Revelations that the IRS secretly scrutinized conservative groups such as the “Tea Party” movement may not seem directly relevant to small-business owners. But the unraveling scandal—for which Congressional hearings start today—may affect how the IRS deals with business owners in coming months and years and the future of small business tax reforms.

For one, the scandal could derail efforts to overhaul the U.S. tax code system, according to Politico.com. House Ways and Means Chairman Dave Camp (R-Mich) and Max Baucus (D-Mont.) both hoped to move forward this year with legislation that would streamline tax rules for small businesses. The tax reform bill introduced by Rep. Camp, for example, would reduce compliance burdens on companies with $10 million or less in annual revenues by letting them use an easier “cash method” of accounting.

But the investigation into the IRS could sideline such reforms and potentially even deflate momentum for them. “There are a lot of distractions in this town and this is another one,” Ohio Rep. Pat Tiberi, a senior Republican on the Ways and Means Committee told Politico. “It takes away from the oxygen of tax reform.”

The IRS scandal could also have broader implications for small businesses—specifically how they’re treated and audited by the IRS. Business owners concerned about IRS scrutiny of their finances may breathe a little easier in coming months: IRS officials will likely want to deflect attention away from their auditing practices as the agency tries to win back public trust. (The scandal could also mean a reduction in the IRS’s budget, according to NPR’s Marketplace.)

Even before the IRS scandal broke, however, audit risks were expected to be lower this year as the IRS faces federal budgetary cuts from the so-called sequestration.

It will be interesting to see the backlash created by the IRS controversy and how much it affects the agency’s reputation and procedures. Some conservative groups are trying to use the IRS scandal to repeal federal health care reform (“Obamacare”). Some businesses have also braced for a future of “robo-audits,” which involves the IRS cross-referencing tax returns with third-party documents and information, such as credit card statements. (Read more about that practice in this U.S. News and World Report article.)

Needless to say, the IRS scandal could have at least short-term implications on small businesses.

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