Senate Republicans halt IRS hearing

Senate Republicans halted a hearing with President Obama’s choice to lead the Internal Revenue Service on Tuesday, raising new questions about whether the troubled agency will have a confirmed chief by year’s end.

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Before the hearing broke up, Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel’s top Republican, Sen. Orrin Hatch (R-Utah), vowed to support John Koskinen, the former Freddie Mac executive tapped to take over an agency still reeling from its admission that it inappropriately singled out conservative groups for additional review.

Baucus and Hatch plan to reconvene the IRS hearing Wednesday at 9:15 a.m.

But with the agency’s current interim chief, Danny Werfel, scheduled to leave by the end of the month, it’s far from clear when Koskinen’s nomination could reach the Senate floor.

The GOP decision Tuesday to block the hearing from proceeding came as the Senate was continuing its work to confirm a string of federal judges and Obama’s nominees via majority vote, after a rule change via the “nuclear option” that Republicans vigorously opposed.

Baucus told reporters after the hearing that he believed Koskinen could be confirmed by the full Senate.

“I hope so,” he said when asked if Koskinen could be confirmed this year. “I’m going to do my very best.”

Sen. Chuck Grassley (R-Iowa), a former Finance chairman, acknowledged that delaying the hearing would make it challenging to confirm Koskinen this year. “It does make it difficult,” he said.

But Grassley, while acknowledging that Republicans remain troubled by the rules change, said he couldn’t say for sure why the hearing wasn’t allowed to proceed after opening statements and questions from just Baucus and Hatch.

During Tuesday’s portion of the hearing, Koskinen vowed to restore the trust of taxpayers shaken by the the agency’s singling out of tax-exempt groups, and to smoothly implement the IRS’s portion of Obama’s healthcare overhaul — a hot topic, given ObamaCare’s troubled rollout.

“In every area of the IRS, taxpayers need to be confident they will be treated fairly, no matter what their background or affiliations,” Koskinen told the committee. “Public trust is the IRS's most important and valuable asset.”

Koskinen, who has crafted a reputation as a turnaround artist, also said that the IRS needed to boost its efforts to combat tax fraud, and urged lawmakers to solve what he called “the funding problem” facing the IRS.

Agency officials have insisted that cutting the IRS’s bottom line only hurts the government’s ability to collect revenue, but Republicans have been skeptical of those assertions.

Baucus said Tuesday that Koskinen was clearly the right person for the job, and that he believed the nominee would reverse the damage caused by the targeting controversy and be a willing partner as Congress chases tax reform.

“The American people were willing to pay their taxes. They understand it's their civic duty, but then there are charges of political bias at the IRS that makes everyone feel like the deck is stacked,” the Montana Democrat said.

But Hatch noted that, while he supports Koskinen, he wishes Baucus had waited to move on the nomination until after the Finance Committee had concluded its investigation into the IRS’s targeting of Tea Party groups.

The two senators had hoped to release their findings this year. But after delays caused by October’s government shutdown and other factors, the report is more likely to be released early next year, aides say.

“I had hoped that the next commissioner would begin his time with the benefit of the findings of our investigation so he would be in a better position to fix the problems we've uncovered and to move the agency forward with strong bipartisan support,” Hatch said at the hearing.

Koskinen, who previously helped the government battle “Y2K” concerns and D.C. combat its own financial troubles, told Hatch he would be “delighted” to cooperate fully with the Finance Committee’s investigation.

The Senate committee is just one of several congressional panels looking into the IRS targeting. Republicans on Capitol Hill have said that the IRS clearly treated conservative groups more harshly. Democrats have insisted that there are no signs that anyone outside the IRS was involved in the targeting, or that there was any political motivation.

Hatch also pressed Koskinen about the federal government’s new proposed regulations that would limit how much campaign activity that tax-exempt 501(c)(4) groups can conduct.

The Utah Republican said he wants to see the IRS make sure that any final rules would also cover unions, and not just the social welfare groups that Hatch said “the IRS intends to hammer.”

But Koskinen would only say that he would actively work to ensure that taxpayers viewed the regulations as fair.

Werfel will be exiting the IRS roughly seven months after taking over following a shake-up among the agency’s top brass.

Previously, when an interim chief has exited without a confirmed successor, the IRS’s deputy commissioner for services and enforcement temporarily takes over the top slot. John Dalrymple, a longtime former IRS executive, was named to that role in August.

— This story was last updated at 3:23 p.m.