Lois Lerner Won't Be Charged in IRS Scandal

The U.S. Justice Department said on Friday it had found no basis for a criminal prosecution over the Internal Revenue Service's mishandling several years ago of requests for tax-exempt status by political groups aligned with the Tea Party.

Closing a chapter on a controversy that shook the tax agency and led to the ouster of its chief, the Justice Department also largely exonerated Lois Lerner, an IRS executive who played a key role and drew ferocious criticism from Republicans.

"The IRS mishandled the processing of tax-exempt applications in a manner that disproportionately impacted applicants affiliated with the Tea Party and similar groups ... However, ineffective management is not a crime," Assistant Attorney General Pater Kadzik said in a letter to lawmakers.

In 2013, the IRS was embarrassed by its worst scandal in decades when a government review found the agency had targeted political groups seeking tax-exempt status for greater scrutiny by looking for keywords such as "Tea Party" and "Patriots."

In mid-May of that year, acting IRS Commissioner Steven Miller was forced to step down.

Three congressional inquires followed and Republicans accused the IRS of targeting conservatives critical of the Obama administration. The scandal deepened after emails surfaced from Lerner, former director of the agency's tax-exempt division, voicing a personal hostility towards conservative figures.

The Justice Department said it found that IRS employees used politically charged keywords to select groups for review, but no evidence that they did so because of bias. Rather, the method was an inept effort at treating similar types of non-profit groups with the same form of review, Kadzik said.

"What occurred is disquieting and may necessitate corrective action, but does not warrant criminal prosecution," Kadzik said.

Lerner's attorneys said in a statement that they were "gratified but not surprised by today's news. Anyone who takes a serious and impartial look at the facts would reach the same conclusion as the Justice Department."

Republican Representative Paul Ryan, who is seeking to become the next speaker of the House of Representatives, said in a statement that the decision not to prosecute IRS officials was "deeply disappointing."

He said the House tax committee he chairs would continue to investigate and "hold the IRS accountable for its actions."