The Government's "Damaged Brand"
That's how law prof Glenn Harlan Reynolds put it in a USA Today op-ed.

On the one hand, I think this is good -- that the IRS scandal and other government malfeasance have led to people being less likely to naively believe, well, "We're the government, and we're here to help."

The problem, as Glenn notes, is the fact that government wrongdoing isn't punished and people, per polls, mostly don't feel it will be:

Believing that government officials break the law is one thing; believing that they face no consequences when they're caught and it becomes public is another. Not only is this a sort of "broken windows" signal to other bureaucrats -- hey, you can break the law and get away with it -- but it's particularly damaging where the IRS is concerned.

America's tax system, despite the feared IRS audit, is fundamentally based on voluntary compliance. If everyone starts cheating, there aren't enough IRS agents to make a dent. Beyond taxes, that's true regarding compliance with the law in general. Moral legitimacy is what makes honest people obey the law even when they can get away with breaking it. Undermine that and you get a country like, say, Italy, where tax evasion is a national sport.