The term of office of IRS Commissioner Charles P. Rettig expires on November 12, 2022. And now let’s ask ourselves together, as King George mused in “Hamilton,” the musical – “What’s next?”
There is still no named formal successor in the pipeline to follow in Rettig’s footsteps. But here’s what the next candidate should know about the job.
What does the IRS officer do?
Rettig’s successor has a big task ahead of him. Commissioners preside over the country’s tax system—not to create tax laws, but to set and interpret tax administration policy, which includes enforcement and taxpayer services.
The IRS is also responsible for managing a significant workforce. In 2021, the agency had nearly 80,000 employees. While that’s down from a decade ago, new funding is expected to increase that number.
How does one become an IRS agent? And what does it take to be good? I figured nobody knew better than someone who’s been in this position before, so I asked former IRS commissioners.
Short Lists and Review
Lawrence Gibbs, currently senior counsel at Miller & Chevalier and IRS commissioner from 1986 to 1989, explained that he found out he was shortlisted for commissioner when then-Treasury Secretary Jim Baker called to ask him to come back to come to Washington.
Even then, the confirmation could be political. Despite the nomination of then-President Ronald Reagan, a Republican senator immediately withheld any vote to confirm Gibbs unless he agreed to overturn an IRS income decision that found abortion expenses were deductible. Gibbs initially declined, but eventually agreed to reconsider. The senator lifted the suspension and Gibbs was confirmed. He then wrote to the senator to explain that because of Roe v. Wade could not revoke the revenue ruling.
Charles O. Rossotti, who was in office from 1997 to 2002, had no shortlist. He received a call asking if he wanted to speak to then-Treasury Secretary Robert Rubin about the job. The IRS, as now, has come under much criticism and attack from the press. Rubin wanted a CEO to run the agency, so he approached Rossotti, who was initially uninterested. Eventually, Rossotti said yes because he thought it was an opportunity to do something worthwhile as a public service.
John Koskinen was commissioner from 2013 to 2017 and had a similar attitude. He noted he wasn’t sure there was a short list when Jack Lew, then Treasury Secretary, contacted him. At the time, the IRS was being attacked in Congress for delays in processing tax exemption requests. He was called, accepted on the spot, and two days later the review began.
On TV, it looks like the verification process is pretty simple: answering questions before Congress. But Rossotti said it could be complex and expensive. You must disclose a variety of information, including your financial holdings. When you’ve been in business like him for a while, it can be a lot to analyze.
Koskinen agreed that the verification process can be complicated, mainly because of the need to go into detail about your tax returns. Despite previous regulatory approvals, the process took two months to complete all background checks, he says.
assets and benefits
Nothing can prepare you for taking on the role of commissioner, but Rossotti said the experience of running a business was a huge help. It’s a lot of responsibility, he said.
Koskinen believes listening was valuable. If you want to know what’s going on in an organization, he said, talk to the people doing the work. He held townhall meetings with frontline IRS officials and listened to what they felt the agency needed to do. He said it also helped morale because for most it was the first time they had seen the commissioner and spoken to him directly.
Gibbs emphasized that acting impartially is a must for any IRS officer. He also felt it was important to manage expectations. He settled on a limited program of objectives that included implementing the 1986 Tax Reform Act, preventing the problems of the 1985 filing season from recurring, and restoring public confidence in the agency. Sticking to those goals and managing the day-to-day demands were the toughest challenges of the job. But achieving those goals tops the list of things Gibbs is most proud of during his tenure as commissioner.
Rossotti also cited restoring public confidence in the agency as one of his greatest accomplishments at the IRS. He said he helped steer the agency to a reasonable extent, although he lacked one crucial thing: funding.
Koskinen ranks one of his most significant accomplishments as helping to boost the morale of IRS staff, who are constantly under attack. He also cited reducing the number of taxpayers who have been victims of identity theft and reimbursement fraud through a public-private partnership called the “Security Summit” as a key achievement. He said that number is now down 81%, according to the IRS strategic plan.
Advice for the next commissioner
Obviously, there is no “how to be an IRS Commissioner” playbook. So what would our former commissioners advise their successor, who has yet to be named?
Koskinen would encourage the new commissioner to use available resources, namely staff. The IRS has a great workforce, he said, and the next leader should take the time to hear what employees have to say. He would also encourage the new commissioner never to make a decision alone, but to meet regularly with senior managers and engage them in the discussion on how to meet the inevitable challenges and difficult issues.
Rossotti stressed the importance of building a team and setting priorities. He also said it’s important to be honest with the public about what you’re up to. If you don’t set your own expectations, he said, someone will.
And with additional funds on the way, Gibbs said the new commissioner should focus on how best to allocate the money and use it to improve interactions with the public, the other IRS stakeholders and non-compliant taxpayers .
This funding is vital.
Rossotti noted that the current administration is betting a huge amount on getting additional funding to improve the IRS. It’s an excellent opportunity to improve the agency, but if the administration doesn’t get the nomination right, they could risk a massive backlash. Without a leader, he said, it just doesn’t work.
With all these challenges, why bite?
This is not an entry-level position and those who enter the job have already built successful careers and reputations. Why give that up for a public job that exposes you to criticism? Words like “service,” “restoring trust,” and “public good” peppered conversations about why the job is ultimately worth it. After all, the IRS directly affects more people in the country than any other organization, notes Rossotti, making it an opportunity to do something important.
This is a regular column from Kelly Phillips Erb, the tax girl. Erb provides commentary on current tax news, tax law and tax policy. Each week, look for Erb’s Bloomberg Tax column and follow her on Twitter at @steuergirl.