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One of five IRS probes ends in a draw

WASHINGTON - After investigating the IRS for more than a year, two key senators - a Democrat and a Republican - disagree on whether the tax agency treated conservative groups worse than their liberal counterparts when they applied for tax-exempt status.

The Senate's subcommittee on investigations released competing reports Friday on how the IRS handled applications from political groups during the 2010 and 2012 elections.

The Democratic report, released by Sen. Carl Levin of Michigan, said both liberal and conservative groups were mistreated, revealing no political bias by the IRS.

"The investigation found that the IRS used inappropriate selection criteria, burdensome questions and lengthy delays in processing applications for 501(c)(4) tax exempt status from both conservative and liberal groups," Levin said in a statement.

The Republican report, issued by Sen. John McCain of Arizona, said conservative groups were clearly treated worse.

"The majority's interpretation of the evidence fails to capture the extent of the IRS's bias against conservative groups and flagrant abuse of power," McCain said in a statement. "Our tax system should not and cannot be used as a weapon to target political opponents, as the IRS has clearly done."

The IRS inspector general set off a firestorm last year with an audit that said IRS agents singled out tea party and other conservative groups for inappropriate scrutiny when they applied for tax-exempt status.

IRS agents were reviewing applications for tax-exempt status to determine how much political activity each group was engaged in. Under IRS regulations, tax-exempt social welfare groups can engage in politics, but it cannot be their primary mission.

President Barack Obama forced the acting IRS commissioner to resign, and much of the agency's top leadership has been replaced. The Justice Department and several committees in Congress launched investigations.

Friday's reports mark the conclusion of just one investigation. The Justice Department and three other congressional committees are continuing their probes.

Levin is chairman of the investigations subcommittee and McCain is the ranking Republican. Their staffs routinely work together on investigations, and while they don't always agree on the results, it is highly unusual for them to issue such diverging reports.

The Democratic report slams last year's audit by the IRS inspector general. It says the IG report was incomplete because it focused only on the treatment of conservative groups. The IG's report "produced distorted audit results that continue to be misinterpreted," the Democratic report said.

The inspector general's office declined to comment Friday. A spokeswoman said they were reviewing the report.

The Republican report says far more conservative groups were singled out for extra scrutiny. They were also asked more questions and were more likely to have their applications rejected or withdrawn.

"The IRS selected conservative groups out of normal processing, placed them on a separate list, stopped work on their applications completely, forced them to answer intrusive questions about their behavior and demeanor at meetings and delayed their applications for multiple years," the Republican report said. "Our investigation has uncovered no evidence that liberal groups received the same expansive inappropriate treatment that conservative groups received."

The Democratic report said investigators reviewed 800,000 pages of documents and conducted 22 interviews with current and former workers at the IRS and the inspector general's office. The investigators, however, were not allowed to see confidential taxpayer information, so many of the documents were blacked out.

Only two committees in Congress have the authority to see confidential taxpayer information: the House Ways and Means Committee and the Senate Finance Committee. Those two committees are continuing their probes.

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