on Tuesday, Attorney General Eric Holder announced that the Justice Department would conduct a criminal investigation into the IRS’s practices regarding conservative and Tea Party groups.

You can read the highlights here [PDF] and the full report here [PDF].