IRS Chief’s Fate Foggy After Trump Victory

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By Colleen Murphy

Nov. 9 — The startling outcome of the presidential election means an uncertain future for the head of the Internal Revenue Service, a figure tax practitioners have applauded and right-wing lawmakers have lambasted.

It is possible President-elect Donald Trump, or his Treasury secretary, would seek IRS Commissioner John Koskinen’s resignation—though in practitioners’ eyes that decision may be unwise. Rather, a new president ought to focus on filling out cabinet spots, making appointments and embarking on top priorities, they told Bloomberg BNA Nov. 9 and in the days leading up to the election.

“There are just so many questions about how he’s going to govern and who he’s going to have to bring in to govern,” Jeffrey S. Trinca, vice president at Van Scoyoc Associates in Washington, said Nov. 9. “Do they have the bandwidth to worry about something like this from the get-go?”

The Trump campaign didn’t return a request for comment.

Deciding on His Own

There is also the possibility that Koskinen, whose presidential appointment ends a year from now, would resign on his own, practitioners said.

Still, the outlook is murkier than it would have been if Democrat Hillary Clinton had won. Practitioners described her as a traditional executive who would respect Koskinen’s challenging job and the importance of an IRS that operates independently from political ebbs and flows.

Koskinen, when asked, has previously noted that he serves at the “pleasure of the president,” and told reporters Nov. 2 he would resign if the incoming president requested it.

The IRS drew conservative ire several years ago for scrutinizing exemption applications from a number of groups, most of which had Tea Party ties. Koskinen has been dogged by criticism from far-right members of Congress who say he should be impeached, an effort that could continue now that Republicans have held onto the House and the Senate.

As some lawmakers rallied for impeachment, holding multiple hearings on the topic, Koskinen said he intended to serve out his full term, Lisa Zarlenga, a partner at Steptoe & Johnson LLP in Washington noted Nov. 9.

“He is very much civil service-oriented. He might decide, ‘I’m going to stick with it unless they let me go,’” Zarlenga said.

Koskinen is “honored and privileged” to serve as commissioner, and will abide by whatever decision the next president makes, an IRS spokesman said in a Nov. 9 statement to Bloomberg BNA. The commissioner and other IRS officials “remain focused on the business of running the nation’s tax system and preparing for the upcoming filing season” and continuing efforts to combat identity theft and refund fraud, the statement continued.

Be Careful

Trump should tread lightly on the issue, practitioners said. The size and influence of the agency can’t be ignored, especially as tax filing season looms, said Marc J. Gerson, a member at Miller & Chevalier Chartered in Washington.

“Any transition, whether in the short term or at the end of his term, I think it has to be handled really well and thoughtfully and carefully,” Gerson said. He worked as a Republican tax counsel for the House Ways and Means Committee during the George W. Bush administration.

Trump could create a firestorm—and politicize the agency—if he immediately called for Koskinen’s resignation, instead of deferring to his Treasury secretary and deputy Treasury secretary to help make the decision, Trinca said. Those officials could consult others and then make a recommendation to Trump, he said.

“My recommendation would be for him to separate himself out,” Trinca said.

Keep Politics Out of It

The IRS is structured to be neutral, practitioners said, and has just two appointees: the commissioner and chief counsel. In comparison, the Treasury Department currently has 16 appointed officials and the Defense Department has 23, according to data from the White House.

Thus, asking Koskinen to resign could inappropriately tie the agency to political battles, practitioners said.

“If you respect the idea that it should be apolitical then it should make no difference who’s in the White House,” said Lawrence B. Gibbs, who was IRS commissioner from 1986 to 1989, in Ronald Reagan’s administration.

Gibbs, who was also at the IRS from 1972 to 1974—first as deputy chief counsel and later as assistant commissioner (technical), said he remembers the inappropriate expectations placed on IRS employees during former President Richard Nixon’s time in office. Nixon tried to push the IRS to audit his political foes, misconduct included in the articles of impeachment against him.

When Gibbs later became commissioner, he made it clear to other officials “if any inappropriate request was made, I would simply resign.”

“I’ve seen what it’s like to have pressure put on you and I must say I think there’s a very good reason for the term limits,” Gibbs, now a member at Miller & Chevalier, said. “That said, if I were at the IRS and a president, a new president particularly, asked for my resignation as commissioner I would resign.”

The Next Step

The IRS should also be working with Trump’s transition team “so there’s an understanding of what the service needs to do its job,” Mark W. Everson, vice chairman of Alliantgroup, said Nov. 9. Everson was IRS commissioner from 2003 to 2007 in George W. Bush’s administration.

Republicans will also “now own the performance of the service,” which may benefit from a less divided climate, Everson said.

“It will be a chance to turn the page on what has been a difficult period for the Service,” he said.

With assistance from Laura Davison in Washington.

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

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

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