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Maybe two wrongs can make a right.

Internal Revenue Service watchdog Russell George said there is new evidence to suggest that Tea Party affiliated groups were not the only ones subject to cherry-picking by IRS employees for extra scrutiny based on their names.

George, a Republican, told a congressional committee on Thursday that the IRS also used “progressives” as a search term to flag organizations for added review in their applications for tax-exempt status.  The news is the latest twist in the three-month-old controversy plaguing the IRS.

Rebecca Ballhaus/WSJ

Rebecca Ballhaus/WSJ

The agency has already been through a lot since the misconduct was made public: President Obama ousted the IRS Acting Commissioner, the Director of tax-exempt organizations was placed on administrative leave, three congressional committees are undergoing investigations into the matter, the FBI is conducting a criminal investigation, thousands of protestors have fled to Washington to “Audit the IRS,” and the Treasury Inspector General for Tax Administration, Russell George, continues to lead the TIGTA probe.

George is now coming under fire from Democrats for failing to accurately report the findings of his investigation.  Documents compiled by Rep. Elijah Cummings, D-Md., indicate that liberal-leaning terms such as “progressive” and “occupy” were also used by IRS screeners during the 2012 election. The documents also include a May email to George from a top investigator in the Treasury’s probe, which says that there was “no indication that pulling these selected applications was politically motivated.”   After meeting with George, the top investigator’s team examined 5,500 emails from IRS screeners and concluded that certain applications were set aside because “IRS employees were not sure how to process them, not because they wanted to stall or hinder the application.”

These details were excluded from George’s May 14 report to congress.  ”This investigation… has been characterized by one-sided and partial information leading to unsubstantiated accusations with no basis in fact,” Cummings said In a letter to the House Oversight and Government Reform Committee.

In George’s report, the IRS was criticized for impartial screening of tax-exempt applications, picking out those that contained conservative-leaning words like “Tea Party,” and “9/11 Project.”

As Reuter’s Kim Dixon puts it simply, “Groups seeking tax exemption under federal law may engage in limited amounts of political activity, depending on the type of exemption sought. That and the vagueness of the rules often make it difficult for IRS agents to tell which groups overstep and become ineligible for tax exemption.”

News that progressive groups were also targeted could spell a little relief for the IRS.  During Thursday’s congressional hearing, George said the Treasury Probe would now be expanded to see if liberal groups received equal treatment.

“If you are really impartial, if you really are, third party, unbiased, then you would be searching for all the terms, not just Tea Party,” Democratic Representative Jackie Speier said.

Whether or not these findings will change the national discussion remains to be seen.  ”A case can be made that activists on the far right and far left were both targeted, but the perception is pretty much set in stone that the Tea Party and other conservative groups were the primary victims,” said Greg Valliere, a political analyst for Potomac Research, in a Reuters interview.

Enamored by this scandal and other allegations of misconduct including lavish parties and inappropriate bonues, the IRS can only hope this news will bury some of the outrage.

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JDKatz: Attorney's At Law
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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At JDKatz: Attorneys at Law, each of our attorneys brings a unique set of experiences and perspectives to bear on our clients’ legal problems. For each case or task we take on, we assemble a team of lawyers ideally situated to our client’s specific needs and goals. Our managing partner, Jeffrey D. Katz, founded our firm in 2000 after starting his career in the tax department of Big Four accounting firm KPMG Peat Marwick. To learn more about our attorneys’ backgrounds and qualifications, please review their individual profiles.

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