US President Barack Obama appointed an acting commissioner on Thursday to head the tax-collecting Internal Revenue Service after the previous chief was asked to resign over allegations of improper scrutiny of conservative groups.

Daniel Werfel takes the job after Steven Miller resigned at the request of Treasury Secretary Jacob Lew, who demanded a leadership change on Obama’s orders.

The IRS last week admitted to targeting non-profit groups for extra scrutiny since 2010 based on suspected associations with the so-called Tea Party, a conservative political movement that advocates smaller Government and lower taxes.

An inspector’s report on IRS practices found this week that the federal tax collection agency used “inappropriate criteria” targeting groups with names containing terms such as Tea Party or liberty.

Federal law allows non-profit groups to pursue public policy agendas but not to directly participate in election campaigns.

Miller had served as acting IRS Chief since November, taking over after the departure of commissioner Douglas Shulman, who was appointed in 2008 by George W Bush, Obama’s conservative predecessor.

The agency announced later Thursday that the head of the division overseeing tax-exempt organisations would retire next month.

During a press conference in the White House rose garden with visiting Turkish Prime Minister Recep Tayyip Erdogan, US President Barack Obama said that he did not believe a special prosecutor was needed to investigate what were “outrageous” actions at the IRS.

“It is just simply unacceptable for there to even be a hint of partisanship or ideology when it comes to the application of our tax laws,” he said.

Congress has “a whole bunch of committees” that can investigate, a Treasury Department inspector general delivered a report this week, and Attorney General Eric Holder revealed Wednesday that a criminal probe was underway, Obama said.

“Between those investigations, I think we’re going to be able to figure out exactly what happened, who was involved, what went wrong, and we’re going to be able to implement steps to fix it,” he said.

“And that ultimately is the main priority that I have.” The White House said Werfel, 42, “will lead efforts to ensure the IRS implements new safeguards to restore public trust and administers the tax code with fairness and integrity.” Currently serving as controller of Obama’s Office of Management and Budget, Werfel “has led efforts across the federal Government to improve federal programme integrity,” the White House said.

Previously, Werfel was a career civil service employee in the Office of Management and Budget and trial attorney in the Justice Department.

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