Bloomberg News

Help-Wanted Ad Posted by Obama for Thankless IRS Position

June 12, 2013

Help Wanted: Run Agency, Take Abuse, File Pristine Return

President Obama leaves after answering questions on the IRS Justice Department investigation and the situation with Syria. Photographer: Mark Wilson/Getty Images

President Barack Obama needs someone who can manage 90,000 employees, handle a hostile Congress and file impeccable personal tax returns.

Maybe it’s no surprise that he’s gone more than 14 months without nominating a commissioner to run the beleaguered Internal Revenue Service.

“It’s probably almost somebody wearing a Superman outfit,” said Margaret Richardson, who was IRS commissioner from 1993 to 1997.

Whoever Obama nominates to run the U.S. tax agency will have to restore public confidence and employee morale after last month’s revelations that the IRS applied stricter scrutiny to Tea Party groups seeking tax-exempt status. The congressional attention complicates an already-tough job that requires protecting taxpayer data from hackers and processing more than 230 million returns annually.

“You’ve got a thankless, complex, under-resourced position,” said Mark Matthews, a former IRS deputy commissioner. “This is high risk, no reward.”

Operating without a Senate-confirmed commissioner and inside a political storm, the agency may have a tougher time providing guidance to businesses and taxpayers, said Miriam Fisher, a partner at Latham & Watkins LLP (1115L) in Washington.

“From where I sit, there’s going to be paralysis at the IRS in terms of decision-making for a while,” she said.

Tea Party

The scandal over the scrutiny given to Tea Party groups has caused six congressional committees to open inquiries. The Justice Department is pursuing potential criminal charges and at least four IRS executives have left their jobs or been forced out.

Meanwhile, Danny Werfel, controller of the Office of Management and Budget, is running the IRS and is a potential candidate for the permanent job. Lawrence Gibbs, who was commissioner from 1986 to 1989, said he has been “very impressed” with Werfel’s work so far.

Matthews and other tax lawyers are urging Obama to choose a commissioner from the tax world -- which hasn’t happened since President Bill Clinton picked Richardson in 1993.

“You do have to understand the law that you’re being asked to enforce,” Richardson said in a telephone interview, emphasizing that the commissioner has a mix of duties including law enforcement, information technology and customer service.

The past three permanent commissioners -- Charles Rossotti, Mark Everson and Douglas Shulman -- entered the job with the management expertise specifically called for in the tax code, a recognition that the job is bigger than collecting checks, sending refunds and interpreting the tax law.

47th Commissioner

Shulman, who left in November when his term ended, was vice chairman of the Financial Industry Regulatory Authority before President George W. Bush nominated him. He was the 47th permanent commissioner of the agency, which was created during the Civil War.

Rossotti, a corporate executive who implemented the agency’s restructuring under a 1998 federal law, is the right model, said John Podesta, former chief of staff to Clinton.

“You want someone completely apolitical who’s a great manager and understands technology,” said Podesta, who is chair of the Center for American Progress in Washington, a policy group he founded. “You want someone who’s just not into politics. That’s what the American public wants and expects and respects.”

Amy Brundage, a White House spokeswoman, declined to comment on Obama’s search for a commissioner.

14 Months

The president has had at least 14 months to choose someone, since Shulman’s April 2012 announcement that he didn’t want to remain in the job. The longest period with acting commissioners was the 300 days that elapsed between Everson’s exit in May 2007 and Shulman’s start in March 2008, according to the IRS.

To avoid topping that mark, Obama will have to nominate someone and win Senate confirmation by Sept. 5, which may be difficult because the Senate is scheduled to be on recess from Aug. 5 through Sept. 6.

“We are working speedily to deal with this,” Treasury Secretary Jacob J. Lew said on Bloomberg Television May 17.

Three Senate Finance Committee members -- Democrats Bob Casey and Tom Carper and Republican Johnny Isakson -- said the administration hasn’t contacted them about the opening. The Finance Committee would consider the nomination.

Werfel, who doesn’t have a tax background, told lawmakers during hearings last week that he is working on a review of the agency that should be completed by the end of the month.

Next Term

Lawmakers in both parties have praised Werfel’s work so far, including his ability to communicate effectively. Obama’s statement appointing him as acting commissioner said Werfel “agreed to serve” through the end of the fiscal year, which is Sept. 30, and was silent on whether he would consider taking the job permanently.

The next commissioner’s term begins upon confirmation and ends in November 2017.

“It doesn’t have to be Danny Werfel, but Werfel-like,” Carper said, adding that he wants Werfel to return to OMB.

Casey said Werfel “has the right attitude about accountability” and said Obama should emphasize integrity and intangibles more than a resume.

“The job description is really: Can this person lead and impose accountability and restore confidence?” Casey said. That “is going to take a long, long time, because it’s been pretty badly eroded.”

Multiple Skills

Filling the commissioner’s job, usually difficult because of the multiple skills it requires, is particularly tough now because of the IRS controversy.

In the Senate confirmation process, the nominee will encounter a rigid examination of personal tax returns, and once confirmed, must ensure the agency is scrupulously nonpartisan. The next commissioner will have to prevent computer attacks that would compromise taxpayer data and help implement the 2010 health-care law.

“The person is going to have to have real leadership skills, the ability to motivate and restore morale,” said Gibbs, who is now an attorney at Miller & Chevalier in Washington.

Werfel has “said the right things,” Gibbs said, citing his recruitment of David Fisher from the Government Accountability Office to assess the risks facing the IRS. “He appears to me to have done the right things.”

Qualified candidates might be reluctant to take a job full of potential problems, Matthews said, particularly if they want to go to the private sector after.

Tax Lawyers

Some ex-commissioners, include Gibbs and Fred Goldberg, are sought-after tax lawyers in Washington. Rossotti, a founder of American Management Systems Inc., is an operating executive at the Carlyle Group (CG), a private-equity firm based in Washington.

Everson is a vice chairman at Alliantgroup LP, which helps medium-sized companies claim tax breaks. Shulman is a guest scholar at the Brookings Institution in Washington.

“One of the secrets in this city is being able to exceed public expectations,” Gibbs said. “The public expectations are quite low and that means there’s a real opportunity for success.”

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net


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