Photographer: Andrew Harrer/Bloomberg

Trump Prepares to Pick His Own Auditor at the IRS

  • Koskinen’s term expires Nov. 12, no replacement named
  • IRS commissioner key in administering changes to tax code

Donald Trump soon will get to choose a new leader for the IRS, a person who may have two high-profile and sensitive jobs: helping implement the president’s proposed tax cuts and overseeing an audit of his tax returns.

IRS Commissioner John Koskinen’s term expires on Nov. 12 and he is unlikely to be reappointed. He was hired by President Barack Obama and is loathed by congressional Republicans, who tried to impeach him in 2016.

Trump hasn’t nominated anyone to replace Koskinen. Treasury Secretary Steven Mnuchin, whose department includes the Internal Revenue Service, is said to be in the early stages of the selection process, according to two people familiar with the matter.

It’s a potentially explosive decision for the president, unless he and Mnuchin recuse themselves. The slightest perception that Trump is trying to influence the agency overseeing his audit or any tax-related probes of his campaign’s ties to the Russian government would ignite a furor in Congress.

The nomination will be even more important if Trump can persuade lawmakers to pass the “historic” tax overhaul he promised in an Indiana speech on Wednesday, legislation that would cut rates for corporations and individuals and simplify returns. The new IRS commissioner will be responsible for making sure computer systems and documents at the IRS are updated, staff are trained in the nuances of the law and filing season proceeds without a hitch.

Mnuchin said Thursday that the tax cuts would ideally be retroactive to 2017, a decision that would further complicate the new commissioner’s work.

While a permanent replacement for Koskinen must be confirmed by the Senate, by law the job can’t remain vacant. The Internal Revenue Code requires the president to appoint an acting head of the agency.

“We are actively focused on nominating a new IRS commissioner. We will put someone in on a temporary basis if needed,” White House spokeswoman Natalie Strom said.

The IRS also lacks a general counsel, the only other political appointee in an agency that employs about 80,000 people across the U.S.

Trump’s Audit

The agency’s enormous workforce of career civil servants insulates it from political meddling. A commissioner who tried to interfere in either the Russia investigation or Trump’s audit would likely be foiled, former leaders of the agency said.

“The career folks at the IRS are not going to let anybody come into the organization, appointee or not, and tell them who and what they have to do in the way of examining someone,” said Lawrence Gibbs, who worked at the IRS for 17 years, including as the commissioner in the 1980s.

That didn’t stop former President Richard Nixon, whose attempts to manipulate tax investigations were cited by Congress in one of his articles of impeachment in 1974.

“The IRS pushed back when Nixon tried to exert political influence; that reinforced the probity of the IRS,” said Mark Iwry, who served as a senior adviser and deputy assistant secretary for tax policy at the Treasury during the Obama administration. “IRS personnel know very well that improperly favoring or disfavoring a particular taxpayer would be absolutely wrong and contrary to IRS’s mission and decades of IRS practice and adherence to principle.”

Trump has said nothing about trying to influence either the Russia investigation or his audit through a new IRS commissioner. Yet Trump’s critics say Congress should nonetheless safeguard against it. CNN reported on Tuesday that the IRS has begun sharing information about key Trump campaign officials with Special Counsel Robert Mueller.

A coalition of 10 liberal advocacy groups including MoveOn.Org said that the president should “not be allowed to unilaterally install an ally as acting commissioner of the IRS” in a letter sent last week to Mnuchin and members of Congress. The Senate should ask the president to retain Koskinen as acting commissioner until a permanent replacement is named to ensure that the agency’s temporary leader is “qualified and impartial,” the groups said.

Koskinen and Trump

As it turns out, Koskinen and the president have a long relationship. The pair first met in the 1970s when Koskinen worked at a company that managed some assets of Penn Central. One of them was a hotel that Trump had purchased. Koskinen said in a December interview that he got to know Trump through several months of negotiations over that deal.

Unless Koskinen is reappointed or a new director confirmed by the Senate, Trump will have fewer political staff to manage changes to the tax code. He has an incomplete team at the Treasury Department, with half of the agency’s highest-ranking political jobs empty. In addition to the general counsel, who would help interpret new legislation, the White House hasn’t named anyone to the eight seats on the IRS’s oversight board. The panel has suspended its operations due to a lack of Senate-confirmed members.

The IRS is also slimmer than it once was due to budget cuts initiated by House Republicans who targeted the agency after gaining power in 2010. IRS staffing levels have dropped 31 percent in the last 20 years, according to the National Treasury Employees Union, which represents IRS employees.

It’s not unusual for temporary officials to lead the IRS. But combined with the lack of resources, the changes that would be required by a tax overhaul “could make for a particularly difficult and delicate time,” said Gibbs, who was commissioner in 1986 when the Reagan administration’s historic tax overhaul was implemented.

The job would be even harder should the tax cuts be retroactive to the start of 2017, he said. Mnuchin said at The Atlantic and Aspen Institute’s Washington Ideas forum on Thursday that “we’d like to” make the cuts retroactive “but again, we’ll see where we get.”

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