Committee Hearing on IRS Scandal Raises More Questions Than Answers

On the morning of June 27, the U.S. House Ways and Means Committee held a hearing to question IRS Principal Deputy Commissioner (and Acting Commissioner) Daniel Werfel regarding his June 24 report, “Charting a Path Forward at the IRS:  Initial Assessment and Plan of Action.” The report details Werfel’s initial findings and suggestions based on a 30-day review of the IRS following the scandal in which IRS agents harassed groups seeking 501(c)(4) tax-exempt status.

Unfortunately, the report’s findings are far fewer than the number of questions that remain unanswered. We still don’t know who decided to start flagging applications with political-sounding names like “tea party,” “patriot,” or “progressive.” We don’t know why so many conservative groups were targeted with excessive questioning and had their confidential information leaked to media sources, while seemingly very few liberal groups received this treatment. We don’t know why this practice was allowed to continue for three years. We don’t know how the targeting of political groups seeking 501(c)(4) status was kept secret from Congress despite inquiries about exactly these practices.

Without answers to these critical questions, few conclusions can be drawn from Acting Commissioner Werfel’s report. One thing that’s clear is that much more investigation must be done. While I might not go as far as Rep. Kevin Brady (R-TX) who declared “this report is a sham,” I certainly would agree with Committee Chairman Rep. Dave Camp’s (R-MI) assessment that this process is in the “early stages” of discovering what really happened at the IRS. To this end, Werfel acknowledged that his report’s conclusions are merely “initial” and promised to return before Congress as the ongoing investigation continues.

While the Republicans primarily chided Werfel for having too few answers, Democrats were also somewhat critical of the report. Ranking Member Sander Levin (D-MI) said the report’s failure to investigate how progressive groups may have been targeted was a “fundamental flaw.” Others, like Rep. Jim McDermott (D-WA), tried to turn the conversation towards the regulation of 501(c)(4)’s.

On this subject, Werfel was interesting and insightful. He noted several times that the IRS is only tasked with determining the extent of an organization’s political activities when it approves 501(c)(3) and 501(c)(4) status. That determination rests on a “unique set of requirements” and an “ambiguous foundation of laws and regulations,” that Werfel said pose significant challenges for the IRS.

We agree. The regulation of political speech is far too complex and must be made simpler, both for the benefit of citizens trying to express themselves and for agencies like the IRS that cannot be expected to have expertise in the complex field of campaign finance and First Amendment law.

More thorough investigation should hopefully bring to light further details about the “who, what, when, why, and how” of the scandal. In the meantime, I’ve made my own “initial conclusion:” The right of every citizen to voice their opinion is far too important to be subjected to complex regulations and the whims of IRS bureaucrats.

The Center for Competitive Politics is now the Institute for Free Speech.