by Mark W. Everson, Former IRS Commissioner; alliantgroup Vice Chairman
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- The Senate Finance Committee this week voted to advance Daniel Werfel’s nomination to become IRS commissioner.
- The nomination process comes amid fierce debate over the agency’s $80 billion in funding.
- The bipartisan committee vote was the final step before a full Senate vote for confirmation.
The Senate Finance Committee this week voted to advance Daniel Werfel’s nomination to become IRS commissioner amid fierce debate over the agency’s $80 billion in funding.
Following a confirmation hearing on Feb. 15, the bipartisan committee vote was the final step before a full Senate vote for confirmation.
Senate Finance Committee Chair Ron Wyden, D-Ore., said Werfel’s February testimony demonstrated he’s a “rule follower” who will work with “both sides of the Committee.”
“He’s going to go through, I believe, in a matter of weeks,” said Mark Everson, a former IRS commissioner and current vice chairman at alliantgroup, noting there is support from both sides of the aisle.
“There’s a great deal of contention about the proper role of the IRS and tax administration in terms of its role on wealth distribution and a host of other issues,” he said. “But there’s agreement that you need a competent, accountable commissioner running this vital organ of government — and Danny Werfel is that person.”
Prior to Werfel’s role at Boston Consulting Group, he served President Barack Obama and President George W. Bush as the IRS acting commissioner and Office of Management and Budget controller.
Oversight of IRS funding is a priority for Republicans
The Senate Finance Committee vote comes amid continued scrutiny of the $80 billion in IRS funding allocated in August through the Inflation Reduction Act.
After months of disapproval, House Republicans in January voted to rescind the funding. But without support from the Democrat-controlled Senate or the White House, the bill was largely seen as political messaging.
And a group of House Republicans in January revisited the Fair Tax Act, which aimed to replace certain federal levies with a national sales tax and to decentralize the IRS. But policy experts say the fair tax has never been a mainstream idea.
In February, the Republican-led House Ways and Means Committee shared oversight priorities, with the $80 billion IRS funding “at the top of the list,” according to chairman Jason Smith, R-Mo.
Meanwhile, the IRS missed the six-month deadline to submit a plan for the funding on Feb. 17, as requested by Treasury Secretary Janet Yellen in August. Her priorities focused on taxpayer service, such as clearing the backlog of unprocessed tax returns, boosting customer service, overhauling technology and hiring workers.
Sen. John Cornyn, R-Texas, on Thursday spoke about the missed deadline during his opening statement, noting that it’s “not inspiring when it comes to regaining the confidence of the American people.”
However, Everson believes the delay is an intentional choice from the agency.
“It would only muddy the waters because it would potentially give rise to another round of questions for the nominee,” he said.
Audit rate won’t rise for those making under $400,000
Following a directive from Yellen, Werfel vowed not to increase audit rates for small businesses and households making under $400,000, relative to recent years.
“If I am fortunate enough to be confirmed, the audit and compliance priorities will be focused on enhancing IRS’ capabilities to ensure that America’s highest earners comply with tax laws,” Werfel said in his opening statement.
Tax enforcement fairness is a key issue
Senate Finance Committee Chair Ron Wyden, D-Ore., kicked off the hearing by emphasizing the Inflation Reduction Act’s goal of providing resources to achieve fairness in tax enforcement, aiming to “go after tax cheating from the big guys.”
Wealthy Americans have increasingly seen fewer audits after years of budget cuts. During fiscal 2022, millionaires faced a 1.1% chance of an IRS audit, according to a recent report from Syracuse University’s Transactional Records Access Clearinghouse.
Meanwhile, the audit rate has declined more slowly for lower earners claiming the earned income tax credit, and Black Americans are roughly three to five times more likely to face an IRS audit than other taxpayers, according to a recent study.
If poor people are more likely to be audited than the wealthy, Werfel said it “potentially degrades public trust and needs to be addressed within the tax system.”
Angelique Neal, a tax attorney at Dickinson Wright, said Werfel “seems committed” to addressing these audit disparities to ensure fairness and equitable treatment for all taxpayers.
Building trust is “one of the foundations of government,” especially for an agency tasked with collecting the vast majority of revenue, said Neal, who previously served as a senior trial attorney in the office of chief counsel to the IRS.
About the Author
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.