But he called the storm over talking points about the consulate attack in Libya a "sideshow."
During a news conference, Obama and British Prime Minister David Cameron praised each other for the enduring relationship between the United States and England and said they discussed next month's meeting of the Group of Eight in Northern Ireland.
"This is pretty straightforward," Obama said. "If in fact IRS personnel engaged in the kinds of practices that's been reported on, and intentionally targeting conservative [groups], that's outrageous and there's no place for it."
"They have to be held fully accountable," he said.
Cameron and Obama also said they would pursue an aggressive trans-Atlantic trade policy that would improve economies and provide jobs.
Regarding Syria, Cameron and Obama acknowledged they have a difficult task in persuading Russia to back off its support of Syrian President Bashar Assad's regime.
Obama said long-term "suspicions" by Russia toward the Group of 8 members and Western countries remain, but that he and Cameron were trying to "break down" those long-held suspicions.
"As a leader on the world stage, Russia has an interest and obligation to resolve this issue that can lead to outcome we all want to see in the long-term," Obama said.
"Syria's history is being written in the blood of her people," Cameron said. He added "and it is happening under our watch."
A stable, democratic Syria that doesn't encourage growth of an extremist element is in "everybody's interest," Cameron said.
Concerning the IRS controversy, Obama said the American public must have "absolute confidence" that laws are being administered in a non-partisan way.
"We don't want the IRS being perceived as biased or anything less than neutral in how they operate," he said.
He said he did not want to comment on any specific finding because the inspector general was conducting an investigation.
"But if you've got an IRS operating in anything less than a neutral, non-partisan manner, then it is outrageous ... and people have to be held accountable ... ."
U.S. Internal Revenue Service inquiry of conservative groups included those lobbying to "make America a better place to live," new details emerging about the IRS investigation indicated. That lever goes beyond what the IRS admitted Friday, which was that it targeted groups with "Tea Party" or "patriot" in their names, several media outlets reported Monday, based on draft findings from disclosures to congressional investigators by the Treasury Department's inspector general for tax administration.
The audit follows complaints last year by Tea Party and other conservative groups they had been singled out and subjected to extreme and improper questioning. Many groups say they were asked for donor lists and other sensitive information.
Lois Lerner, head of the IRS tax-exempt-organizations division, said Friday the agency was "apologetic" for "absolutely inappropriate" actions by lower-level workers.
Obama called the revived controversy over his administration's response to the attack on the U.S. Consulate in Benghazi, Libya, as a "sideshow."
Congressional Republicans last week raised questions about the administration's handling of talking points in the days immediately after the attack on the consulate in Benghazi, in which Ambassador Christopher Stevens and three other diplomatic staffers were killed.
"We've now seen this argument that's been made by some folks ... for months now," he said
The emails were provided by the White House to congressional committees which concluded "months ago there was nothing afoul," Obama said.
"Suddenly, three days ago this is spun up as if there something new to story," he said. "There's no there there."
Obama said Republicans were playing politics and have used the issue for fundraising.
"The whole thing defies logic, and the fact that this thing keeps getting churned out quite frankly has a lot to do with political motivations," Obama said.
"We don't have time to playing political games in Washington," Obama said. "We dishonor them [diplomats] when we turn things like this into a political circus."
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