By Mark Felsenthal
WASHINGTON (Reuters) - President Barack Obama on Tuesday called the findings in a government report about the Internal Revenue Service's targeting of conservative groups for extra scrutiny intolerable and said he has directed his administration to hold those responsible for the agency's actions accountable.
"The report's findings are intolerable and inexcusable," Obama said in a statement on the Treasury Department's investigation. "The IRS must apply the law in a fair and impartial way, and its employees must act with utmost integrity. This report shows that some of its employees failed that test."
Obama was commenting on a report by the Treasury Inspector General for Tax Administration into IRS practices that came to light in recent days. The IRS had used key words such as "Tea Party" and "Patriot" for picking out applications by groups seeking tax-exempt status for extra scrutiny.
Lois Lerner, a senior IRS official, apologized for the actions last week, but the revelation has embarrassed the agency and put the White House on the defensive. The report said the criteria used to target conservative groups gave the appearance that the IRS "is not impartial in conducting its mission."
Obama said he has directed Treasury Secretary Jack Lew to hold those responsible for the IRS's actions accountable.
"Regardless of how this conduct was allowed to take place, the bottom line is, it was wrong," Obama said.
Lew said in a statement that the report found no evidence that any individual or organization outside the IRS influenced the decision to use these criteria. But he deplored the actions, and promised the tax agency would take actions to restore public confidence in its impartiality.
Lawmakers from both political parties heaped criticism on the tax agency this week, with some calling for the resignation of acting IRS Commissioner Steven Miller, and the affair is likely get intensive congressional scrutiny in the weeks ahead.
The House Ways and Means Committee will hold a hearing on the issue on Friday, attended by Miller and J. Russell George, the Treasury inspector general for tax administration.
The probe has focused on the IRS's office in Cincinnati, which was responsible for examining whether non-profit advocacy groups that sought to qualify for tax-exempt status were entitled to it. To qualify for tax-exempt status, groups must limit their activity to advocating for issues or causes, and avoid endorsing political candidates.
The president said he first learned of the targeting practices from news reports. White House spokesman Jay Carney said the White House counsel's office had been given a heads up in April that a review of the Cincinnati office was in the works.
The IRS controversy, along with questions about the administration's handling of the deadly attack on a U.S. diplomatic facility in Benghazi, Libya, and the revelation that the Justice Department has seized phone records from the Associated Press in connection with an alleged leak of classified information, have put the president's second-term policy agenda on the back burner.
(Reporting by Mark Felsenthal; Editing by Mohammad Zargham and Lisa Shumaker)