Taxes

Biden’s IRS Nominee Promises Change At Senate Confirmation Hearing

Many taxpayers got their first glimpse of President Biden’s nominee to lead the Internal Revenue Service on Wednesday as Daniel Werfel appeared before the Senate Finance Committee for his confirmation hearing. Others, however, may have experienced deja vu—Werfel served as the interim IRS Commissioner for several months in 2013 after Steven T. Miller resigned under pressure during the Lois Lerner scandal.

Werfel appeared at the hearing with his wife, Beth, who works as a psychologist in the public school system, his children, Sean and Molly, and his parents.

Opening Remarks

In his opening remarks, which you can watch here, Werfel noted that he began his career in public service at the Office of Management and Budget (OMB) as a GS-9 in the late 1990s. GS is an abbreviation for General Schedule, the predominant federal pay scale. The system has 15 grades, beginning with GS-1 and going up to GS-15—there are 10 steps within each grade. A GS-9 is described as “mostly mid-level technical and first level supervisory positions.”

While at the OMB, Werfel served under nine directors of both political parties. That experience, he says, reinforced the importance of having a “true north” for how to best serve the American people.

Werfel has spent most of the last decade in the private sector at Boston Consulting Group. He graduated from Cornell University before earning his law degree from the University of North Carolina, Chapel Hill. He also holds a Master of Public Policy from Duke University.

That background prepared him to serve as Acting Commissioner for IRS in 2013, when he “witnessed how dedicated and talented IRS civil servants are in fulfilling the critical mission of administering the nation’s tax system.” Their “true north,” he says, is their deep belief that the American people need an IRS that provides all taxpayers with world-class customer service and implements the tax code in a way that is just, fair, equitable, and protects the US government’s resources.

IRS Challenges

“World-class customer service” was a theme Werfel repeated throughout his confirmation hearing. That ties in with his upcoming challenge to decide how to allocate the $80 billion that the last Congress approved for the IRS over the next decade as part of the Inflation Reduction Act.

Those funds have been a sore spot in the current Congress, with Sen. Ron Wyden (D-OR) noting, at the hearing, that “the IRS is getting the resources it needs to go after tax cheating by the big guys — the wealthy and corporations. There are members who oppose that effort, and I get that they want to deflect and distract. That’s why you’re hearing these wild, made-up fantasies about 87,000 agents armed with rifles, busting down people’s doors.”

So far, the IRS has hired 5,000 additional employees to answer the phones—something that most tax professionals, including me, appear to appreciate—and rolled out new services, including the ability to get tax refunds from amended tax returns via direct deposit.

Werfel advised that he reads the Taxpayer Bill of Rights (TBOR) every day and pledged to continue to do so. TBOR, which enumerates the fundamental rights assured to taxpayers when dealing with the IRS, was written into the Tax Code and was a signature accomplishment of then-National Taxpayer Advocate Nina Olson.

“I’m ready to roll up my sleeves to help working families,” Werfel testified.

Audit Questions

There is still work to be done. And as the IRS works to reduce the tax gap, some worried there could be an overreach. Werfel noted in his remarks that last year, Treasury Secretary Janet Yellen issued a directive that the IRS will not increase audit rates, relative to historic levels, for small businesses and households making under $400,000. During the hearing, Werfel was asked about this repeatedly and assured the committee that he would commit to making that happen.

When Sen. Mike Crapo (R-ID) worried aloud that Yellen’s guidance “leaves a lot of wiggle room,” Werfel was quick to assure him that he was “a rule follower.”

Members of the committee said they would hold him to his commitment, with Crapo adding, “If confirmed, Mr. Werfel, you must be the change agent we have long been promised.”

What Comes Next

How long confirmation could take is anyone’s guess. The previous Commissioner, Charles Rettig, waited about seven months for confirmation.

Werfel was officially nominated by President Biden last November after Rettig left office. Douglas O’Donnell has served as Acting Commissioner of the IRS since that time.

Commissioners are nominated by the President and confirmed by the Senate—the IRS Commissioner and the IRS Chief Counsel are the only federal appointees in the agency. IRS Commissioners typically serve a five-year term.

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