IRS officials, according to the report, did not consult anyone beyond the agency about the development of the additional screening criteria. They believed that the criteria they came up with was a screening shortcut meant to help with the influx of applications, the report said.
The agency's top watchdog found that the criteria used to flag potential political applications resulted in substantial delays and the request of unnecessary information from the groups.
Among the criteria used by IRS officials to flag applications was a "Be On the Look Out" list, or a BOLO, which was discontinued in 2012, according to the report. The criteria on the BOLO included:
-- Whether "Tea Party," "Patriots" or "9/12 Project" was referenced in the case file.
-- Whether the issues outlined in the application included government spending, government debt or taxes.
-- Whether there was advocating or lobbying to "make America a better place to live."
-- Whether a statement in the case file criticized how the country is being run.
-- Whether it advocated education about the U.S. Constitution and the Bill of Rights.
The investigation by the Treasury Inspector General for Tax Administration was initiated after congressional complaints began to surface in the media in 2012 that the IRS was targeting conservative groups and holding up applications.
"Whether the inappropriate criterion was shorthand for all potential political cases or not, developing and using criteria that focuses on organization names and policy positions instead of the activities permitted under the Treasury regulations does not promote public confidence that tax-exempt laws are being adhered to impartially," the report said.
The IRS welcomed the Treasury inspector general's report, saying that it agreed that aspects of its original approach in handling the influx of tax-exempt applications was inappropriate.
"The IRS is required by law to determine if organizations are engaging in a legally permissible level of political activity. Centralizing these cases was necessary to achieve consistent treatment," it said in a statement.