Tuesday, June 4, 2013

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

The failings of the Internal Revenue Service in its processing of exemption applications, especially those filed by many tea party groups seeking recognition of exempt status under section 501(c)(4) of the Internal Revenue Code, are obviously commanding much attention, including daily posts on the TaxProf Blog (today’s post here).  Today the New York Times examines an interesting spin-off of the controversy: the hope of House of Representatives Ways & Means Committee Chair, Dave Camp, to use the fiasco as a catalyst for broad tax reform.  Quotes from congressional leaders appearing in the Times provide no clear signal that the strategy will work, however.  And quotes from witnesses at the House Ways & Means Committee hearings unsurprisingly suggest that they want the focus to remain specifically on the mishandling of their exemption applications.

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

Mr. Werfel went much further than the acting commissioner he replaced, Steven Miller, saying he had reached the “inescapable conclusion” that organizations applying for tax-exempt status had been targeted according to political labels.

And he pledged to report to President Obama and Treasury Secretary Jacob J. Lew by the end of the month what efforts he had begun to deal with the management lapses, hold those responsible accountable and put in place new controls on spending for travel and training.

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



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