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December 12, 2013
Koskinen Pledges Transparency and Accountability in Confirmation Hearing
by William Hoffman

Full Text Published by Tax Analysts®

The Senate Finance Committee will vote December 13 on the nomination of John Koskinen to be the next commissioner of the IRS, after finishing the second half of his two-day confirmation hearing December 11.

Koskinen assured committee members that he would pursue and punish wrongdoers identified in the IRS's investigation of alleged targeting of conservative organizations' applications for tax-exempt status. To the extent that anyone was politically targeted, he said, "That was intolerable."

"Trust is the most important asset the IRS has," and restoring the agency's integrity would be a top job, Koskinen said.

Koskinen also promised that whatever Congress decides to budget for the IRS, both for taxpayer services and enforcement and for its new responsibilities in implementing the Affordable Care Act, the agency would not default in its operational responsibilities.

"Obviously it is a major set of resource decisions that needs to be made in light of the constraints of the budget," Koskinen testified. "But those resource decisions will not affect either the implementation of the statutory responsibilities or the basic filing season responsibilities of the IRS."

Seeking Clarity With Social Welfare Regs

Finance Committee member Rob Portman, R-Ohio, questioned the IRS's proposed regulations (REG-134417-13
) issued November 26 on political activity by section 501(c)(4) social welfare groups.

Portman noted that the regulations state that section 501(c)(4) groups could not publicly discuss a president's judicial nominees for nine months before a national election, and they require those groups to remove some political statements from their websites for two months before an election. "Does this concern you, that some of these proposals might further entangle the IRS in making political judgments, and opening the door to more potential mischief, as we've seen over the last couple of years?" he asked.

Koskinen said his goal is to keep the IRS out of politics. "What [the] public needs to be confident about . . . is that the commissioner, whatever his political views are, won't apply them to the IRS," he said.

Koskinen also said he hoped the regs will clarify, both for applicants and for the agents reviewing the applications, what constitutes political activity, and that "the lines are clear enough that the IRS itself is not making those distinctions."

Bigger Budget, More Revenue?

While Koskinen promised that his agency would work within the bounds of the budget decided on by Congress, he also promised a greater return on investment if the IRS were less constrained by budget limitations. In his written testimony
, he said, "I don't know any organization in my 20 years of experience in the private sector that has said, 'I think I'll take my revenue operation and starve it for funds to see how it does.'"

Like all government agencies, the IRS should be careful stewards of taxpayer funds, Koskinen said. But additional funds for the IRS have been variously estimated to return $4 or $5 for every $1 invested, he said. Meanwhile, the IRS is working on a budget of roughly $11.2 billion, Koskinen noted, compared with the $12.8 billion the Obama administration requested for fiscal 2014.

"That difference is a substantial and significant one," Koskinen said. "If the funds were made available to the IRS, I'm confident that more than the additional revenues you provided to the IRS would be returned to the government in additional tax collections and revenues."

"All organizations, when constrained, will become more efficient, and the IRS has taken steps to become more efficient in the use of space, use of outside contractors, travel, and training," Koskinen added.

"But as I noted in my [written] testimony, there comes a point at which you can't be asked to do more and more with less and less, without jeopardizing the operation of the agency," Koskinen said. He added that the IRS would keep an open channel to the committee and to Congress "to make sure that you are aware of the implications of the funding that's available to the IRS and the limitations provided therein."

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