IRS chief struggles with uncertain future under Trump

IRS chief struggles with uncertain future under Trump
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(This story originally appeared on The Hill Extra)

 

IRS commissioner John Koskinen, an Obama administration appointee, has been public about his willingness to work with President Trump, including carrying out the GOP goal of dismantling the tax agency’s Affordable Care Act system that he helped build.

Koskinen came out of retirement in 2013 amid a major lift from IRS to implement new ACA requirements. He took office after an acting agency head stepped down amid an uproar over political targeting of tax-exempt groups, which led to big cuts in the agency's budget.

The former business executive has been dubbed a "Washington fixer," presiding over troubled organizations, such as the federal mortgage giant Freddie Mac under former President George W. Bush. At the IRS, he's credited with uncovering areas within the cash-strapped agency to shift resources to fund the health law without sacrificing the tax filing operation. Koskinen earlier worked for former President Clinton to oversee Y2K computer preparation. 

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Trump, however, has still not made a decision yet on whether to dismiss or keep Koskinen, even as Republicans seek to blow up the current health law and repeal most of the tax elements. 

Several top Republicans, including Vice President Mike PenceMike (Michael) Richard Pence3 reasons Devin Nunes must step away from the Trump probe Pence meets his 'second-favorite Ron and Nancy' Sanford: 'Testosterone can get you in trouble' MORE and Senate Majority Leader Mitch McConnellMitch McConnellPath to 60 narrows for Trump pick Dems delay Senate panel vote on Supreme Court nominee This week: GOP picks up the pieces after healthcare defeat MORE (R-Ky.), are still sour over the IRS political controversy and want Koskinen out before his term ends in November.

Under Koskinen, the IRS has already begun to carry out Trump's first executive order to ease the burden of the law. Last month, the agency announced that it will no longer reject individual tax returns that don't report a taxpayer's health insurance status for this year's filing season, reversing prior guidance provided to software providers. 

Koskinen can still do more under Trump's directive, according to experts. One key move would be to relax the enforcement of employer mandates by making the case that the beleaguered IRS already lacks the resources. The agency could continue pushing back the reporting deadlines as it done in the past.  

Competing interests?

Seeking to revamp the health law and calling for Koskinen's head at the same time are “pretty serious competing considerations,” according to Larry Gibbs, who served as the IRS commissioner under President Reagan.

While it’s common that a new administration would prefer another head of a department or agency, “we’ve already seen how difficult it is for cabinet nominees to be confirmed and the time that it will take to put in a new commissioner is at least a matter of months,” said Gibbs, now an attorney at Miller & Chevalier.

The confirmation process for Treasury Secretary Steve Mnuchin and Health and Human Services Secretary Tom Price experienced delays. Democrats in the Senate Finance Committee twice boycotted a critical panel vote. 

Even during a time of less rancor, Gibbs was picked to lead the IRS on March 1986, but the Republican-controlled Senate didn’t confirm him until August. A senator in his party had put a hold on his confirmation because he and then-Treasury Secretary James Baker didn’t want to revoke an IRS ruling that supported the controversial 1973 Roe v. Wade case.

Exit stage left.

But Rep. Chris Collins (R-N.Y.), a Trump surrogate, said undoing the IRS regulations tied to ObamaCare without a commissioner won’t be a problem.

“That’s one person. I always say, anyone can be hit by a bus tomorrow and things move on. You’ve got a staff,” Collins said. “And it’s the policy that really matters.”

Collins also said Koskinen's resignation would be a "respectful" move to the new president.

"Most people would say, 'If I'm not wanted, I'm exiting stage left. Why would I want to be in that awkward position?' " he said.

Rep. David SchweikertDavid SchweikertHealthcare fight pits Trump against Club for Growth GOP leaders seek healthcare votes from competing factions Trump, GOP struggle to find healthcare votes MORE (R-Ariz.) a member of a conservative caucus that pushed to impeach Koskinen last year, said a new IRS commissioner would be “an opportunity for a refreshing start — whether you’re a supporter of Koskinen or not.”

Meanwhile, Trump has not yet given any signs that he wants to push out the sitting tax chief. Koskinen said in early January that he had a very positive discussion with the Trump team. 

A spokesman for Trump did not have a comment on the nomination process.

Collins said that he has heard "some names kicked around" to replace Koskinen but didn't disclose them. He added that the House GOP conference would be "united in bringing in a new IRS commissioner.

While details are still vague, the House GOP "Better Way" tax reform plan envisions a slimmed-down tax agency that would be focused on customer service.

"The new IRS will have a unit that will serve families and individuals and a separate unit that will serve businesses. And there will be an independent function designed to resolve small business disputes quickly, efficiently, and appropriately," the plan says. 

In a December interview with Tax Analysts, Koskinen warned that administering the health insurance system "inevitably will be more complicated than anybody would like" and even replacing current infrastructure will still be a major undertaking.

"So it is a system now up and running, and so I kind of hate to see it go away because we put so much into it, but we're prepared to do that. And we're prepared to adjust it, fix it, get rid of it, replace it with something else," Koskinen said during the interview. 

A 'good' tax chief.

Sen. Orrin HatchOrrin HatchCan Trump rebound after failure on healthcare bill? Overnight Finance: US preps cases linking North Korea to Fed heist | GOP chair says Dodd-Frank a 2017 priority | Chamber pushes lawmakers on Trump's trade pick | Labor nominee faces Senate US Chamber urges quick vote on USTR nominee Lighthizer MORE (R-Utah), whose Finance Committee investigated the IRS political targeting and vets potential commissioners, told The Hill Extra before the last congressional recess that he has not yet heard of potential candidates.

“I don’t know what the administration has in mind,” said the committee chairman, adding that Mnuchin would have a say in who would be his IRS commissioner. 

But if Trump does keep Koskinen, Hatch said he has no problem with him as commissioner.

“I happen to like Mr. Koskinen. Some people in the House don’t, but I do like him. I think he’s been a good IRS commissioner,” Hatch said.

 

This story originally appeared on The Hill Extra. See more exclusive content on policy and regulatory news on our subscription-only service here.