WASHINGTON — Management flaws at the IRS contributed to a "dysfunctional culture" that allowed agents to mistreat conservative political groups when they applied for tax-exempt status, according to the results of a bipartisan congressional investigation released Wednesday.
The report by the Senate Finance Committee lays much of the blame for the scandal on former IRS official Lois Lerner, who used to head the division that processes applications for tax-exempt status. The report says Lerner waited nearly two years before informing her supervisors about long delays in the processing of applications.
Amid the scandal, the IRS didn't perform any audits of groups that might have been engaging in improper political activity from 2010 through April 2014, the report said. This was at a time when many high-profile tax-exempt groups were spending large sums of money on political activities.
The report said managers were worried that selecting any of these groups for audits would give the impression that they were chosen because of their "political leanings."
"Our investigation found that from 2010 to 2013, IRS management was delinquent in its responsibility to provide effective control, guidance, and direction over the processing of applications for tax-exempt status filed by Tea Party and other political advocacy organizations," the report said.
Some groups ultimately waited as long as five years to have their applications processed, the report said.
IRS employees also improperly disclosed sensitive taxpayer information when responding to requests under the Freedom of Information Act, the report said. The employees, however, received little or no discipline.
The IRS has been under investigation by the Department of Justice and at least four congressional committees since 2013, when agency officials disclosed that agents had improperly singled out tea party and other conservative political groups when they applied for tax-exempt status.
Lerner, who has since retired, was the IRS official who first publicly disclosed that groups were mistreated. She later emerged as a central figure in congressional investigations. The House voted to hold her in contempt of Congress last year after she refused to answer questions at two House Oversight hearings.
The Finance Committee issued a series of recommendations to improve IRS management procedures.
The IRS issued a statement saying the agency saying it will review the report and its recommendations.
"The IRS is fully committed to making further improvements, and we want to do everything we can to help taxpayers have confidence in the fairness and integrity of the tax system," the IRS statement said. "We have already taken many steps to make improvements in our processes and procedures, and we are pleased to have other suggestions from the committee to help us in our continuing effort."
The Finance Committee's report is unique because investigators had access to confidential taxpayer information. The only other Congressional committee with access to such information is the House Ways and Means Committee, which has yet to issue a report.
The Finance Committee's investigation also resulted in the first bipartisan report on the scandal, though Democrats and Republicans issued separate findings on key issues.
For example, Democrats said there was no evidence that anyone outside the IRS was involved, or that IRS workers were motivated by political bias. Democrats also say that liberal groups were mistreated, too.
Republicans disagreed on all of these points.
"This bipartisan investigation shows gross mismanagement at the highest levels of the IRS and confirms an unacceptable truth: that the IRS is prone to abuse," said Sen. Orrin Hatch, R-Utah, chairman of the Finance Committee.
"The Committee found evidence that the (Obama) administration's political agenda guided the IRS's actions with respect to their treatment of conservative groups," Hatch said. "Personal politics of IRS employees, such as Lois Lerner, also impacted how the IRS conducted its business."
Sen. Ron Wyden of Oregon, the top Democrat on the committee, painted a different picture.
"The results of this in-depth, bipartisan investigation showcase pure bureaucratic mismanagement without any evidence of political interference," Wyden said. "Groups on both sides of the political spectrum were treated equally in their efforts to secure tax-exempt status."
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