A Widening Scandal, And Some Valuable Lessons

The IRS scandal may have been knocked off the front page by Edward Snowden’s fugitive travels and the George Zimmerman-Trayvon Martin trial, but it’s still out there, and there have been some interesting recent developments.

The House Ways and Means Committee investigation of the IRS targeting of certain groups seeking tax-exempt status has borne fruit.  The AP is reporting that, according to documents obtained by the Committee, the IRS targeting lasted longer than was originally reported and was broader in scope, with the IRS looking not just at “tea party” and “patriot”-named groups, but also at groups that used terms like “progressive,” “medical marijuana,” and “Israel.”  The documents indicate that the prior report of the Treasury Department inspector general may have barely scratched the surface of what IRS functionaries were doing.

DSC04187The new acting commissioner of the IRS, Danny Werfel, has concluded that the IRS used “inappropriate criteria” on certain screening lists and states that he ended the process earlier this month.  He said he found no evidence of “intentional wrongdoing” by IRS employees, but rather “insufficient action” by managers to prevent and disclose the problems.  Werfel says the IRS is committed to correcting its mistakes and holding individuals accountable as appropriate, and the AP report states that the top five people in the IRS responsible for the tax-exempt status of organizations have been removed from their jobs.

It’s all predictable, and the scenario is a familiar one.  Improper action by an agency comes to light, and the first response is to argue that the practices have ended and there is nothing left to examine.  Sometimes that approach works, but when it doesn’t, and congressional committees begin digging, different stories often emerge, and new questions get asked.  How did the IRS screening lists get created?  Who vetted the terms included on the list?  What process was followed when an organization whose name included such terms was identified?

The IRS scandal shows the value of congressional committees that actually conduct investigations, use their subpoena power, and take meaningful testimony.  It also shows that we shouldn’t necessarily trust the reassuring initial statements of agency heads or accept inspector general reports as the last word.  The congressional committees should continue their investigations, but then they need to take the next step — determining whether the tax-exempt status laws should be changed, and if so, how.  That will require Congress to wrestle with some uncomfortable questions:  Why do we grant tax-exempt status to these organizations — regardless of their political affiliations or apparent interests — in the first place, and should that practice continue?  If so, how do we rein in the exercise of discretion by the IRS, so that bureaucrats can’t simply decide to target one group over another on the basis of whim and caprice?

There’s still a long way to go on this one.

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