Apparently the gumshoes over at the IRS have been investigating nonprofits for potential ties to terrorism in Keystone Cops fashion. According to a report by the agency's watchdog, the Treasury Inspector General for Tax Administration, IRS agents pour over nonprofit filings manually, cross-referencing them with a terrorist watch list that is woefully inadequate. "As a result, the IRS provides only minimal assurance that tax-exempt organizations potentially involved in terrorist activities are being identified," the watchdog reports. And that's not even the worst part. Responding to the dismal report in a letter to Treasury Secretary Henry Paulson today, Montana Democrat Max Baucus, chair of the Senate Finance Committee, reveals that IRS investigators resorted to racial profiling when looking into potential terrorist financing. "IRS personnel told TIGTA that they primarily look for 'Middle Eastern sounding names' when considering which tax filings to flag for further review." How has this screening process worked out for the IRS? Not very well. Baucus writes: "TIGTA investigators found that the current IRS screening process has never identified any person or organization with links to terrorists."