In a statement announcing the settlements, Attorney General Jeff Sessions had strong words for his predecessors, saying it was "clear" that the IRS was "using inappropriate criteria to screen applications" for tax-exempt status under the Obama administration from tea party or conservative groups.
"The IRS's use of these criteria as a basis for heightened scrutiny was wrong and should never have occurred," Sessions said. "It is improper for the IRS to single out groups for different treatment based on their names or ideological positions. Any entitlement to tax exemption should be based on the activities of the organization and whether they fulfill requirements of the law, not the policy positions adopted by members or the name chosen to reflect those views."
The settlement apparently involved no monetary compensation to the groups. In a filing with the court, the Justice Department and plaintiffs asked the court to accept the agreement and dismiss the claims, saying both parties would pay for their own side of the litigation, and asking the court to declare it to be wrong to apply tax laws and rules based on political viewpoint.
The case dates back to 2010, which is when the IRS began using "inappropriate criteria" to evaluate tax exempt status claims from political groups that targeted mainly conservative groups, according to a 2013 inspector general report.
The scandal unfolded over years, as congressional committees investigated the practice and the House voted to hold former IRS official Lois Lerner -- who was ousted over the scandal -- in contempt of Congress.
The issue became a rallying cry for conservatives, who accused the Obama administration of inappropriately curtailing their First and Fifth Amendment rights and attempting to hamstring their movement.
"There is no excuse for this conduct," Sessions said Thursday. "Hundreds of organizations were affected by these actions, and they deserve an apology from the IRS. We hope that today's settlement makes clear that this abuse of power will not be tolerated."
The settlement will need to be approved by US district courts hearing two separate cases brought over the issue, one in the District of Columbia and one in the Southern District of Ohio.
An attorney who represented Lerner did not immediately respond to a request for comment.
Last month, the Justice Department declined a request from two House Republicans to reconsider prosecuting Lerner, citing the findings of an FBI investigation that concluded in 2015
that there was "substantial evidence of mismanagement at the IRS," and that the IRS has disproportionately mishandled tax exempt organization applicants associated with the tea party, but found no evidence of "criminal intent by any IRS official."
"After this process, the department determined that reopening the criminal investigation would not be appropriate based on the available evidence," the letter read.