The news was met with a healthy dose of I-told-you-so from the conservative and tea party communities, which have long been pitted against the IRS and have in the past accused it of just such politically inappropriate behavior.
The explosive nature of the admission is evident; conservative media will be all over this from the word "go." The political implications of the budding scandal are a little harder to suss out this early.
First and foremost, Republicans and tea party groups see the IRS's apology and the questions that will follow as a rallying cry for their cause -- a cause that hasn't had a whole lot to get excited about in recent months and years. Tea party groups, in particular, have waned in influence significantly since the 2010 election.
Republicans have long accused the Obama administration of politicizing agencies like the Environmental Protection Agency, for example. And what could inflame the passions of limited government activists more than the government unjustly targeting conservative groups?
"Fox (News) will be all over this like white-on-rice," said one Republican granted anonymity to offer a candid take. "Holy cow, the IRS targeted the word 'patriot.' That's perfect!"
At least one tea party group, the Tea Party Patriots, is already calling for an investigation and the resignations of those involved.
Secondly, the IRS's admission should add impetus to the growing effort to reform the tax code for the first time in a quarter-century. Senate Finance Committee Chairman Max Baucus (D-Mont.) has said that he wants to propose an overhaul this summer -- in time for the debt-ceiling debate.
The IRS's admission may add some immediacy to that cause, but its overall affect depends a lot on how many other shoes will drop, and tax code reform remains an elusive goal for a reason -- it's hugely difficult.
Thirdly, it seems this will undercut whatever success the IRS might have had in cracking down on politically oriented non-profits. And that's good news for the GOP, which has been much quicker to embrace the use of these groups.
Good-government groups (and the White House, for that matter) have long alleged that many of these organizations are thinly veiled super PACs that allow the groups to hide their donors. The groups are not supposed to be directly involved in political campaigns, though their efforts are often clearly geared toward that end.
"Now what’s going to happen is, I expect you’ll have (House oversight committee chairman) Darrell Issa or other Republicans holding hearings in the House to make a legitimate point about political targeting – one that has the potential to overshadow and short-circuit that effort," said Rick Hasen, a political law expert at the University of California-Irvine.
Of course, if that effort is thwarted, it's all to the benefit of Republicans.
“Republicans are more likely to use these (non-profits)," Hasen said. "That does suggest there is a very good political reason for Republicans” to press the issue.
And lastly, it seems that another potential government scandal -- on top of the GOP's still-roiling push on the Benghazi issue -- suggests we aren't likely to see Republicans and Democrats in Congress join hands and sing Kumbaya any time soon.
At this point, there is no indication that the wrongdoing reached the higher levels of the IRS or into the Obama administration, but Republicans will undoubtedly use this issue to press their small-government agenda as we head into the looming tax reform and debt ceiling debates.
And there is plenty of reason to believe that this could be a big issue for the GOP -- both politically and on policy.