Reading the highly critical report by the Internal Revenue Service’s auditor, you get the sense that rogue, lower-level agents ran amok, writing up watch lists, targeting conservative agencies, and stalling their applications for tax-exempt status.

At least IRS management has painted a picture of misguided underlings who acted “inappropriately,” finally offering a mea culpa a couple years after claims that Tea Party groups being hung up, even harassed, by tax agents began filtering in.

Lois Lerner, director of the IRS’ exempt organizations unit, apologized a week ago for front-line employees who inappropriately flagged for further review organizations with the descriptors, “tea party” or “patriot.”

“We had a shortcut in the process. It wasn’t appropriate.  We learned about it and we fixed it,” Lerner said, emphatically denying that the segregation of applications and the lengthy delays in processing them merely based on conservative-sounding names had absolutely nothing to do with partisan politics.

But a report released late Tuesday by the Treasury Inspector General for Tax Administration, the independent overseer of the IRS, points to lax management and at least ignorance of federal code governing tax-exemption review. And while TIGTA may not employ the term “targeted” in its scathing review, the auditor blasts the IRS for singling out conservative groups, asking them a host of unnecessary questions and, in many cases, grinding the application process to a halt.

More than anything, the IRS’ “inappropriate” measures threaten public confidence, the report notes.

“The mission of the IRS is to provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.  According to IRS Policy Statement 1-1, IRS employees accomplish this mission by being impartial and handling tax matters in a manner that will promote public confidence,” the audit states.

“However, the criteria developed by the (IRS) Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission.  The criteria focused narrowly on the names and policy positions of organizations instead of tax-exempt laws and Treasury Regulations.”

BOLO List

The audit depicts agents in 2010, earlier than IRS brass previously had stated, pulling out 501(c)(4) applications with “Tea Party, Patriots, or 9/12 in the organizations name,” as well as “political-sounding names.” In May 2010, the Determinations Unit began developing a spreadsheet that would become known as the “Be On the Look Out” list, according to the audit. By August, the unit began distributing the first formal BOLO list.