Fox News is dishonestly misinterpreting news reports to erroneously conclude that IRS officials in Washington, D.C., were involved in the improper scrutiny of conservative groups seeking tax-exempt status.

Several Fox anchors have portrayed details of a congressional interview with Holly Paz, formerly a D.C.-based manager in the IRS tax-exempt unit, as contradicting previous claims from the Obama administration that IRS reviews of conservative tax-exempt applications were not initiated by D.C. officials.

For example, on America's Newsroom, Martha MacCallum said Paz “says that she was in on the plan to give extra scrutiny to conservative groups.” On the same program, Stuart Varney said Paz's interview proved that the orders to scrutinize conservative groups “did go higher up the food chain.”

Later in the show MacCallum said that there were “compelling reasons” to investigate whether the orders to investigate conservative groups came from the top.

Similarly, America Live host Megyn Kelly said Paz's interview “discredits” claims made by the Obama administration that they were not involved in targeting conservatives.

These claims are based on a misinterpretation of what the IRS did that was improper. In an interview with congressional investigators, transcript of which was released to several news outlets, Paz acknowledged having “reviewed 20 to 30 applications” from politically active groups seeking non-profit. But it was not improper for the IRS to review such applications -- the reason the IRS has been criticized is because they used politically slanted criteria to select conservative, but not progressive, groups to receive that scrutiny. Specifically, the IRS gave additional scrutiny to groups with “tea party,” “patriot,” and “9/12” in their names.

In her interview, Paz reportedly said she reviewed case files submitted by IRS officials in Cincinnati, Ohio, but that it was the local office that was responsible for selecting those cases for scrutiny. From USA Today:

Paz said liberal groups were mentioned by name, alongside the Tea Party, on an IRS BOLO -- or “be on the lookout” -- list. Screeners in Cincinnati, where all applications for tax-exemptions are processed, used the list to identify sensitive or complex cases that should be sent to specialists in Cincinnati and Washington.

Thus, by the time Paz reviewed the cases in D.C., the improper behavior had already occurred, consistent with the Obama administration claims that the improper behavior was the fault of officials in Cincinnati.

Indeed, Paz's testimony indicates that she was unaware of the criteria Cincinnati officials were using to select groups for scrutiny. She reportedly testified that she believed “tea party” was being used by Cincinnati IRS officials not specifically to refer to tea party groups, but generically to refer to all of the targeted groups, saying, “since the first case that came up to Washington happened to have that name, it appeared to me that that's what they were calling it that as a shorthand, because the first case had been that.”

Paz also testified that when Lois Lerner, the Washington, D.C.-based director of exempt organizations, became aware that the Cincinnati office was using an improper set of key words to select groups for additional review, Lerner ordered the process stopped:

On July 5, 2011, Lerner convened a meeting in Washington -- with Cincinnati managers attending by phone -- to discuss the Tea Party cases, Paz said. It was clear that screeners were using key words like “Tea Party”, “Patriots” or “9/12” to identify cases for greater scrutiny.

Lerner “said the criteria needed to immediately be changed,” Paz said. “She directed that they cease using the filters and labels that they were using before and that they would use this new phraseology about organizations with political lobbying or advocacy.”

The AP noted in its story that Paz “provided no evidence that senior IRS officials ordered agents to target conservative groups or that anyone in the Obama administration outside the IRS was involved.” Rep. Elijah Cummings (D-MD), the ranking Democrat on the House Oversight Committee, described the release of Paz's interview to the media as “another leak from Chairman Issa of cherry-picked excerpts that show no White House involvement whatsoever in the identification and screening of these cases” in a statement to Politico.