Will the 501(c)(4) Scandal Lead to Tax Reform?

Thefailings of the Internal Revenue Service in its processing of exemptionapplications, especially those filed by many tea party groups seeking recognitionof exempt status under section 501(c)(4) of the Internal Revenue Code, are obviouslycommanding much attention, including daily posts on the TaxProf Blog (today’spost here).  Today the New York Timesexamines an interesting spin-off of the controversy: the hope of House ofRepresentatives Ways & Means Committee Chair, Dave Camp, to use the fiasco asa catalyst for broad tax reform.  Quotesfrom congressional leaders appearing in the Times provide no clear signal thatthe strategy will work, however.  And quotesfrom witnesses at the House Ways & Means Committee hearings unsurprisingly suggestthat they want the focus to remain specifically on the mishandling of their exemptionapplications.

Asidefrom the tax reform angle, embedded in the story is an interesting comment fromDaniel Werfel, the Acting Commissioner of Internal Revenue.  Here is the relevant excerpt:

Mr. Werfel went muchfurther than the acting commissioner he replaced, Steven Miller, saying he hadreached the “inescapable conclusion” that organizations applying for tax-exemptstatus had been targeted according to political labels.

And he pledged to reportto President Obama and Treasury Secretary Jacob J. Lew by the end of the monthwhat efforts he had begun to deal with the management lapses, hold thoseresponsible accountable and put in place new controls on spending for traveland training.

One wonders how far Acting Commissioner Werfel will go “to deal with the management lapses” and “holdthose responsible accountable.”

JRB