September 6, 2014 / 1:46 AM / 5 years ago

U.S. Senate investigators split on party lines over IRS scandal

WASHINGTON (Reuters) - Democratic Senate investigators criticized a watchdog for the U.S. Internal Revenue Service on Friday for “inaccurately and unfairly” damaging public confidence in the tax agency’s political impartiality.

Republican investigators disagreed, defending the job done by the Treasury Inspector General for Tax Administration (TIGTA) last year in reviewing the IRS’ handling of tax-exemption applications received from political groups.

A starkly split 222-page report from the Senate Permanent Subcommittee on Investigations displayed continued partisan discord over an affair that burst into view in May 2013 and quickly enmeshed the IRS in its worst scandal in decades.

Last year’s controversy stemmed from allegations that IRS agents had singled out applications for tax-exempt status from the Tea Party movement and other conservative groups for extra scrutiny. When a senior IRS executive apologized over the issue, a furor ensued that led to the resignation of the chief of the IRS and multiple investigations and congressional hearings.

Separately on Friday, the IRS acknowledged that it had discovered the loss of more related employee emails from the 2009-2014 period being probed by Republican congressional investigators, according to a letter sent to them by the agency.

Obtained by Reuters, the letter said emails for five current or former IRS employees had been lost in a computer crash. The agency earlier this year said it had lost many emails by a former senior IRS executive, triggering another round of congressional hearings.

“The IRS has determined that five of the employees had hard-drive issues that resulted in a probable loss of emails,” IRS Commissioner John Koskinen said in a statement on Friday.

He said the IRS had salvaged 14,000 potentially relevant emails from those lost. “The IRS has found no evidence that any IRS personnel deliberately destroyed any evidence,” he said.

In the Senate subcommittee report, Democrats said IRS staffers reviewing tax-exemption applications subjected both conservative and liberal groups to extra scrutiny, while Republicans complained conservatives got worse IRS treatment.

Democrats singled out TIGTA for harsh criticism. The independent watchdog is headed by J. Russell George, a lawyer nominated by former Republican President George W. Bush and confirmed by the Senate in November 2004.

Days after the IRS targeting program for tax-exemption applications erupted into view, TIGTA issued an audit report that had been underway for months on the IRS’ conduct.

The report focused chiefly on conservative groups and said that “inappropriate criteria” were used by the IRS for selecting applications for closer, lengthier review.

TIGTA’s George said in an emailed statement that he was reviewing the subcommittee report. “I firmly stand behind the audit report that we issued last year,” he said.

Senate subcommittee Democrats said TIGTA left out of its audit report that both conservative and liberal groups were mistreated by IRS agents, and that TIGTA investigators, in early inquiries, found no indications of political bias at the IRS.

In their section of the report, Republicans said TIGTA’s audit was valid and “adequately covered the relevant material.”

Reporting by Kevin Drawbaugh; Editing by Tom Brown and Lisa Shumaker

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