IRS controversy: What's the potential fallout?

After lawmakers question the IRS over the undue scrutiny the agency put on conservative groups that filed for tax-exempt status during the 2012 elections, they'll want to take action -- to hold people accountable and eventually consider legislation to amend any systemic problems that led to this kind of political discrimination. At the same time, both Democrats and Republicans are using the controversy for political fodder.

Members of Congress are already questioning the IRS about the scandal behind closed doors, but the public line of questioning starts Wednesday, when Attorney General Eric Holder testifies before the House Judiciary Committee.

Holder on Tuesday announced he's directed his department to work with the FBI to conduct a criminal investigation into what he called "outrageous and unacceptable" actions at the IRS. While the scandal has outraged officials from both sides of the aisle, Republicans on the Judiciary Committee Wednesday are likely to hold Holder's feet to the fire.

"Oversight over the Department of Justice is a key function of the House Judiciary Committee and recent events illustrate the importance of this duty," Judiciary Committee Bob Goodlatte, R-Va., said in a statement. "Any abridgement of the First Amendment is very concerning, especially reports that the IRS targeted conservative groups for unwarranted scrutiny during an election year."

Holding the IRS accountable

In addition to the FBI investigation, the IRS discrimination against conservative groups was the subject of an investigative report by a Treasury Department inspector general. The report, obtained by CBS News late Tuesday afternoon, blamed lax management at the IRS.

On Friday, the House Ways and Means Committee will grill acting IRS commissioner Steve Miller over that management. In a preview of what questions they'll ask, Chairman Dave Camp, R-Mich., and Rep. Sandy Levin, D-Mich., the top Democrat on the committee, sent Miller a letter asking that he respond to several questions by May 21.

The letter asks, "Who knew about the targeting of conservative groups, when did they become aware and what actions were taken upon learning of the practice?" It also questions, "Did the IRS at any time notify the White House" of the targeting?

Camp and Levin also question why the agency in recent years never acknowledged that conservative groups were targeted, even though the Ways and Means Committee asked about it after Miller and others had learned about the misconduct.

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