IRS Principal Deputy Commissioner Danny Werfel (AP file)
WASHINGTON -- Internal Revenue Service agents in Cincinnati used additional "inappropriate" lists to flag certain tax-exempt applications for extra scrutiny, IRS Principal Deputy Commissioner Danny Werfel told reporters on Monday.
The IRS has previously acknowledged that the Cincinnati field office, which reviews all tax-exempt applications, used a "be on the lookout" list -- or BOLO list -- that included words like "Tea Party" and "patriot" to determine which groups should be subject to heightened scrutiny.
But Werfel said Monday that an internal IRS probe has turned up other, similar lists, which were in use by tax-exempt screeners when he took over as IRS chief at the end of May.
"There were a series of these types of lists being used in this part of the IRS as part of their review of tax-exempt applications," Werfel said in a conference call with reporters. "We believe there continued to be inappropriate or questionable criteria on these BOLO lists."
He declined to say what criteria or terms were on the additional BOLO lists, although he suggested they cast a wide net.
"There was a wide-ranging set of categories and cases that spanned a broad spectrum," Werfel said.
He said it would be "be premature to get into specifics," and said he had ordered a halt to "the use of any 'be on the lookout' lists" in the review of tax-exempt applications.
Werfel said the IRS was working to redact personal data from key documents relating to the BOLO lists so that information could be turned over to key congressional panels investigating the IRS scandal.
"I want to get to the bottom of this and I want this information out ... as quickly as possible so we can air these issues," he said.
Werfel's revelations came as the IRS released an interim internal report on the tax agency's handling of tax-exempt applications. He said the IRS's inquiry has "shed further light" on management failures that led to the scandal and allowed the targeting to continue for so long.
Werfel replaced Steven Miller, who had served as acting IRS commissioner but was forced to resign amid the controversy over IRS targeting of tea party groups.
The IRS scandal erupted last month, after an inspector general's audit found that Cincinnati-based IRS employees developed and implemented "inappropriate criteria" -- using terms like "Tea Party," "patriot," and "9/12" -- as triggers that sent those applications into a lengthy, burdensome review process.
Since the revelations became public, much of the IRS leadership has been replaced and the Justice Department launched a criminal investigation. Several congressional committees have also seized on the IRS targeting of conservative groups, questioning Washington and Cincinnati employees.
Werfel said the IRS review so far has not turned up any "evidence of intentional wrongdoing" inside the agency, nor any involvement by "anyone outside" the agency.
He said he briefed President Obama and Treasury Secretary Jack Lew on the interim audit Monday before its release. He said in light of the findings so far, the IRS has installed "new leadership" in the top five posts overseeing the tax-exempt division.
He declined to name specific individuals or say what disciplinary actions had been taken. But in addition to Miller's resignation, the head of the IRS's tax-exempt division, Lois Lerner, has been placed on administrative leave.
Werfel also said the agency has created a new voluntary process for groups that have been waiting for tax-exempt status for more than 120 days to "self-certify" that they will comply with key rules limiting their political activity.
Such groups have to agree that they will not spend more than 40 percent of their time or money on political campaign activities. In exchange, they can win automatic tax exempt status.
Werfel said the agency can always review these groups' activities afterwards, to make sure they are in compliance.