Gov. Mitt Romney and President Barack Obama . (Associated Press)
UPDATE 2:03 p.m. ET - The story has taken yet another weird turn. The IRS in an attempt to explain itself released the following statement [emphases added]:
Between 2010 and 2012, the IRS saw the number of applications for section 501(c)(4) status double. As a result, local career employees in Cincinnati sought to centralize work and assign cases to designated employees in an effort to promote consistency and quality. This approach has worked in other areas.
However, the IRS recognizes we should have done a better job of handling the influx of advocacy applications. While centralizing cases for consistency made sense, the way we initially centralized them did not. Mistakes were made initially, but they were in no way due to any political or partisan rationale.
We fixed the situation last year and have made significant progress in moving the centralized cases through our system. To date, more than half of the cases have been approved or withdrawn. It is important to recognize that all centralized applications received the same, even-handed treatment, and the majority of cases centralized were not based on a specific name.
In addition, new procedures also were implemented last year to ensure that these mistakes won't be made in the future. The IRS also stresses that our employees - all career civil servants -- will continue to be guided by tax law and not partisan issues.
However, this clearly contradicts Lerner's earlier claim that the IRS looked for groups that included the words "tea party" or "patriot" in their applications for tax-exempt status.
So what's really going on?
If this was just some sort of bureaucratic hiccup (as the IRS statement claims it was), then what, exactly, was Lerner talking about? Also, you can't say that this was entirely "nonpartisan" when Lerner -- a top ranking official -- specifically stated that they were flagging groups that used "patriot" and "tea party" in their applications.
Someone needs to get their story straight.
UPDATE 1:43 p.m. ET - In case you were wondering why the IRS hadn't mentioned or addressed this issue until today, here's your "answer":
IRS says no apology before today because no one ever asked.
UPDATE 1:38 p.m. ET - House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) and Subcommittee Chairman Jim Jordan (R-Ohio.) on Friday issued the following statement:
The fact that Americans were targeted by the IRS because of their political beliefs is unconscionable. The Committee will aggressively follow up on the IG report and hold responsible officials accountable for this political retaliation.
UPDATE 1:28 p.m. ET -- The American Civil Liberties Union (ACLU) on Friday released the following statement:
Even the appearance of playing partisan politics with the tax code is about as constitutionally troubling as it gets. With the recent push to grant federal agencies broad new powers to mandate donor disclosure for advocacy groups on both the left and the right, there must be clear checks in place to prevent this from ever happening again.
UPDATE 1:16 p.m. ET -- The IRS spokeswoman has clarified what she meant when she responded to questions about disciplinary action:
IRS clarifies: when they said "no" to question about disciplinary action, meant they aren't going to answer that question.
UPDATE 1:07 p.m. ET -- An IRS spokeswoman said Friday that no disciplinary action has been taken against agency employees. She added that about 200 employees at the Cincinnati office were involved in the process.
Also, Lerner in her remarks noted that 75 of the 300 groups targeted for additional reviews were conservative. She claims none of them lost their tax-exempt status.
When asked later about this number, the IRS spokeswoman referred to the 75 conservative groups as "a quarter" of the total. When it was noted that this was incorrect, she replied: "I'm not good at math."
UPDATE 12:30 p.m. ET - Shortly after Lerner's comments made national headlines, Jenny Beth Martin, National Coordinator for Tea Party Patriots, issued the following statement:
The IRS has demonstrated the most disturbing, illegal and outrageous abuse of government power. This deliberate targeting and harassment of tea party groups reaches a new low in illegal government activity and overreach. It is suspicious that the activity of these "low-level workers" was unknown to IRS leadership at the time it occurred.
President Obama must also apologize for his administration ignoring repeated complaints by these broad grassroots organizations of harassment by the IRS in 2012, and make concrete and transparent steps today to ensure this never happens again. We reject a simple apology that does nothing to alleviate the danger of this happening again. Only immediate and public actions on the part of the IRS and the president will suffice.
We demand the immediate resignation of all complicit in this activity and insist Congress investigate.
The Internal Revenue Service "inappropriately flagged" conservative political groups during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday.
Organizations were singled out because they included the words "tea party" or "patriot" in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups.
In some cases, groups were asked for their list of donors, which violates IRS policy in most cases, she said.
"That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That's not how we go about selecting cases for further review," Lerner said at a conference sponsored by the American Bar Association.
"The IRS would like to apologize for that," she added.
It's important to remember that IRS Commissioner Douglas Shulman -- a Bush appointee whose 6-year term ended in November -- told Congress in March 2012 that the IRS was not targeting groups based on their political views.
"There's absolutely no targeting. This is the kind of back and forth that happens to people" who apply for tax-exempt status, Shulman told a House Ways and Means subcommittee.
But after her talk, Lerner seemed to defend Shulman's comments, telling an Associated Press reporter that no high level IRS officials knew about the practice. She did not say when they found out.
"It's the line people that did it without talking to managers," Lerner said. "They're IRS workers, they're revenue agents."
Lerner stressed during her talk that the practice was not motivated by political bias.
But that's not how many conservative groups saw it.
TheBlaze in February 2012 received emails from several Tea Party groups alleging partisan and almost thuggish behavior on the part of the IRS.
Ohio Liberty Council Corp. President Tom Zawistokowski, for example, posted a letter on the group's website detailing their extraordinary experiences with the IRS. Zawistokowski writes:
My own Portage County TEA Party has been waiting for over a year just to get a response from the IRS so we can file our 2010 tax return! In the attached PDF I share with you, the "Additional Information Requested" of the Ohio Liberty Council from our June 30th, 2010 application which we just received on January 30, 2012. Yes, they took a year and a half to respond to our application and they are giving us two weeks to respond back. As you will see, this is no simple request.
Here's what the IRS demanded of the group:
A hard copy printout of the website - A PDF file emailed to the IRS will not suffice (and this is the high-tech Administration)
List all Social Media outlets being used (Facebook, Twitter, etc) and include hard copy printouts of every posting
A narrative description of every activity of your organization since June 30, 2010 (filing date) - And they do not want a mere description of the event, but full details - including; who conducted it, their qualifications, who was allowed to take part in the activities and how they were selected, was there a fee? (how much)
The IRS also wants to know about the members of the group and their roles and more, asking specifically for the "name, address, and corporate federal ID of all organizations that are members of our organization"
Public events are also under scrutiny with the IRS demanding to know the time, location and content schedule of each event.
Copies of any and all handouts must be included.
Names and credentials of all instructors and copies of any workshop materials used.
All speakers must be identified and copies of every speech must be included.
By March, several Republican senators and The American Center for Law and Justice (ACLJ) were starting to ask questions about the IRS' treatment of Tea Party groups.
"This appears to be a coordinated attempt to intimidate Tea Party organizations by demanding information that is outside the scope of legitimate inquiry and violates the First Amendment," said ACLJ Chief Counsel Jay Sekulow in a statement, adding that the IRS asked questions that violate groups' association rights.
"These organizations have followed the law and applied for tax exempt status for their activities as Americans have done for decades," the statement notes.
Later, 12 GOP senators sent a letter to IRS Commissioner Douglas Schulman questioning the nature of the relationship between the IRS and Tea Party groups.
"It is critical that the public have confidence that federal tax compliance efforts are pursued in a fair, even-handed, and transparent manner - without regard to politics of any kind," wrote the Senators, referring specifically to the Kentucky 9/12 Project's claim of IRS intimidation.
"It is imperative that organizations applying for tax-exempt status are able to rely on a consistent and foreseeable review structure from the IRS.
"Any significant changes to the IRS review process should be implemented only after appropriate notice and opportunity for comment from the public and affected parties," the letter adds.
The letter was spearheaded by Utah Sen. Orrin Hatch and Ohio Sen. Rob Portman, joined by Senators Mitch McConnell (R-Ky.), Chuck Grassley (R-Iowa), Lamar Alexander (R-Tenn.), Bob Corker (R-Tenn.), Pat Roberts (R-Kan.), John Cornyn (Texas), Kay Bailey Hutchison (R-Texas), Jon Kyl (R-Ariz.), John Thune (R-S.D.), and Rand Paul (R-Ky.).
More than a year later, Lerner's comments show that the harassed conservative grassroots groups -- and their defenders -- were actually on to something.
Follow Becket Adams (@BecketAdams) on Twitter
The Associated Press contributed to this story. This post has been updated.