Republican and Democratic senators who have been arguing over how much money to give the IRS and how it should be spent found at least one point of unanimity Wednesday as they considered President Joe Biden’s nominee to lead the agency: Both sides wished Danny Werfel good luck with the worst job in Washington.
Werfel pledged before senators not to expand tax audits on businesses and households making less than $400,000 per year, a key point of concern to legislators, as he faced rounds of questions before the Senate Finance Committee on how he would spend the agency’s big new infusion of money. He drew praise for being willing to leave a private consulting job to take on the top job at the troubled agency.
Sen. Mark Warner, D-Va., called the job “one of the more thankless tasks” in Washington. Sen James Lankford, R-Okla., said Werfel was “walking right into fire.” Sen. Thom Tillis, R-N.C., told Werfel the IRS was never going to be one of the most admired agencies in Washington given its mission of collecting taxes. And Sen. Sheldon Whitehouse, D-R.I., offered Werfel best wishes in one of the “least popular jobs in town.”
A vote on Werfel’s nomination will be scheduled after the committee allows time for him to answer follow-up questions. But the bipartisan acknowledgment of the tough job ahead served as a reminder of just how beleaguered the national tax collector has become in recent decades and the work it will take to modernize the organization.
President Joe Biden nominated Werfel to steer the IRS as it receives nearly $80 billion over the next 10 years through the Inflation Reduction Act, which Congress passed in August. Taking note of the potential impact of the funding, Werfel said “Americans rightfully expect a more modern and high-performing IRS.”
Werfel, 51, said he would be “unyielding in following my true north to increase public trust” in the agency even as he works to modernize the agency’s technology, address its paperwork burden and audit high-income earners.
Werfel, who led Boston Consulting Group’s global public sector practice, would replace Charles Rettig, whose five-year term ended in November. An acting commissioner has been filling in.
Werfel will have to navigate controversy surrounding the new funding as critics distort how the new law would affect the IRS and taxes for the middle class. About $46 billion was allocated for enforcing tax laws and the rest to taxpayer services, operations support and updating business systems.
Republicans have suggested without evidence that the agency would use the new money to hire an army of tax agents with weapons.
Sen. Mike Crapo, R-Idaho, said Republican concerns center around potential misuse of government funding.
Taxpayers “are rightly concerned about the vitality of their taxpayer rights” he said.
Werfel pulled out a paper copy of the Taxpayers Bill of Rights and said he pledged to read the document every day if confirmed to the role.
”I’m ready to roll up my sleeves to help working families,” he said.
Senators on both sides of the aisle probed the IRS’ intent to audit more high-income earners — and Werfel’s commitment not to expand audits of households and businesses making less than $400,000 per year.
House Republicans began their tenure in the majority last month by passing a bill that would rescind new IRS funding. That legislation has not advanced in the Senate and is unlikely to reach Biden, who has promised a veto.
Caroline Bruckner, a tax professor at the American University Kogod School of Business, said that, if confirmed, Werfel would have to address the massive workforce challenges at the IRS wrought by attrition, an aging workforce and a generally poor reputation.
“The next generation of accountants don’t want to work for the IRS,” Bruckner said. She added, “To attract the best talent, particularly with Millennials and Gen-Z workers who will be the future of the workforce, transparency as a leader will go a long way.”
Bruckner referred to a Stanford University study that showed IRS data-driven algorithms chose Black taxpayers for audit at up to 4.7 times the rate of non-Black taxpayers. “The next generation of workers care about these things, and this is a leadership challenge,” she said.
Werfel said he would “absolutely” report to the Senate Finance committee within 60 days of his confirmation on the matter.
“The bottom line is what will build trust with the taxpayers,” Werfel said.
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