On November 12, 2022, the term of IRS Commissioner Charles P. Rettig will expire. And now, we collectively ask ourselves, as King George mused in “Hamilton,” the musical: “What’s next?”
There is still no formal designated successor in the pipeline to fill Rettig’s shoes. But here’s what the next nominee needs to know about the job.
What does the IRS Commissioner do?
Rettig’s successor will have a big job ahead of him. Commissioners preside over the nation’s tax system, not to create tax laws, but to establish and interpret tax administration policy, including compliance and taxpayer services.
The IRS is also responsible for managing a significant workforce. As of 2021, the agency had nearly 80,000 employees. While that’s a decrease from a decade ago, with new funding, that number is set to rise.
So how do you become an IRS commissioner? And what does it take to be good? I figured no one knows better than someone who’s been in the position before, so I asked former IRS commissioners.
Short Lists and Check
Lawrence Gibbs, currently a senior counsel at Miller & Chevalier and an IRS commissioner from 1986 to 1989, explained that he learned he was on a shortlist for commissioner when then-Treasury Secretary Jim Baker called him to ask him to come to Washington. .
Even then, the confirmation could be political. Although the nomination came from then-President Ronald Reagan, a Republican senator immediately suspended any vote to confirm Gibbs unless he agreed to overturn an IRS revenue ruling that held abortion expenses deductible. Gibbs initially refused, but eventually agreed to reconsider. The senator lifted the suspension and Gibbs was confirmed. Later, he wrote to the senator to explain that because of Roe v. Wade, he couldn’t overturn the Revenue Resolution.
Charles O. Rossotti, who served from 1997 to 2002, was not aware of any shortlist. He got a call asking if he wanted to talk to then-Treasury Secretary Robert Rubin about the job. The IRS was, as it is now, under much criticism and attack from the press. Rubin wanted a business executive to run the agency, so he contacted Rossotti, who was initially uninterested. Eventually, Rossotti said he did because he thought it was an opportunity to do something meaningful as a public service.
John Koskinen was a commissioner from 2013 to 2017 and had a similar opinion. He noted that he wasn’t sure there was a shortlist when Jack Lew, then Treasury secretary, contacted him. At the time, the IRS was under attack in Congress for delays in processing tax-exempt applications. They called him, they accepted him on the spot and two days later the investigation process began.
On television, it seems that the investigative process is quite simple: answer questions in front of Congress. But Rossotti said it can be complex and expensive. You have to reveal a lot of information, including your financial holdings. If you’ve been in the business for a while, like him, it can be a lot to analyze.
Koskinen agreed that the vetting process can be complicated, primarily due to the need to review his tax returns in detail. Despite having prior government clearances, he says, the process took two months to complete all the background checks.
Assets and Achievements
Nothing can prepare him to take on the role of commissioner, but Rossotti said experience running a business was a big help to him. It’s a lot of responsibility, he said.
Koskinen thinks listening was valuable. If he wants to know what’s going on in an organization, he said, talk to the people who do the work. He held public meetings with frontline IRS employees and listened to what they thought the agency needed to do. He said it also helped morale since, for most, it was the first time they had seen and spoken directly with the commissioner.
Gibbs emphasized that acting in a bipartisan manner is a must for any IRS commissioner. He too felt that managing expectations was essential. He chose to adopt a limited program of goals, which included implementing the Tax Reform Act of 1986, preventing a recurrence of the problems of the 1985 filing season, and restoring public confidence in the agency. Meeting these goals and managing the day-to-day demands were the most difficult challenges of the job. But achieving those goals tops the list of what Gibbs is most proud of in his tenure as commissioner.
Rossotti also cited restoring public confidence in the agency as one of his greatest achievements at the IRS. He said he helped guide the agency to a reasonable degree, though one crucial thing was missing: funding.
Koskinen counts supporting the morale of IRS employees under constant attack as one of his most significant accomplishments. He also cited reducing the number of taxpayers who fell victim to identity theft and refund fraud through a public/private partnership called “Security Summit” as a critical success. He said that according to the IRS strategic plan, that number has now been reduced by 81%.
Advice for the next commissioner
Obviously, there is no “how to be an IRS commissioner” playbook. So how would our former commissioners advise his yet-to-be-appointed successor?
Koskinen would encourage the new commissioner to use the resources available, that is, the employees. The IRS has a great workforce, he said, and the next leader should take the time to listen to what employees have to say. He would also encourage the new commissioner never to make a decision on his own, but instead meet regularly with senior managers and engage them in discussion of how to deal with the inevitable challenges and difficult questions.
Rossotti echoed the importance of building a team and setting priorities. He also said it’s important to communicate honestly with the public about what he plans to do. If he doesn’t set his own expectations, he said, someone will do it for you.
And with additional funding on the way, Gibbs said the new commissioner should focus on how to best allocate and use the money to better deal with the public, other IRS stakeholders and non-compliant taxpayers.
That funding is vital.
Rossotti noted that the current administration gambled heavily on additional funding to improve the IRS. It’s an excellent opportunity to improve the agency, but if the administration misses the nomination, it could risk a major setback. Without a leader, he said, it just won’t work.
With all those challenges, why bite?
This is not an entry-level position, and those who take on the job have already established successful careers and reputations. Why give that up for a job in the public eye that subjects you to criticism? Words like “service,” “restore trust” and “public good” dotted conversations about why the work is ultimately worth it. After all, the IRS directly affects more people in the country than any other organization, Rossotti points out, which makes it an opportunity to do something important.
This is a regular column by Kelly Phillips Erb, Taxgirl. Erb provides commentary on the latest tax news, tax law, and tax policy. Look for Erb’s column each week in Bloomberg Tax and follow her on Twitter at @taxgirl.