Bloomberg News

Obama’s Choice to Rehabilitate IRS Wins Senate Confirmation (3)

December 20, 2013

New IRS Commissioner John Koskinen

John Koskinen, 74, said he wants to rehabilitate the IRS, which faces multiple congressional investigations for its selective scrutiny of nonprofit groups that back smaller government. Photographer: Jim Watson/AFP via Getty Images

The U.S. Senate voted to install John Koskinen as commissioner of the Internal Revenue Service, giving the tax agency its first Senate-confirmed leader in more than a year.

The vote was 59-36 to confirm Koskinen. No Democrats voted against him, and five Republicans voted for confirmation.

“Throughout his career, John has always acted with the absolute integrity Americans demand from those in public service,” President Barack Obama said in a statement today. “And his strong leadership and unquestioned expertise make him the right person to lead the IRS.”

Koskinen, 74, said he wants to rehabilitate the IRS, which faces multiple congressional investigations for its selective scrutiny of nonprofit groups that back smaller government. He’ll start work next week, according to the IRS.

“In every area of the IRS, taxpayers need to be confident that they will be treated fairly, no matter what their background or their affiliations,” he told the Senate Finance Committee, which approved his nomination on Dec. 13. “Public trust is the IRS’s most important and valuable asset.”

Koskinen is a former chairman of government-backed mortgage company Freddie Mac (FMCC:US) and city administrator of Washington. He also was president of the U.S. Soccer Foundation and chairman of the board of trustees at Duke University in Durham, North Carolina, which named its soccer and lacrosse stadium for him.

Tea Party

The IRS faces a series of challenges, starting with the congressional and criminal investigations into its treatment of Tea Party groups applying for tax-exempt status.

Since May, the IRS has pushed out at least four executives, including Lois Lerner, director of exempt organizations who was put on leave then retired in September. Lerner said her office had flagged applications from some Tea Party groups for extra scrutiny based solely on their names.

The groups, including some with the word “progressive” in their names, were asked questions by the agency that the IRS inspector general deemed inappropriate.

The revelations led to the congressional investigations and a federal criminal investigation.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, yesterday said he would oppose the nominee until the Obama administration answers questions about how groups were targeted. McConnell said he had no “animus” toward Koskinen and would monitor developments at the agency.

‘Deserve Answers’

“The American people deserve answers about how and why this targeting happened,” McConnell said.

“We expect whoever is eventually confirmed to hold those who broke or bent the rules accountable,” McConnell said. “We expect the next commissioner to fairly implement the laws that he or she is charged with executing.”

Koskinen takes over an agency that has been struggling with a reduced budget and added responsibilities to help implement the 2010 Patient Protection and Affordable Care Act.

The agency completed the most recent tax-filing season with 8,000 fewer employees, said Colleen Kelley, president of the National Treasury Employees Union, which represents most IRS workers.

“These are serious circumstances undercutting the work of the agency responsible for collecting 93 percent of government revenue,” she said in a statement.

Koskinen, who has no experience in tax administration, fills the void left by former commissioner Douglas Shulman.

Bush Nominee

Shulman, who had been chosen by President George W. Bush, announced in April 2012 that he didn’t intend to stay when his term ended seven months later in November.

Steven Miller, a veteran IRS employee, became acting commissioner to replace Shulman. Obama forced Miller out in May after the agency apologized for giving some Tea Party groups extra scrutiny based solely on their names.

Obama replaced Miller with Danny Werfel, the controller of the Office of Management and Budget.

Obama nominated Koskinen in August. His term will end in November 2017.

According to disclosures he filed this year, Koskinen’s net worth ranges from $7.1 million to $27.4 million. In those disclosures, he said he would resign as a director of AES Corp. (AES:US) and American Capital Ltd. (ACAS:US) and sell stock holdings.

Koskinen, who has donated to Democratic political campaigns including Obama’s, will oversee work on new rules setting a definition of political activity for nonprofit groups. Those rules, which aren’t likely to take effect until after the 2014 election, will determine how much of that activity jeopardizes their tax-exempt status.

During Koskinen’s Senate confirmation hearing, Republicans such as Pat Roberts of Kansas criticized the rules, arguing they would chill free speech and have a disproportionate effect on organizations allied with Republicans.

“The IRS is in need of strong leadership,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat. “He’s the type of leader we need at the IRS.”

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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Companies Mentioned

  • FMCC
    (Federal Home Loan Mortgage Corp)
    • $3.82 USD
    • -0.01
    • -0.26%
  • AES
    (AES Corp/VA)
    • $14.26 USD
    • -0.09
    • -0.63%
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