It turns out that Lois Lerner, head of the IRS tax exempt department, was involved in a "limited hang out" as they used to say during the unraveling of the Watergate scandal.

Her disingenuous statement on Friday - seemingly out of the blue - has now become "inoperative" (another Watergate euphemism for lie).

In fact, Lerner's statement didn't even begin to reveal IRS wrongdoing - wrongdoing at the highest levels of the agency.

Associated Press:

Senior Internal Revenue Service officials knew agents were targeting tea party groups as early as 2011, according to a draft of an inspector general's report obtained by The Associated Press that seemingly contradicts public statements by the IRS commissioner.

The IRS apologized Friday for what it acknowledged was "inappropriate" targeting of conservative political groups during the 2012 election to see if they were violating their tax-exempt status. The agency blamed low-level employees, saying no high-level officials were aware.

But on June 29, 2011, Lois G. Lerner, who heads the IRS division that oversees tax-exempt organizations, learned at a meeting that groups were being targeted, according to the watchdog's report. At the meeting, she was told that groups with "Tea Party," ''Patriot" or "9/12 Project" in their names were being flagged for additional and often burdensome scrutiny, the report says.

The 9/12 Project is a group started by conservative TV personality Glenn Beck. In a statement to the AP, Beck suggested that the revelations were hardly news to him and other conservatives.

"In February 2012, TheBlaze first reported what the IRS now admits to -- that they unfairly targeted conservative groups including the 9/12 project," Beck said, citing his website and TV network. "It is nice to see everyone else playing catch-up and finally asking the same questions that TheBlaze started raising over a year ago."

Lerner instructed agents to change the criteria for flagging groups "immediately," the report says.

The Treasury Department's inspector general for tax administration is expected to release the results of a nearly yearlong investigation in the coming week. The AP obtained part of the draft report, which has been shared with congressional aides.

Among the other revelations, on Aug. 4, 2011, staffers in the IRS' Rulings and Agreements office "held a meeting with chief counsel so that everyone would have the latest information on the issue."

On Jan, 25, 2012, the criteria for flagging suspect groups was changed to, "political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform/movement," the report says.

Read the above carefully. Note that Lerner first discovered the targeting in late June. 2011. She says she ordered a halt to the targeting "immediately" at that time.

But  5 weeks later, there was a meeting of senior staff so that everyone could receive "the latest information on the issue."

What the...? Five weeks later they are still targeting tea party groups despite Lerner telling the "low level" employees to halt the practice at once? And then finally, nearly 7 months after IRS management discovered the targeting, they officially changed the criteria? Is that when they stopped harassing conservatives? We don't know, and that's one of a zillion questions Congress will have for IRS officials when the hearings begin.

How about some questions for the administration? When did anyone associated with the White House first find out about this targeting, why wasn't it announced, was the president informed, and why hasn't Obama apologized? It's his government that made a mockery of democracy, that targeted innocent citizens engaged in expressing their First Amendment rights for abusive and bullying treatment.

We know Obama hates the tea party but this is beyond personal feelings and goes to the heart of the relationship between the citizen and the government. That relationship, already damaged and hanging by a thread, received a body blow when this story broke.

For once in your miserable presidency, Barry, man up and apologize on behalf of your government.

Thomas Lifson adds:

Why is changing the criteria for flagging suspect groups to "political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform/movement" in 2012 supposed to be better than just honestly admitting it is tea part and patriot groups being singled out? The target is the same, just the description is changed a little. Why does educating the public on the Constitution bear more scrutiny than, say, educating the public about abortion rights?

Rick is right. This scandal just got a whole lot bigger.