Issa directed Treasury inspector general to ignore IRS treatment of liberal groups

UPDATE: Treasury IG denies allegations IRS audit was politically biased

The bombshell IRS audit released in May omitted information about liberal groups at the request of House Oversight Committee Chairman Darrell Issa (R-CA), according to the Treasury Inspector General for Tax Administration's office.

A spokesman for Treasury Inspector General J. Russell George told The Hill on Tuesday that Issa had requested investigators "narrowly focus on tea party organizations."

The subsequent audit concluded the IRS used "inappropriate criteria" to single out for additional scrutiny tea party groups that applied for tax exempt status. The findings lead almost every politician, including President Barack Obama, to denounce the IRS. Several Republicans suggested the audit indicated the White House had a Nixonian "enemies list."

Speaking to CNN on Tuesday, Issa said the IRS appeared to have been targeting Obama's political opponents "perhaps not on his request" but "on his behalf."

But new documents have revealed that liberal and progressive groups received similar treatment from the IRS. The "inappropriate criteria" used to single out tea party groups -- so-called "Be On the Look Out" (BOLO) memos -- also singled out progressive and "Occupy" groups.

"We did not review the use, disposition, purpose or content of the other BOLOs. That was outside the scope of our audit," the Treasury inspector general spokesman told The Hill.

The BOLO memos stated tax exempt status for progressive groups "may not be appropriate" because they were engaged in "anti-Republican" political activity. On the other hand, the BOLO memos only directed IRS employees to send tea party applications to a particular group. IRS officials have said the tea party applications were "centralized" to insure they received consistent treatment. Exactly how the BOLO memos were used remains unclear.

The report identified 298 groups that were subjected to additional scrutiny, and identified 98 of those groups as either tea party, patriot or 9/12 groups. The remaining 202 groups were labelled as "other." During congressional hearings, George was repeatedly asked if these 202 "other" groups included liberal organizations. He said he couldn't "make that determination" based on the available evidence. However, several liberal groups received the same level of IRS scrutiny as tea party groups.

The omitted information has caused Democrats to question whether the audit was truthful.

"Failing to make this clear in these documents and at Congressional Hearings even when asked directly has been fully misleading," Rep. Sandy Levin (D-MI) wrote in a letter to George on Wednesday. "It has contributed to the distortion of this entire investigation, including use of innuendo and totally unsubstantiated assertions of White House involvement."

The Associated Press on Wednesday confirmed that liberal and progressive groups were subjected the same treatment that conservative groups had complained about, including excessive questioning and extremely long waits. The liberal group Catholics United, for instance, waited seven years before receiving tax exempt status, far longer than any tea party group was forced to wait.

Meanwhile, the Treasury Inspector General for Tax Administration's office has continued to defend its audit of the IRS. Karen Kraushaar told the Associated Press that the inspector general was only "asked to look at the treatment of organizations known to be affiliated with the tea party in its review, and was asked to audit the way those organizations were being treated when they applied for tax-exempt status."

Kraushaar implied information regarding liberal and progressive groups was omitted simply because of the narrow scope of the audit.

House Republicans have denied they attempted to limit the audit of the IRS. They acknowledged they requested the audit based off complaints they received from tea party groups, but that should not have prevented investigators from mentioning the impact on other effected groups. A Republican aide told The Hill that the Treasury Inspector General for Tax Administration had "the authority to look at whatever they wanted to, and would be expected to do so if there was wrongdoing."

Issa had previously released excerpts from a congressional investigation that purportedly proved the "targeting of conservative political groups came from Washington, D.C." Rep. Elijah Cummings (D-MD) later released the full transcripts to show there was no evidence the Obama administration was involved.

[Note: Updated with information from the Associated Press and new reports from The Hill]