On November 12, 2022, IRS Commissioner Charles P. Rettig’s term is due to expire. And now we collectively wonder, as King George mused about ‘Hamilton,’ the musical – ‘What comes next?’
There is no official successor named in the pipeline yet to replace Rettig. But here’s what the next candidate should 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 country’s tax system, not to create tax legislation, but to establish and interpret tax administration policy, which includes law enforcement and taxpayer services.
The IRS is also responsible for managing a large workforce. In 2021, the agency had nearly 80,000 employees. Although this is a decrease from a decade ago, with new funding this number is expected to increase.
So how do you become an IRS commissioner? And what does it take to be a good one? I figured no one knew better than someone who’s held the job before, so I asked former IRS commissioners.
Shortlists and Verification
Lawrence Gibbs, currently senior counsel at Miller & Chevalier and IRS commissioner from 1986 to 1989, said he found out he was on a shortlist for commissioner when then-Treasury Secretary , Jim Baker, called him to ask him to come to Washington.
Even then, confirmation could be political. Despite then-President Ronald Reagan’s nomination, a Republican senator immediately suspended any votes to confirm Gibbs unless he agreed to revoke an IRS tax ruling declaring abortion expenses deductible . Gibbs initially refused, but eventually agreed to reconsider. The senator lifted the hold and Gibbs was confirmed. Subsequently, he wrote to the senator to explain that because of Roe v. Wade, he couldn’t revoke the tax ruling.
Charles O. Rossotti, who served from 1997 to 2002, was unaware 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 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 yes because he thought it was an opportunity to do something meaningful as a public service.
John Koskinen was commissioner from 2013 to 2017 and had a similar vision. He noted that he wasn’t sure there was a shortlist at the time Jack Lew, then Treasury Secretary, contacted him. At the time, the IRS was under attack in Congress over delays in processing tax exemption claims. He was called, accepted on the spot, and two days later began the verification process.
On television, it seems that the verification 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 assets. If you’ve been in business for a while, like he had, that can be a lot to analyze.
Koskinen agreed that the verification process can be complicated, primarily due to the need to review your tax returns in detail. Despite previous government clearances, he says, the process took two months to complete all background reviews.
Strengths and achievements
Nothing can prepare you to take on the role of commissioner, but Rossotti said the experience of running a business has helped him a lot. It’s a lot of responsibility, he says.
Koskinen thinks the listening was valuable. If you want to know what’s going on in an organization, he says, talk to the people who do the work. He held public meetings with frontline IRS employees and listened to what they thought the agency should do. He said it also helped morale, as for most it was the first time they had seen and spoken directly with the commissioner.
Gibbs stressed that acting in a bipartisan manner is a must for any IRS commissioner. He also felt it was essential to manage expectations. He chose to adopt a limited program of objectives, which included implementing the Tax Reform Act of 1986, preventing a recurrence of the problems of the 1985 filing season, and restoring the confidence of the public in the agency. Sticking to those goals and managing the day-to-day demands were the toughest challenges of the position. But achieving those goals tops the list of what Gibbs has been most proud of since his time as commissioner.
Rossotti also cited restoring public trust in the agency as one of his greatest accomplishments at the IRS. He said he helped run the agency in a reasonable way, even though he lacked one crucial thing: funding.
Koskinen considers supporting the morale of IRS employees under constant attack as one of his most significant accomplishments. He also cited the reduction in the number of taxpayers who become victims of identity theft and reimbursement fraud through a public/private partnership called the “Security Summit” as a critical success. He said that according to the IRS’ strategic plan, that number is now down 81%.
Advice for the next commissioner
Obviously, there is no “how to be an IRS commissioner” playbook. So how would our former commissioners advise their successor who has not yet been appointed?
Koskinen would encourage the new commissioner to use available resources, namely 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 decisions on his own, but to meet regularly with senior executives and involve them in discussions on how to deal with the inevitable challenges and tough 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 you plan to do. If you don’t set your own expectations, he says, someone will.
And with additional funding on the way, Gibbs said the new commissioner should focus on how best to allocate and use the money to improve relations with the public, other IRS stakeholders and non-compliant taxpayers.
This funding is vital.
Rossotti noted that the current administration has bet heavily on securing additional funds to improve the IRS. It’s a great opportunity to improve the agency, but if the administration doesn’t get the right nomination, it could risk a massive setback. Without a leader, he says, it just won’t work.
With all these challenges, why bite?
This is not an entry-level position, and those who step into the position have already established successful careers and reputations. Why give up that for a job in the public eye that subjects you to criticism? Words like ‘service’, ‘restore trust’ and ‘public good’ have peppered conversations about why the work is worth it. After all, the IRS directly affects more people in the country than any other organization, Rossotti notes, making this an opportunity to do something important.
This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers 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.