Lily Kahng

Document Type



The IRS Tea Party controversy erupted when the Treasury Inspector General issued a report finding that IRS employees in the Cincinnati office had targeted certain organizations’ applications for tax exempt status for heightened scrutiny, in particular singling out groups with “Tea Party” or “Patriot” in their names. A media firestorm ensued, with fevered speculation about a hidden political agenda extending all the way to the White House. A complete picture of the controversy has yet to emerge, but as of the writing of this Essay, it appears that the worst suspicions about political bias are unfounded. Nonetheless, the IRS has suffered reputational damage that undermines its legitimacy and impairs its ability to perform its central function of collecting taxes to fund the government. This Essay explores the Tea Party controversy as a case study in which to examine the IRS’s exercise of discretion and observe the operation of oversight mechanisms. It first explains how legal and factual circumstances led to an administrative nightmare for the IRS, one that was almost certain to result in allegations of political bias. It then considers whether the controversy could have been averted through mechanisms designed to control administrative discretion. It assesses a variety of these control mechanisms, including congressional and judicial review and bureaucratic management practices, with a view toward formulating general policy prescriptions and future research questions regarding IRS administrative discretion.


Reprinted in Ethical Duties to the Tax System (Scott A. Schumacher & Michael Hatfield, eds., University of Washington 2015).