IRS Revamp May Come Separately From Tax Reform: Brady

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By Colleen Murphy and Laura Davison

The House Ways and Means Committee plans to remake the IRS in a standalone bill, instead of including it in a tax reform package, members told Bloomberg BNA.

A GOP proposal released last year would split the Internal Revenue Service into three units and could remove some of its enforcement capability to ensure it is focused on helping taxpayers. But those changes may not fit into the tax reform bill because Republicans plan to pass it using the filibuster-proof reconciliation process, meaning all aspects must be related to the budget.

“I wouldn’t be surprised if that needs to move in a separate bill,” committee Chairman Kevin Brady (R-Texas) told Bloomberg BNA May 2.

The pitch to revamp the agency—which many Republicans think can’t be trusted—would likely be an easy one for those lawmakers to get behind. Still, the blueprint doesn’t include information on key parts of the agency, such as the National Taxpayer Advocate and the Tax Exempt and Government Entities Division, which was at the center of a scandal several years ago when employees singled out groups applying for tax-exempt status.

Not There Yet

Restructuring the IRS wasn’t discussed much at the Ways and Means Committee’s two-day tax policy meeting held April 30 and May 1, Rep. Carlos Curbelo (R-Fla.) said.

“You also get into the reconciliation issue: Can you restructure an agency through a reconciliation package?” Curbelo said. “Honestly, I haven’t given much thought to this.”

The committee is “further ahead” on tax reform than on IRS restructuring, which will come once a new tax code is finalized, Rep. Peter Roskam (R-Ill.) said May 2. Roskam is the chairman of the Tax Policy Subcommittee. The committee would have “more flexibility” to make IRS reforms if Congress decides to do tax reform through regular order, he said.

“The structural changes will follow the decisions that get made in terms of tax reform,” he said.

Roskam also said proposed changes have nothing to do with Republican ire toward IRS Commissioner John Koskinen. Some members, including Roskam and Brady, have called for his dismissal in recent weeks.

Putting Out Feelers

Members of the committee are planning to request feedback on how to restructure the agency and may hold roundtables or put out “invitations for ideas,” Brady said. Roskam and Rep. Vern Buchanan (R-Fla.) are “laying out a process to invite that feedback on how to best redesign the IRS for a much simpler tax code and really a redesign focused on taxpayer service,” he said.

Buchanan is chairman of the Oversight Subcommittee.

“We’d like to try to get both done,” Buchanan said. “We talked about that in the blueprint and it’s not about us; we’d like to work with the IRS to figure out what more we can do to help.”

To contact the reporters 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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