May 17, 2013

DANIEL WERFEL, whom President Obama tapped on Thursday to lead the Internal Revenue Service, has a record of shaking up stolid federal bureaucracies. When he gets to his new agency, he shouldn’t hold back.

If a new Treasury Department inspector general report and a Friday House hearing are any indication, the IRS doesn’t just need a shake-up — it requires a veritable earthquake of reform. That’s clear enough even though there are still plenty of unanswered questions for the various investigations now underway.

The origins of the IRS’s practice of targeting tea party-type groups applying for 501(c)(4) tax-exempt status are still murky. In testimony on Friday, Steven T. Miller, the outgoing acting IRS commissioner, couldn’t identify whose idea this was — though so far there is no evidence that it came from Washington.

As for motivations, IRS officials have insisted that the agency saw a big influx of applications beginning in 2010 and that its targeting was just an inappropriate shortcut to sort through them. Yet an IRS letter to the inspector general also cited pressure from “the public, media, watchdog groups and members of Congress” to investigate specific 501(c)(4) groups as a factor in its decision making. Does that mean political pressure might also have influenced IRS staff?

Regardless of the origins of the policy, the result for conservative organizations was a hellishly long application process — months, even years. Some were lucky enough only to have to wait. Others had to answer invasive and unnecessary questions about the political affiliations of officers or the activities of those in event audiences. It’s little surprise that since 2009 many more groups with “progressive” in their titles obtained nonprofit status than those with “tea party” in their names.

At seemingly every level in the IRS, leadership failed. After senior managers found out about the targeting, why didn’t they demand that any more changes to the criteria used to sort out applications require their approval? Instead, lower-level staffers were able to revert to targeting after they had been told to stop.

Why didn’t IRS specialists get training on the nature of nonprofit social welfare organizations until May 2012? After that training, the pace of the application reviews shot up, suggesting that the IRS “specialists” had been clueless about what the Internal Revenue Code allows. The inspector general report says that this confusion probably also led to IRS officials demanding mountains of irrelevant information.

It’s good that Mr. Obama sacked Mr. Miller. Some have expressed sympathy for the outgoing chief. We see little reason for it. He failed to tell Congress about the targeting after he found out last year, despite lawmakers’ keen and regularly expressed interest. It’s also welcome that the president is promising to hold more people than Mr. Miller to account.

Among the many investigations getting started, the Justice Department is beginning a criminal probe. More important than criminal convictions, however, is that investigators in the Obama administration and in Congress get answers, that the IRS sees genuine reform, and that those who betrayed the public trust — willingly or not — are removed from positions in which they could repeat their errors.