WASHINGTON (CNN) - President Obama vowed Monday to hold the Internal Revenue Service accountable if reports of political targeting are proved true.
"If in fact IRS personnel engaged in the kind of practices that have been reported on and were intentionally targeting conservative groups, then that's outrageous. And there's no place for it," Obama told reporters.
"And they have to be held fully accountable. Because the IRS as an independent agency requires absolute integrity, and people have to have confidence that they're ... applying the laws in a nonpartisan way."
Obama said he learned of the allegations through news reports on Friday.
Documents set to be released this week by the IRS watchdog show that the agency targeted tea party organizations and other groups focused on government spending and the federal debt that were seeking tax-exempt status.
The IRS also applied extra scrutiny to applicants with statements that "criticize how the country is run" or that sought to educate the public on how to "make America a better place to live," designations that would have included conservative political groups looking to apply for 501(c)(4) status.
Those disclosures are included in the appendix of an inspector general's report, obtained by CNN, that has caused widespread anger among lawmakers on both sides of the aisle as well as conservative groups.
IRS chief to face Congress in Friday hearing
The Republican-led House Ways and Means Committee, which oversees the IRS, announced it would hold a hearing on the allegations Friday morning. The acting head of the agency, Steve Miller, and J. Russell George, the Treasury Department's inspector-general for tax administration, are slated to appear.
In the Senate, meanwhile, Finance Committee Chairman Max Baucus, D-Montana, called Monday for a full investigation.
"These actions by the IRS are an outrageous abuse of power and a breach of the public's trust. Targeting groups based on their political views is not only inappropriate but it is intolerable," he said in a statement.
"We need to know who knew what, and exactly what mistakes were made. The American people have questions for the IRS and I intend to get answers. I want to review the Inspector General's report first, but the IRS should be prepared for a full investigation into this matter by the Senate Finance Committee. The IRS will now be the ones put under additional scrutiny."
In 2010, Baucus called on the IRS to look into whether some groups were abusing their tax-exempt status by making politics their primary activity.
Sen. Orrin Hatch, the committee's top Republican, wrote a letter to Baucus calling for an immediate hearing.
"Bipartisanship on this issue is critical since both Democrats and Republicans have expressed considerable interest in these matters over the past couple of years," Hatch wrote. "As the sole committee of jurisdiction over the IRS, it is critical that Finance Committee play a leadership role in examining this issue."
On Sunday, lawmakers blasted the IRS for its scheme, which Sen. Susan Collins, R-Maine, called a "truly outrageous" breach of public trust.
"It contributes to the profound distrust that the American people have in government," the Maine Republican said on CNN's "State of the Union," adding that Obama should offer a public condemnation of the IRS's practices.
Obama spokesman Jay Carney said Saturday that the president believes that the government should be staffed with "the very best public servants with the highest levels of integrity" and that "based on recent media reports, (the president) is concerned that the conduct of a small number of Internal Revenue Service employees may have fallen short of that standard."
That doesn't go far enough for Collins, who said "the president needs to make crystal clear that this is totally unacceptable in America."
Rep. Mike Rogers, chairman of the House Intelligence Committee, called for a full investigation of the IRS's practices, something Republicans and Democrats have said is necessary after learning of the conservative targeting.
"I don't care if you're a conservative, a liberal, a Democrat or a Republican, this should send a chill up your spine," the Michigan Republican said on "Fox News Sunday."
A congressional investigation would look into who knew what and when, Rep. Darrell Issa said Sunday. Issa chairs the House Committee on Oversight.
"The fact is, if you're doing something and it's wrong, it's illegal, it's the kind of thing that scares the American people to their core, when Americans are being targeted for audits based on their political beliefs, that needs to change," the California Republican said.
IRS official admits 'mistakes'
The watchdog report is the product of an audit that was requested by Issa's oversight committee and focused on IRS programs and operations. An audit is separate from an investigation, which would assess wrongdoing such as violations of laws or policies.
An IRS official admitted Friday that the agency made "mistakes" in the past few years with tax-exempt status applications, specifically those submitted by groups with the words "tea party" or "patriot" in their names. Multiple conservative groups have said their applications were delayed and returned with lengthy requests for supporting materials, sometimes including website printouts and lists of guest speakers.
The applications in question were processed by an office in Cincinnati that handles most applications for 501(c)(4) status and had seen the number of applications rise sharply beginning in 2010, the year of the Supreme Court's Citizens United v. Federal Election Commission ruling, which blessed unlimited campaign spending by corporations. Tax-exempt groups became a popular channel for the new wave of political spending.
The inspector general's report indicated the agency's practice of singling out conservative groups began as early as March 2010, and in July of that year, unidentified managers within the agency "requested its specialists to be on the lookout for tea party applications." In August, specialists were warned to be on the lookout for "various local organizations in the tea party movement" applying for tax-exempt status.
In June 2011, a briefing paper noted that groups focused on government spending and debt, as well as organizations criticizing how the government was being run, were also singled out for extra inspection.
Officials at the Internal Revenue Service knew in June 2011 that their agents were targeting conservative groups for additional scrutiny on tax documents, the report indicates.
Lois Lerner, director of tax-exempt organizations for the IRS, publicly admitted Friday for the first time that agents used the keywords "tea party" and "patriot" to flag applications for further review, but she stressed that was done as a "shortcut" for picking the applications to review, not out of "political bias."
The IRS commissioner at the time said at a March 2012 congressional hearing that his agency did not target conservative groups for political reasons.
"I can give you assurances. We pride ourselves in being a nonpolitical, nonpartisan organization," said Commissioner Douglas Shulman, who was appointed by President George W. Bush. "There is absolutely no targeting. This is the kind of back and forth that happens when people apply for 501(c)(4) status."
A congressional source familiar with the inquiry understood that Lerner knew of the targeting in 2011 but sent letters to Congress this year without disclosing the extent of her knowledge.
Lerner said in a Friday conference call that she "did not feel comfortable answering" as to when senior IRS officials became aware of the situation. She also said she could not give a time frame for when the IRS began looking into complaints.
She said the IRS has implemented changes to prevent similar mistakes in the future but could not say that any IRS employees had been disciplined.
The IRS said Sunday that the timeline in the inspector general's report was accurate but that it "does not contradict" Shulman's March testimony.
"While Exempt Organizations officials knew of the situation earlier, the timeline reflects that IRS senior leadership did not have this level of detail," the statement from the IRS read. "The timeline supports what the IRS acknowledged on Friday that mistakes were made. There were not partisan reasons behind this."