Don’t Race Through IRS Restructuring, Agency Chief Says

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By Colleen Murphy and Laura Davison

Dec. 13 — Lawmakers should take their time when considering a reshuffle of the Internal Revenue Service, instead of plowing ahead with changes as part of tax overhaul efforts next legislative session, the agency commissioner said in an interview with Bloomberg BNA.

The IRS would be broken up into three “units,” according to a GOP proposal released in June. But the document—meant to serve as a marker of priorities—ignores critical agency areas such as criminal investigation, tax-exempt entities and the National Taxpayer Advocate, and glosses over the need for some enforcement abilities, Commissioner John Koskinen said Dec. 13.

“You can’t easily restructure the IRS in three months without taking a look at all these issues. It’s not to say that you shouldn’t. My sense is that if people sit down and look at it all and say, ‘It would look better in another way,’ we’re happy to explain what we think the issues are and what would make it work better or not, or what the technical issues are,” he said.

When the agency was restructured in 1986, a task force and committee “looked at it for a long time,” and lawmakers held congressional hearings to determine the best route, Koskinen said.

The likelihood of sweeping tax changes crystallized in November when Republicans held onto control in the House and Senate, and Republican Donald Trump won the presidential election. Koskinen said he is more confident about proposals to revamp corporate and individual tax because of the extensive time lawmakers and researchers have already spent on the areas.

“There is much more data available and much more analysis of proposals out there to work with to make tax reform in the first several months of the administration more likely to be effected than trying to restructure the IRS in the first three or four months,” he said.

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Koskinen noted that lawmakers created administrative problems for the agency last year when Congress passed legislation changing how the IRS audits partnerships that hadn’t been fully vetted. The legislation lacked technical clarification that made the audit process more difficult than the current law to implement, causing the agency to have to go back to Congress to request revisions to the law.

Koskinen said he is reaching out to the Trump transition team to offer up IRS officials to help draft legislation for an overhaul of the tax code that meets the policymakers’ intended result.

“Our goal is to make sure people don’t inadvertently pass legislation that makes life more complicated than it has to be,” Koskinen said.

Lawmakers should also have technical conversations with the IRS before repealing or replacing the Affordable Care Act, Koskinen said. Scrapping the law is one of Republicans’ top priorities come January. Koskinen said he asked IRS staffers who worked on implementing the law to pull together suggestions for how the process can be smoothed out.

One Year Left

Hard-right lawmakers have urged for more than a year that Congress impeach Koskinen, blaming him for the agency’s response to an investigation into scrutiny of social welfare organizations applying for tax exemptions. The House quashed a resolution to oust the commissioner Dec. 6, sending it back to the Judiciary Committee.

“The consensus seems to be there’s a phenomenal amount of work the new Congress has to address, and so it is probably less likely that this will come back up next session,” Koskinen said.

Koskinen, one of two presidential appointees in the IRS, said the topic of his resignation didn’t come up in a meeting last week with Trump’s transition team. He has previously said he serves at the pleasure of the president, and would step down if asked. His five-year term ends in November 2017.

To contact the reporter on this story: Colleen Murphy in Washington at cmurphy@bna.com and Laura Davison in Washington at ldavison@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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