IRS Scandal Bolsters Code Revision, Top Tax Writers Say

The scandal at the Internal Revenue Service reinforces the case for revising the U.S. tax code, Congress’s top tax writers said in an interview with Bloomberg Television.

“This actually leads to new momentum for tax reform,” said Senate Finance Committee Chairman Max Baucus in a joint interview with House Ways and Means Committee Chairman Dave Camp. The pair spoke in the Capitol today with Bloomberg Television’s Peter Cook for “Capital Gains” airing May 19.

Camp, a Michigan Republican, will lead the first congressional hearing tomorrow into the selective scrutiny applied to small-government groups applying for tax-exempt status.

Baucus, a Montana Democrat, and Camp said the IRS revelations showed problems in the tax system that warrant a comprehensive approach to revising it.

Groups with “tea party” or “patriot” in their names received tougher questioning and had longer delays than others in a practice that the IRS acknowledged May 10.

“Clearly there has been taxpayer confidential information leaked, and potentially for political reasons,” Camp said. “And obviously only one political perspective was targeted, so it does seem to have significant political overtones. But we just don’t know where this will lead until we take a serious look at it.”

Camp said Americans now understand “the fear the IRS can put into people.”

The Senate Finance panel will follow with a hearing May 21.

Miller’s Resignation

Steven Miller, acting commissioner of the IRS, was forced to resign yesterday. Today, President Barack Obama announced that he has chosen Danny Werfel, controller of the Office of Management and Budget, as acting commissioner.

Camp and Baucus have been working together on rewriting the tax code to broaden the tax base and lower marginal rates. They’re cooperating even though they disagree on whether a tax rewrite should generate more revenue.

“There have been 15,000 legislative changes to the code since 1986,” Baucus said. “That’s created lots of barnacles, lots of stuff that is just not needed there.”

Baucus says some tax changes should pay for deficit reduction; Camp disagrees and wants rate reduction only.

“The big question about revenues is one that I think that can be put off for a while,” Baucus said.

Baucus has announced that he won’t seek re-election in 2014 and will retire from the Senate after six terms. Camp, under Republican rules, must give up his gavel as chairman of the Ways and Means panel after next year.

“The calendar’s kind of like the weather,” Camp said. “It’s pretty hard to predict. But I think we’re all looking at trying to do this as soon as possible and trying to get it done certainly.”

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