George's audit said the targeting resulted in some conservative groups having their applications delayed or stonewalled with requests for answers to inappropriate questions regarding donors, political beliefs and other matters. The targeting of conservative groups ended in May 2012, the audit said.
In his first substantive report on the agency, Werfel said Monday that its tax-exempt unit used multiple lists of inappropriate criteria in assessing tax-exempt applications until earlier this month, more than a year later than previously revealed.
Werfel said he has suspended the use of BOLO lists in considering tax-exempt applications for now.
Werfel's report Monday said the five IRS managers replaced included the previous acting commissioner he succeeded, as well as the head of the unit based in Cincinnati that handles tax-exempt applications.
In addition, Werfel created an Accountability Review Board to recommend within 60 days "any additional personnel actions necessary to hold accountable those responsible" for the targeting disclosed by the inspector general's report.
As part of his review, Werfel said 80 groups awaiting IRS action on their applications for tax-exempt status for more than 120 days could self-register with the agency as long as they certified under penalty of perjury that they would comply with applicable laws and regulations.
At the heart of the matter is what kind of organization can qualify for tax-exempt status. Regulations limit such status to groups primarily involved in social welfare activities, while political groups are considered ineligible.
Confusion over defining what constitutes political activity versus social welfare activity contributed to the targeting by the IRS, Werfel said.
An IRS statement Monday said the "safe-harbor" option for self-certification would apply to groups that "certify they devote 60% or more of both their spending and time on activities that promote social welfare."
"At the same time, they must certify that political campaign intervention involves 40% or less of both their spending and time," the statement said. Applicants meeting those thresholds would get approval within two weeks of seeking self-certification, it said.
Werfel said the IRS would continue checking on tax-exempt groups to ensure they were following the law.