Confidence signal from IRS chief

The IRS is showing renewed signs of confidence some nine months after it apologized for singling out Tea Party groups, with the agency’s new leadership making a concerted effort to move past the controversy.

The agency’s reputation hit rock bottom in May, when revelations about Tea Party targeting prompted President Obama to force out the agency’s interim chief, and Lois Lerner, then the head of the tax-exempt division, invoked her Fifth Amendment rights in congressional testimony

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Now the agency’s new commissioner, John Koskinen, is shifting the focus to other issues, like taxpayer services and implementing ObamaCare, and even handing out bonuses to IRS employees.

Koskinen said he’s working to build on the efforts of the IRS’s most recent interim commissioner, Danny Werfel, to regain the taxpayer’s trust in the agency.

“Nobody wants this investigation to be completed sooner than I do,” Koskinen told a House Ways and Means subcommittee on Wednesday about the various probes into the IRS’s treatment of groups seeking tax-exempt status.

Koskinen, who took over the position just six weeks ago, made a move to boost agency morale by approving some $62 million in bonuses for agency staffers. He suggested to lawmakers that the agency shouldn’t be judged solely on the actions of exempt organization staffers that make up less than 1 percent of IRS employees.

The change in approach from Werfel — who moved last year to scrap IRS bonuses — has riled Republicans, who say the agency was never held fully accountable for the targeting that went on. 

But Koskinen, a former Freddie Mac executive with a reputation as a turnaround artist in both the private and public sectors, says he’s focused on supporting the staffers who will play a role in repairing the agency’s relationship with the public. 

“The important message I hope comes out of this is that the IRS is functioning independently, and it is going to treat people fairly,” Koskinen told reporters after Wednesday’s hearing.

Floyd Williams, a longtime former IRS staffer, said Koskinen is trying to isolate the targeting controversy to broaden the public’s focus.

“They’re trying to get back on track, definitely,” Williams, now senior tax counsel for Public Strategies Washington, told The Hill. “He’s got to be the cheerleader. You still have a mission to fill.”

Koskinen stressed to Republicans on Ways and Means Wednesday that getting the investigators the documents they need would be at the top of his to-do list. 

But with Republicans intent on keeping the IRS controversy at center stage, Koskinen didn’t shy away from sparring with GOP lawmakers in his first testimony since taking over as commissioner. 

After the president chalked up the treatment of conservative groups as merely “bone-headed” — a sign, if nothing else, that the White House doesn’t view the IRS controversy as a pressing matter — Rep. Tom Reed (R-N.Y.) pressed Koskinen to agree that the president was making premature conclusions.

Koskinen retorted that a horde of officials had appeared to make conclusions before inquiries into the targeting were over.

“I’m not coming to any conclusions,” he said. “What anybody else wants to do is up to them.”

The new IRS commissioner was noncommittal about the GOP requests for documents dealing with the proposed regulations governing 501(c)(4) groups, rules that Republicans argue would stifle free speech. 

“We need to be careful that we don’t in effect interfere with that process as it goes forward,” Koskinen said.

Still, Republicans made clear Wednesday that the end of their investigation is nowhere in sight. In response, Democrats noted that congressional committees have received a half million pages’ worth of documents, and that nine months of investigations have yet to find any proof of political motivation, or any involvement outside of the IRS.

Ways and Means Committee Chairman Dave Camp (R-Mich.), making a rare appearance at a subcommittee hearing, maintained that Tea Party applications for tax-exempt status were held up because of news media attention — not, as some Democrats have said, because of any confusion surrounding the law.

Camp cited an email from a Treasury official that was addressed to Lerner, among others, that discussed the possibility of new tax-exempt rules almost a year before the IRS targeting broke. That, Camp said, suggested that the rules weren’t drafted to fix problems revealed by the targeting controversy.

“I want to be perfectly clear: This committee will fight any efforts to restrict the rights of groups to organize,” the Ways and Means chairman told Koskinen. “We’ll get to the bottom of this.”

The IRS is set to face more scrutiny this week, with a House Oversight subcommittee — filled with some of the agency’s most strident critics — scheduled to explore the administration’s probe into the targeting. 

Rep. Jim Jordan (R-Ohio), the subcommittee chairman, has criticized the Justice Department for placing an Obama donor in a top role in the administration’s criminal investigation.

Even as Koskinen tries to bring a more self-assured public face to the IRS, he has also acknowledged that he faces other challenges, including the agency’s pared-back budget. 

After Wednesday’s hearing, Koskinen said he understood it would be a challenge to move beyond the targeting controversy as long as lawmakers want to discuss it.

With the IRS receiving hundreds of millions dollars less than it did a couple years of ago, Koskinen has already advised taxpayers with questions about their returns to check the agency’s website, and to avoid the IRS’s customer service lines. 

“It wouldn’t be fun if it were easy,” Koskinen said, before making a nod to his own reputation: “And I probably wouldn’t be here if it weren’t in the middle of a lot of controversy.”