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Yellen names O’Donnell to temporarily steer IRS as it readies for major expansion

Quoted from Mark W. Everson Former IRS Commissioner; alliantgroup Vice Chairman

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Treasury Secretary Janet Yellen on Friday appointed Douglas O’Donnell as acting head of the IRS during a potentially transformative period for the agency.

O’Donnell, who is currently deputy commissioner for services and enforcement, would take charge of the IRS until a permanent replacement for outgoing Commissioner Chuck Rettig is confirmed. President Joe Biden has yet to nominate
someone for the post.

It’s considered a key appointment after an $80 billion influx of funding by Congress designed to ramp up scrutiny of wealthy people who may be avoiding taxes, reverse a staff shortage and modernize woefully out-of-date technology.

“Doug is an excellent choice,” said Jorge Castro of Miller & Chevalier, a former counselor to the IRS Commissioner. “He is the consummate IRS professional.”

“He’s experienced; he’s intelligent; he’s energetic and dedicated to the IRS and its mission,” said former IRS Commissioner John Koskinen, who held the post from 2013 through 2017 and worked with O’Donnell at the agency.

No walk in the park: O’Donnell has his work cut out for him, with the agency contending with return processing and correspondence backlogs in addition to the implementation of the Inflation Reduction Act funding.

And that will prove no easy feat, especially with Republicans launching attack ads portraying the Democratic-crafted funding as a plan to expand audits of ordinary Americans.

“This is a very politically charged initiative,” said Mark Everson, the vice-chairman of consulting firm Alliantgroup and the IRS commissioner from 2003 to 2007.

“I think he’s going to have to be very sure-footed and have a tight grip on what’s going on so that there aren’t many missteps or statements that throw gasoline on the flames,” Everson said of O’Donnell.

Everson noted that Republicans have already gone on the record threatening to roll back annual appropriations for the IRS in response to what they view as an unnecessary windfall.

And the extent to which an acting commissioner can chart the course for dramatic, long-term changes at the IRS remains to be seen, according to Marc Goldwein of the Committee for a Responsible Federal Budget.

“I do think it’s sort of culturally hard for someone that has an acting position,” Goldwein said,

No time to lose: Several observers noted that, while the nomination of a new commissioner is unlikely before the end of the year, the IRS can’t afford to wait that long to start working on the Inflation Reduction Act mandates.

That’s because the IRS has to staff up operations in personnel and procurement before the agency can overhaul its computer systems and make significant hires in tax enforcement.

Rettig’s term expires Nov. 12. He was a tax attorney, and the administration is said to be looking for a replacement with management experience given the changes expected at the IRS

“I greatly appreciate Commissioner Rettig’s service,” Sen. Ron Wyden (D-Ore.) said in an emailed statement. “He navigated the IRS through unprecedented challenges.”

About the Author

Mark W. Everson

The Honorable Mark W. Everson was the nation’s 46th Commissioner of Internal Revenue Service serving from 2003 until 2007. Prior to joining the IRS, Everson held Bush administration posts as Deputy Director for Management at the Office of Management and Budget and Controller of the Office of Federal Financial Management. Everson also served in the Reagan administration, holding several positions at the United States Information Agency and the Department of Justice, where his assignments included Deputy Commissioner of the Immigration and Naturalization Service. At the state level, Everson oversaw the Indiana Workforce and Unemployment Insurance Systems under Governor Mitch Daniels.

In the private sector, Everson served as Group Vice President of Finance at SC International Services, Inc. (SkyChefs), a $2 billion food services company, and as Senior Vice President with the Pechiney Group, then one of France’s largest industrial groups and the largest packaging company in the world.

As Vice Chairman of alliantgroup, Mark helps guide strategic and operational planning for the firm. Mark’s extensive private sector and government background afford him insights on tax incentives and regulatory matters which he shares with businesses across the country on behalf of alliantgroup. Mark is consulted regularly by the media concerning issues of tax administration and tax policy and how they impact businesses.