Could the Scandal at IRS Discourage Decision Making?

By now everyone has heard about the situation brewing over at the IRS.

But here is a brief refresher: A Treasury Department inspector general criticized IRS management for not providing sufficient oversight for agency workers who evaluate applications for tax-exempt status. The report said that laxity contributed to workers screening for words like "tea party" and "patriots" in deciding which groups should be closely examined to make sure they were not participating primarily in political campaigns, which would disqualify them from tax-exempt status.

So what does this mean for government going forward? And are there bigger issues at stake than the scandal itself?

Don Kettl is the Dean of the School of Public Policy at the University of Maryland. He told Chris Dorobek that the IRS situation started off bad and is only going to get worse.

The IRS is one of the few government agencies that touches everyone. So the scandal is even more intense, because "everyone knows the tax code is pretty complicated. They also know that they're doing their best, but maybe they missed something, maybe the IRS could single them out next," said Kettl.

Scandal Erases All the Good Work

"You have people who say I don't think government should be as big as it is, or shouldn't exist at all. Then you have an incident happen like the tornados in Oklahoma or hurricane Sandy and the reaction is always this is why we have government. We want the government to help. And so far the government employees at the federal, state and local levels in Oklahoma have been excellent. Their work proves what good government workers can do, but the bad headlines cause the public to loose confidence in government," said Kettl.

A Few Poor Choices

"The sad part of this whole situation is that we had a couple of people in a small office who were given a job that was way over their heads. They didn't have proper training or instructions and they were overwhelmed by the volume of work. For better or worse they made some decisions that were the best they could come up with at the time. They were wrong. But some of the blame clearly rests with Congress for passing laws that were too vague to begin with. Some blame also lies with the Courts for making interpretations that confuse what people ought to do," said Kettl.

Errors of Efficiency?

The Former IRS administrator says the employees were trying to be efficient. I've heard some statistic that because of the Supreme Court decision on the 501C4 political organizations that the number of applications went up by 40%. The number of employees did not go up. So somehow they had to find a way to provide a way to process all those things that were coming through their office. Not surprisingly they tried to find some efficient way to screen the avalanche of paper that was descending on them. So they made a decision. The Tea Party applications were new and different and some of the applications were questionable but most were legitimate. So that was the screen they used. It turned out to be a horrendous mistake of political judgement but you can understand the underlying issues there," said Kettl.

Discourage Future Decision Making?

“The blowback from recent scandals – from Las Vegas conferences to IRS checklists – risks sending good people away from government and pushing good people in government to dig deep foxholes,” Kettl says.  “We can’t afford an unaccountable government.  But it we create a government in which no one is willing to take a risk, we’ll soon end up at a very dangerous place."

Need for Training

"We need to train people so that there is a filter in the minds to make sure what they do doesn't create the risk of political overtones in their judgements. By all accounts this was an office where nobody wanted to be, doing a job nobody wanted to do, far away from headquarters, it was a disaster waiting to happen," said Kettl.

What Should New Acting Administration Danny Werfel Do? Kettl says:

  • Right away he needs to re-establish the integrity of the agency.
  • Has to figure out the internal management issues.
  • Has to restore morale. So that employees can move on and get the job done.
  • Make sure it doesn't happen again. The underlying issue is you had poorly trained people with inadequate resources, unclear standards, and an avalanche of paperwork.
  • Figure out how to get resources for training.

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