On its face, the IRS scandal involving the questioning of 501(c)(4) applications by conservative Tea Party groups looks bad, and it is, but it's not terrible. David Brooks makes a good point in his NYT column on the issue, generally critical, but pointing out that most Tea Party groups hate the IRS, which is reviewing their applications, and would eliminate it or drastically limit it. Brooks says, "It’s hard to tell now if the I.R.S. scandal is political thuggery or obliviousness. It would be one thing if the scandal is just a group of tax people targeting the most anti-tax groups in the country. That’s just normal, run-of-the-mill partisan antipathy."
In addition, the 501(c)(4) provision is bad policy, as Steve Rattner wrote in the NYT, and as Stephen Colbert illustrated when he created his bogus, but legal, Super PAC during the last election cycle. Rattner points out the one of the biggest advantages of 501(c)(4) status is that the group does not have reveal the names of its donors. Carl Rove has worked out a scheme where he collects money through his 501(c)(4) so that he does not have to reveal donors' names, and then transfers the money to his Super PAC. In theory the 501(c)(4) group should not be overtly political, but the Super PAC can be. So, the IRS was given the job of overseeing one of the most controversial election financing provisions, something that should be overseen by the Federal Elections Commission, but the FEC is toothless and worthless, the IRS is probably a better organization to it, if you are interested in protecting the American people from election fraud. Meanwhile, the Supreme Court has only strengthened the legal channels for political corruption in America.
So, the IRS made a little stand against political corruption, and it has been viciously attacked for doing so. It is at fault, particularly if it routinely granted 501(c)(4) status to liberal groups while giving conservative groups a hard time. However, the real problem is the corrupt politicians who passed section 501(c)(4) in the first place so that their campaigns could rake in millions of dollars in untraceable contributions.