Report: Official knew of IRS scrutiny

WASHINGTON— A report from the watchdog overseeing the Internal Revenue Service finds that a top IRS official knew that lower-level agents gave extra scrutiny to conservative tea party groups as early as 2011, according to a congressional source with knowledge of the findings.

The Treasury Department’s inspector general for tax administration is expected to issue the report this week, days after a top IRS official apologized for what she called inappropriate targeting, according to the source.

The report, requested by Rep. Darrell Issa, R-Calif., chairman of the House of Representatives’ oversight and government reform panel, will confirm the IRS’ targeting of conservative and other groups seeking tax-exempt status under section 501(c)(4) of the tax laws.

Such organizations can collect money from anonymous donors and spend it on advertising. To stay taxexempt, they cannot endorse a candidate or a political party.

Lois Lerner, the top official dealing with tax-exempt groups at the IRS, apologized Friday for the incident, which she said was confined to an office in Ohio. Her apology sparked an uproar from Republicans demanding an investigation.

The report will say she knew of the incidents as early as 2011, according to the source.

The WhiteHouse says it was not involved, which Lerner also said Friday.

The number of groups seeking 501(c)(4) status jumped after the Supreme Court’s 2010 Citizens United decision lifting government limits on corporate spending in federal elections.

Such contributions became controversial during the 2012 election season.

BRENDAN SMIALOWSKI/GETTY-AFP PHOTO Rep. Darrell Issa, R-Calif., asked the tax inspector general to report on IRS agents’ targeting of tea party groups.