The Man Who Can Save the IRS

The IRS has no permanent commissioner. It needs one more than ever. But who would want the job?

This would be quite the week for the commissioner of the Internal Revenue Service. If the Internal Revenue Service had a commissioner.

The position has been vacant since Douglas Shulman finished his term in November, and President Barack Obama still has yet to nominate a replacement. So the IRS is responding to the scandal over its inappropriate review of conservative non-profit organizations without a permanent leader. Obama won't be able to delay making a nomination much longer. But it's not clear who would want the job, be good at it and be able to get confirmed.

The IRS needs a permanent leader who can run a complicated bureaucracy with more than 100,000 employees. He or she will need to put in place the recommendations detailed in the Inspector General report released yesterday to make sure politically biased nonprofit reviews don't happen again. And he or she will have to rebuild the service's reputation so it can work with a wide variety of sometimes hostile stakeholders as it undertakes sometimes politically charged initiatives, such as implementing Obamacare.

Oh, and that nominee will need to be able to get confirmed by a Senate whose Republicans will be sure to use confirmation hearings to beat the Obama administration over the head with this scandal.

The last three IRS commissioners have been outsiders to the tax world with private business experience. Last year, when Shulman stepped down, Tax Notes (a trade publication for the industry) interviewed people who work on taxes for a living and found that they generally liked this arrangement: The consensus was that the IRS has plenty of in-house tax expertise, and outsiders with business backgrounds know how to run big organizations. So Obama will also probably go with a candidate who is an experienced manager.

But is that arrangement really working? The failure the Inspector General report describes -- mid-level staffers in a satellite office made up their own politically charged rules in part because they didn't have enough supervision from Washington -- is exactly the sort of management breakdown you would hope a seasoned business executive would prevent.

The report's finding that "Determinations Unit specialists lacked knowledge of what activities are allowed" for nonprofits also complicates the claim that career IRS staffers have theknowing-how-taxes-work thing down and just need a good manager.

But an internal IRS candidate is going to be a non-starter politically; the new commissioner needs to be someone untainted by this scandal who can promise to do some house-cleaning. Obama could go with a state-level tax commissioner, preferably one appointed by a Republican governor. But state tax commissions are much smaller and simpler organizations than the IRS, so these officials might not have the chops.

Today, someone who has run a major public bureaucracy may be a better choice than a business executive. This is a time when running the IRS will be an unusually political job requiring someone with experience in running an organization under fire from political opponents.

At the risk of sounding like Thomas Friedman, who better to do this than Arne Duncan, Joel Klein or another former leader of a large urban public school district? (Duncan ran the Chicago Public Schools before serving as Obama's Secretary of Education; Klein was the Chancellor of the New York City Public Schools from 2002 to 2011.) Like the IRS, big school districts have a ton of employees, are often maligned by the public and must deal with stakeholders like teachers' unions that are often at cross-purposes with the organization's mission.

We don't know whether Duncan, Klein or others with similar qualifications would even be willing to run the IRS. It's a problem similar to what I wrote about with the Metropolitan Transportation Authority last month -- running the IRS isn't a glamorous job, and it doesn't pay nearly as well as comparable jobs in the private sector. Add to that the likelihood of a long vetting process followed by a bruising confirmation fight, and a lot of people who would be really good at the job are probably demurring at exactly the time a great IRS commissioner is needed most.

We don't know who the Obama administration has been vetting to replace Shulman or whether its candidate or candidates are still suitable and willing choices post-scandal. If the White House decides it must now start over vetting, stability at the IRS may be further delayed. But now more than ever it's important to get a strong candidate swiftly nominated, so the service can start cleaning up this mess and get back to work.

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