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July 05, 2013

Wide Variety of Groups Hindered by IRS 'Lookout Lists'

A broad variety of organizations seeking nonprofit status, many with no political ties, had their applications held up or rejected by the Internal Revenue Service because their submissions included terms that triggered heightened scrutiny, The New York Times writes.

The controversy over IRS targeting initially focused on conservative and Tea Party organizations and allegations that the tax agency was acting on ideological grounds. But recent reports have found that liberal and "progressive" groups were also screened, as were medical-marijuana purveyors, pro-Palestinian organizations, and developers of open-source software.

Words and phrases common to such groups' applications were among terms for which IRS screeners were instructed to "be on the lookout." Acting IRS Commission Danny Werfel ordered an end to the use of such lists last month.

Organizations that make and distribute open-source software appear to have hard the hardest time getting approval, the Times says, with IRS staff instructed that such groups are often involved in for-profit activity.

See The Chronicle’s special report on the IRS scandal.