When the IRS is enforcing a corrupt law, it makes people who fear the corrupt law being enforced against them view the IRS as the bad guys. That it is the law only hurts the IRS's position in this. Until the IRS makes the truly wealthy pay their fair share, not their legal share, they will find themselves in a position lacking moral authority.
Put another way, yes those loopholes are legal, but so is reducing the IRS's budget until they aren't able to operate at all.
This isn't the IRS's job. This isn't within their authority. Under these conditions, the IRS can't ever be in a position of moral authority.
Is it possible that you may be blaming the IRS when blame might be better apportioned elsewhere?
You are right, which is part of the reason why there is a non insignificant part of the population that wants to disable the IRS and sees them as a threat.
Same as a police officer who is sent as set of drug laws to enforce that are crafted specifically to target minorities. The only winning move is to not play, and those who don't quit begin to be seen as opponents regardless of how much the individual doesn't like the laws they are enforcing. Regardless of if you think this is a correct or incorrect way to view things, one has to accept that this does happen and it explains why entire communities turn away from the police and engage in self enforcement of their own rules and begin to craft policies such as 'snitches get stitches'.
The IRS is not enforcing a corrupt law, and the story Fox News doesn't want you to know about the IRS' conservative "charity" crackdown is that all of those charities were openly violating tax laws to the private inurement of their executives and challenging the IRS to do something about it, knowing that they had members of the House GOP in their pocket to prevent IRS action.
I wasn't speaking about that case. I was talking about how the tax law is currently written to favor some groups at the expense of other groups. And to be honest, this doesn't even have to be true. Only the appearance of it has to be seen by enough of the population for the reaction I describe to happen. Even if you think the tax law is completely fair, you would have to admit that significant portions of the population are not in agreement, and their views of the IRS will be driven by their views of the tax law.