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Image of IRS next challenge for D.C. fixer

Koskinen

– In today’s polarized environment, the Internal Revenue Service has become even more of a whipping boy for politicians. That makes the agency an ideal situation for John Koskinen.

A year ago, top White House aides talked to Koskinen about a job in the Obama administration. He demurred, though he told them, if you’ve got something disastrous that no one else wants to manage, call me. They did; he says it took him “about 15 seconds” to accept the job of IRS commissioner.

In an earlier life, he was a successful entrepreneur. During the Clinton administration, he was put in charge of the Y2K crisis, preparations to avoid cataclysmic malfunctions as the clock turned to Jan. 1, 2000. The transition went seamlessly.

When George W. Bush took office, Koskinen stunned his colleagues by accepting a job as city administrator for the often-ridiculed District of Columbia government. There, too, he was a success. In 2008, he became chairman of Freddie Mac and paved the way for the restructuring of the troubled mortgage- finance giant.

Koskinen loves challenges. Many Republicans hate the IRS. Its budget has been cut for four consecutive years, while its responsibilities have increased. It has a major role in the implementation of the Affordable Care Act, and it is embroiled in a controversy over the tax-exempt status of political groups. In less than three months, Koskinen already has bolstered morale at the agency as well as its standing on Capitol Hill.

“After four years of what we’ve been through, there is an amazing amount of energy and commitment,” he says. “One common theme is we don’t have enough people to provide services to taxpayers.”

Since 2010, the IRS budget has been reduced, in real terms, by $1 billion, and it has 8 percent fewer employees. Yet Congress doesn’t hesitate to add to the agency’s workload. “With all the grumbling, there’s confidence that the IRS will get the job done,” Koskinen says.

Historically, for every additional dollar the IRS receives from Congress, it is able to raise five times as much with better collection and enforcement. In his latest budget, Obama has recommended a 10 percent increase. Republicans may be receptive to the argument that reduced funding means taxpayers are having trouble getting quick assistance from the agency.

The major Republican accusation is that several years ago, IRS officials in Cincinnati targeted the tax-exempt status of conservative political groups. That did occur in some instances, yet a multitude of investigations has failed to uncover evidence the scrutiny was politically directed. It was likely a misstep by mindless bureaucrats.

Entities such as Karl Rove’s American Crossroads, the groups sponsored by David and Charles Koch and Priorities USA Action claim to be principally social-welfare organizations, not political ones. This isn’t reality, of course, but the IRS’s proposed regulation to prevent abuses of tax-exempt status has drawn a firestorm of criticism. Even Koskinen supporters such as Sen. Orrin Hatch of Utah have warned the commissioner to junk the proposals.

As Koskinen points out, the proposed changes wouldn’t affect the ability of anyone to spend money. They just would be required to disclose their contributors.

He is taking these criticisms and the budget cuts in stride.

“This is a vital agency that touches virtually every American, and it’s under attack,” he says. “That’s a challenge that’s hard to pass up.”

It may be an impossible job. If so, he’s the right man.

Albert R. Hunt is a Bloomberg View columnist.

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