Internal Revenue Service procedures for selecting nonprofit groups to be audited are filled with holes that could allow the tax agency to discriminate against certain organizations, a new report shows.
The findings suggest IRS officials could single out groups "in an unfair manner ... based on an organization's religious, educational, political, or other views," said the Government Accountability Report, an advance copy of which was provided to the Washington Examiner.
Rep. Peter Roskam, chairman of the House Ways and Means Committee's oversight subcommittee, said the report "exposes a new and more egregious frontier of potential targeting" in the way the IRS chooses nonprofit groups to be audited.
"It turns out that, even in the wake of the Lois Lerner scandal, the IRS has failed to take the steps necessary to ensure all taxpayers are treated fairly and equally," Roskam told the Examiner.
"An audit takes significant time and money, and can harm or even kill a nonprofit organization," he added. "That's why it's critical that an audit is never undertaken because of the personal bias of a few powerful IRS employees."
The GAO report, which is slated to be the subject of a ways and means committee hearing Thursday, discovered the decision of whether to forward a case to the IRS unit that performs audits on nonprofits was left up to one individual. In some cases, the decision was made by a committee, but one whose members were seemingly permanent despite IRS requirements that they rotate on a staggering basis every year.
IRS officials kept poor documentation of their decisions when it came to setting aside groups for a potential audit.
That meant the tax agency could struggle to defend itself if a nonprofit appealed an IRS decision or took the agency to court.
In some instances, existing guidance on how to determine whether a group's political activities warranted an audit was simply not followed by IRS employees.
The GAO report comes a little more than a year after members of the ways and means committee referred Lois Lerner, the former head of the IRS's tax-exempt unit, to the Department of Justice for a possible criminal investigation.
Lawmakers had discovered emails that suggested Lerner targeted Crossroads GPS, a prominent conservative group founded by veteran Republican strategist Karl Rove, among other evidence of wrongdoing.
In an email sent in Jan. 2013, Lerner said she would personally consider whether to open an audit for Crossroads — suggesting she may have believed she had the power to go after groups.
The IRS drew a firestorm of criticism after its own watchdog discovered right-leaning organizations had been selected for more rigorous screenings when first applying for nonprofit status.
A May 2013 inspector general report revealed the agency had targeted tax-exempt groups for review based on their policy positions, not on whether they had violated IRS rules for nonprofits.
Tea Party and conservative groups were singled out for scrutiny, with many facing invasive questions and unfair criteria.
The TIGTA report alleged IRS officials began targeting conservative groups in early 2010.
Shortly after the report's release, Steven Miller, then the acting IRS commissioner, was forced to resign amid allegations that he had been aware of the tax-exempt unit's misconduct.
"If the agency wants to restore public confidence, the American people need to see concrete reforms to ensure that they will never again be targeted," Roskam said of the GAO report.