Obama Chooses John Koskinen as Next U.S. IRS Commissioner

President Barack Obama said he will nominate John Koskinen, former chairman of Freddie Mac (FMCC), as the next Internal Revenue Service commissioner.

Koskinen will be tasked with revamping the U.S. tax agency, which has come under intense criticism for giving extra scrutiny to small-government advocacy groups as they applied for tax-exempt status.

“John is an expert at turning around institutions in need of reform,” Obama said in a statement today. “With decades of experience, in both the private and public sectors, John knows how to lead in difficult times, whether that means ensuring new management or implementing new checks and balances.”

Koskinen, 74, is a former deputy director of the Office of Management and Budget under President Bill Clinton and led the government’s efforts to prepare for converting computer systems for the year 2000.

He was city administrator of Washington and took over as non-executive chairman of Freddie Mac, the U.S.-owned mortgage financier, after the credit crisis, from 2008 to 2011. He’s a director of AES Corp. (AES), based in Arlington, Virginia, and American Capital Ltd. (ACAS), which has its headquarters in Bethesda, Maryland.

Democratic Donor

Since the beginning of 2007, Koskinen has donated $25,600 to Democratic candidates and causes, including $7,300 to Obama and $3,000 to the Democratic Congressional Campaign Committee, according to Federal Election Commission records.

Senator Orrin Hatch of Utah, the top Republican on the Finance Committee, said he was “more than a little mystified” that he wasn’t consulted or notified in advance about the choice of Koskinen and that the IRS hasn’t been forthcoming enough in responding to document requests from Congress.

“I will not stop until the truth comes out, and I will demand significant answers from this nominee to ensure that we not only get to the truth, but that the administration is fully cooperating with our efforts,” Hatch said in a statement.

The last permanent IRS commissioner, Douglas Shulman, left after his term ended in 2012. Obama forced out Shulman’s acting replacement, Steven Miller, in May, after the IRS apologized for its treatment of Tea Party groups.

Management Background

Danny Werfel is the agency’s current acting leader. Like every IRS commissioner since Clinton picked Margaret Richardson in 1993, Koskinen’s background is in management, not tax policy or tax law.

If confirmed by the Senate, Koskinen’s term would last until November 2017.

The IRS faces a series of challenges, starting with the congressional and criminal investigations into its treatment of Tea Party groups applying for tax-exempt status.

Since May, the IRS has pushed out at least four executives, including Lois Lerner, former director of exempt organizations who was put on paid leave.

The agency also has a central role in implementing the 2010 health-care law and administering rules designed to limit Americans’ ability to hide money in offshore accounts. Republicans in Congress have proposed cutting the agency’s budget by 24 percent.

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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