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IRS apologizes for scrutinizing conservative groups

Agency flagged tax-exempt applicants with “tea party” and “patriot” in their names

The Internal Revenue Service (IRS) has fired up conservative political groups.

On Friday, the agency apologized for flagging about 300 groups with the words “tea party” or “patriot” in their names for extra scrutiny when they applied for tax-exempt status.

The IRS said the flagging took place during the 2012 election campaigns but that its actions weren’t politically motivated. Lois Lerner, head of the IRS tax-exempt organizations division, told reporters that the agency “made some mistakes” and that “some people didn’t use good judgment.”

The apology comes after the IRS previously denied that it had targeted any political groups. Not surprisingly, many conservatives aren’t happy. Senate Republican Leader Mitch McConnell is calling for the White House to conduct a transparent review of the agency. And a co-founder of the Tea Party Patriots, an umbrella organization for more than 3,000 local groups, said the agency workers responsible for the flagging should either be dismissed or resign.

Press Secretary Jay Carney told reporters that the Obama administration feels the matter is “of concern” and “inappropriate,” and that the president would expect action to clear up what happened.

Applications for tax-exempt, or “social welfare,” organizations doubled from 2010 to 2012, and many of the latest groups are created for public issue advocacy and political campaigns. The IRS allows such groups to exist as long as social welfare remains their main mission. The agency attempted to centralize applications for further review to ensure groups were properly designated. “While centralizing cases for consistency made sense, the way we initially centralized them did not,” the IRS said in a statement.

Read Reuters and the Wall Street Journal for more information.

For more InsideCounsel coverage of the IRS and non-profits, read:

The division of the IRS responsible for tax exemptions has failed to do its job

A proposal to overhaul tax-exempt law

The last political loophole is found in non-profits

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