Commissioner Koskinen Asked to Resign

IRS Commissioner, John Koskinen, has been on the job for only a couple years, but he was brought in at a very difficult time for the agency. He was appointed by Pres. Obama and given the task of cleaning things up at the IRS, particularly in regard to the scandal involving targeting of Tea Party groups. Now he has lawmakers calling for his resignation because of the way he has handled the debacle. I bet there are days he regrets accepting the assignment.

The most outspoken republicans insist that Koskinen lied about the missing emails. Jason Chaffetz (R-Utah) is on record saying that Koskinen was in possession of the emails, and then after they were subpoenaed, his agency destroyed them. Many now want him to resign, and if he doesn’t, they are threatening worse. They are throwing around words like “contempt,” “obstruction of justice,” and “impeachment.”

President Obama claims that there was “not even a smidgen of corruption” within the IRS, but everybody knows this isn’t true. He needs to be a little more careful with his words. The IRS is huge and people are imperfect, arrogant, and greedy. How can he say there isn’t a smidgen of corruption? He doesn’t know that. All that really means is he has had meetings with those that run the agency who say there’s no corruption, who have had meetings with high level management who say there’s no corruption, who have had meetings with lower level management, etc. There is no way any clear-thinking adult could swallow such a broad statement as that.

According to Chaffetz, there are still at least 5 open investigations into the targeting scandal, including that of TIGTA and the Department of Justice. I, for one, must admit that I am a little surprised that the news of this scandal hasn’t fizzled yet. I think it speaks to how passionate we are, as US citizens, about allegations of corruption within our government.

IRS Doesn’t Hire 20-year-olds Because They’re Used to Stuff that Works

One of the most hilarious things for IT people is to hear non-IT people try to talk about computers and technology.  By no stretch of the imagination am I an IT person, but I do see the humor in that sort of thing as well.  Here is 75-year-old John Koskinen in a recent interview with Tax Analysts’ William Hoffman:

[W]e have a huge turnover in people under 30 because we’re not hiring that many. But when we’re hiring them, we’re obviously not keeping them at the rate that we would like….Part of that is because our technology is so abysmal. You take people, young people coming in at 23, 25, 27, and they’re used to….stuff that works. You know, they’re at the high end and they Twitter and they do all of that stuff. When you come into an organization still moving people onto Windows 7 from Windows XP, that’s not exactly a cutting-edge technological group….Now, on the other hand, we’ve proved technological, technology people because we are doing great things. We don’t have enough resources, and we’re way behind what we’d like to do. But, you know, the apps we’re doing — Where’s My Refund, Get Transcript, and that — so we’re pushing various state-of-the-art stuff, which is why I refer to our IT as a Model T with a great GPS and wonderful sound system….And so that’s some extent, so we’ve got some state-of-the-art apps and, you know, really ancient — you know the average age of our IT equipment is 15 years. So we have to be the only serious large organization of a financial institution running with average equipment age of 15 years. So our computers are too old, our servers are too old. You know, we still got stuff in COBOL programming….So that’s the problem at the front end.

I’m not 27 any more and I feel like I am used to stuff that works too.  It would absolutely drive me crazy to work with 15-year-old computer equipment.  I couldn’t work there for 1,000 other reasons, but that would be a big one.

This quote is so full of awesome lines I don’t even know where to start.  My favorite line: “You know, they’re at the high end and they Twitter and they do all of that stuff.”  It is funny to me that the head guy at the IRS says things like this.  I mean, it’s fine, we don’t need a spry young kid at the high end who Twitters or anything.  As long as he can manager other high end people who Twitter, things should be fine.  The IRS definitely has proved technology people and they’re doing apps and pushing various state-of-the-art stuff.  Oh boy, don’t even get me started on the IRS apps, Mr. Koskinen.  They aren’t that good.  After all, it doesn’t make much sense to put a GPS in a Model T if the Model T can’t go 99.99% of the places shown on the GPS.

IRS Role Model Dies at Age 94

I’m going to warn you: if you are prone to crying during movies like Forrest Gump or Old Yeller, you may want to skip this blog post.  If you don’t believe me, read on.  Read all the links too and you’ll probably agree that this story is up around 8 or 9 on the “feel-good” scale.

We lost a good man this week, and he used to work for the IRS.  I know, that sounds like an oxymoron these days.  Johnnie M. Walters, former IRS commissioner during Watergate, died on Tuesday at the age of 94.  In 1971 Nixon needed a “yes man” to fill the top post at the IRS, and after he fired the previous commissioner, Nixon made this statement about his replacement (recorded on White House tapes):

I want to be sure he is a ruthless son of a bitch, that he will do what he’s told, that every income-tax return I want to see I see, that he will go after our enemies and not go after our friends.

How easy it would be to find this kind of guy in 2014!  But in the early 1970s I guess there were people in positions of power who didn’t let it get to their heads.  There was still a little integrity and courage in the White House.  Needless to say, Walters did not measure up to Nixon’s prerequisites; not even close.  He refused to take action on Nixon’s “enemies list,” instead locking it up in a safe.

The story gets even a little sappier if you go back to Walters’ early years.  He grew up in humble circumstances on a farm in South Carolina.  He put himself through law school, served in the military and earned a Purple Heart.  He was married for 66 years to his wife and they had 4 children.  He seems like the kind of guy that everyone admired.  Walters wrote a memoir in 2011 called “Our Journey.”  Maybe this should be required reading for IRS employees

Koskinen's Press Club Speech

The IRS Commissioner typically speaks at a National Press Club luncheon once a year.  It is the perfect venue to learn about the Commissioner, his vision, and everything at the top of his to-do list.  Here are a few things that stood out to me from Koskinen’s Press Club remarks from April 2nd, 2014:

  • He enjoys college basketball, . . . or at least March Madness, . . . or at least Duke.  He made a pretty funny joke about Duke’s loss in the early rounds of the NCAA championship.
  • During the three months he has been serving as head of the IRS, he has visited 18 of the 25 largest IRS offices.  He has jumped right in and run around quite a bit for an old guy.
  • He likes to hear the opinions of the minions.  I really do respect this approach and hope that it is more than just words and becomes part of the culture at the IRS.
  • He is realistic; he does not pretend to be perfect and he doesn’t expect IRS employees to be perfect either. In fact, he said that his theory is “bad news is good news,” meaning that even negative reports have a silver lining because at least it signifies that the news is getting reported.  After all, a problem cannot be corrected unless and until it has been identified.  I see his point, but I’m not sure I would have taken it that far.
  • He is big on the whole idea of restoration of public trust and the notion that every taxpayer should be treated fairly.  He spent a large portion of his talk discussing the investigations into the IRS’ tax exempt application scandal.
  • He wraps up by commenting on the tax filing season, problems with voluntary compliance and tax fraud, FACTA, customer service (by phone and at local service centers), tax reform, and administration of applicable provisions of the Affordable Care Act.
  • The biggest problem, according to the Commissioner, is insufficient funding.  He basically needs another billion dollars, give or take.

Koskinen's YouTube Debut as Commissioner

New Internal Revenue Service Commissioner, John Koskinen, delivered a special message to the nation via the IRS YouTube channel.  For many this is a video of first impressions.

On a side note, I’m not sure what the point of these videos is because regular taxpayers don’t watch them and those people that do watch (tax attorneys, CPAs, enrolled agents, and general tax professionals) don’t really benefit, as these videos normally consist of a series of ambiguous soundbites.

Koskinen’s message falls in line with other IRS videos: positive and hopeful, but lacking any kind of substance.  Here are the main points:

  • He got right to work after being appointed to his new position
  • He has been traveling around the nation taking the pulse of the IRS
  • The IRS is here to help taxpayers during 2014 tax season
  • Refunds will be issued quickly
  • The IRS will work to reduce tax fraud and ID theft
  • Over 120 million people filed their tax return electronically last year
  • Resources are limited & there will be long wait times if you try to call
  • Quicker way to get help: irs.gov, tax software, tax professionals, IRS YouTube channel, IRS2Go smartphone app

As the new Commissioner of the IRS, I want to be up front with you and call it like it is, just as I have been doing my entire career.

~ John Koskinen, IRS Commissioner

My mom always told me to be skeptical of phrases that are prefaced with “I’m gonna be honest with you,” but whatever.  On the other hand, Koskinen was sufficiently stiff, boring, and unhappy in this video to convince me that he’s the right guy for the job.  He’s going to fit in just fine at the IRS.

New Commish, 2014 Tax Season, EITC

A few noteworthy events caught my eye in the world of tax relief today.

First, the Senate approved Obama’s nomination of John Koskinen in a 59-36 vote, confirming him to fill the top position at the IRS; a position that has been vacant for over a year.  Commissioner Koskinen will take his post beginning next week and we’ll definitely keep a close eye on him to see if he will fulfill his promise of restoring public trust to the agency that has been fighting a dismal public perception for years.  Obviously, this is not something that he’ll be able to do overnight.

Second, the IRS announced that the opening of the 2014 tax season will be on January 31st.  This is when the IRS will begin accepting 2013 tax returns.  The IRS encourages taxpayers to file electronically.  If you are due a refund, this is definitely the quickest way to get it.  Also, the IRS reminds us that we always have the option of requesting an automatic six-month extension using Form 4868.  The IRS tends to encourage extensions because it spreads out the influx of tax returns so that things don’t get too bottlenecked.

And finally, TIGTA, the IRS watchdog, reported on increasing abuse of the Earned Income Tax Credit (EITC) by tax preparers.  The IRS has always had a problem with EITC abuse and fraud because it is a refundable tax credit that can mean money in the pocket of whoever claims it and qualifies (or appears to qualify).  TIGTA noted that too many tax preparers fail to do their due diligence by completing and attaching Form 8867, the Paid Preparer’s Earned Income Credit Checklist.

Nominee for IRS Commissioner Vows to Restore Public Trust

President Obama’s choice for IRS Commissioner is John Koskinen, a man known for his talent in turning around large corporations on the brink of collapse.  He is known for his skills in “restoring public trust” after major disasters.  Isn’t it a little funny that Koskinen is coming highly recommended for the post without any significant tax knowledge?  I don’t know if it is funny or just a sign of the times.

The nomination of John Koskinen shows where our priorities are with the IRS.  The IRS is in survival mode and they need a strong leader who will right the ship.  Sure, they are fine-tuning and making needed adjustments to their processes along the way (according to the near weekly TIGTA audit reports), and this makes it seem like they are focused on the important details of tax administration.  But don’t be fooled.  The nomination of Koskinen speaks volumes about how the president views this agency in crisis.  And the Senate too, since it looks like Mr. Koskinen has received bipartisan support at his confirmation hearing earlier today.

50 years ago it may have seemed odd to put somebody like Koskinen at the head of the IRS, but it was a different agency back then.  I do think they have the right guy for the job.  The IRS needs a proven leader and game-changer, not just another bean counter.  Koskinen went on the record saying, “public trust is the IRS’ most important and valuable asset,” and I think this is spot on.  If taxpayers can’t be certain the IRS will safeguard their private information and administer the tax laws fairly, then the concept of “voluntary compliance” will not work because people literally won’t pay.

Obama Nominates John Koskinen as New IRS Commissioner

The IRS has been without a permanent leader for some time now.  Acting Commissioner, Steven Miller, had replaced Douglas Shulman when his term came to an end in November 2012.  Then, when President Obama fired Miller in May of this year, the agency was being led by Danny Werfel, a White House budged official.

Today the White House announced the nomination of John Koskinen as the new IRS Commissioner.  Obama’s nomination is likely going to be approved by the Senate following their standard and very thorough hearings.  Obama likes Koskinen because he has vast experience helping large companies on the verge of collapse and fixing bad management and bad morale.

With decades of experience, in both the private and public sectors, John knows how to lead in difficult times, whether that means ensuring new management or implementing new checks and balances. Every part of our government must operate with absolute integrity and that is especially true for the IRS. I am confident that John will do whatever it takes to restore the public’s trust in the agency.

~ President Obama

74-year-old Koskinen has quite the resume and has often been called on to rescue organizations in crisis.  Here is some of his work experience:

  • Freddie Mac
  • Mutual Benefit Life
  • Penn Central Transportation Company
  • city administrator for District of Columbia
  •  president of the United States Soccer Foundation
  • US Office of Management and Budget
  • chair of the President’s Council on Year 2000 Conversion
  • executive board-member of AES Corp. and American Capital, Ltd
  • National Advisory Commission on Civil Disorders

So, Koskinen is certainly an old guy, but maybe the IRS needs more maturity in its leadership.  It is probably safe to say that he wouldn’t approve of Star Trek videos.

It will be interesting to see how Koskinen handles the task of cleaning up the IRS.  Will he fire a bunch of executives?  Will he try to clone himself by hiring like-minded replacements?  Or will it be enough to simply put the fear of God in the existing leadership?  I’m sure we will eventually get to know his leadership style, but for now we should be content knowing that the man gets results.

How Will Werfel Restore Trust at the IRS?

Daniel Werfel was appointed by President Obama as acting Commissioner at the IRS.  He replaced Steven Miller a couple weeks ago and his honeymoon period lasted only a couple hours.  A lot is expected of Werfel, and Congress (and the American people) are not likely going to give him too much time to get it done.  We need to know what he’s going to do to clean things up at the IRS.

He has been at it for less than three weeks so far, but I think he’s on the right track.  He is focused on holding IRS employees accountable for their missteps.  He has ensured that the managers responsible for the tax exempt investigations fiasco no longer have jobs at the IRS, even if that means encouraging them to resign instead of firing them.  Either way they’re being removed, which is the main thing.  He appears to be committed to bringing all the dirt out into the open as a first step in restoring trust.

The newest example of IRS waste that has come to light is the $4.1 million conference that was held in Anaheim, CA in 2010.  At least two high-level IRS employees reportedly accepted lavish gifts in violation of IRS ethics rules and stayed in $1,500 per night rooms during this conference.  Werfel is taking the necessary steps to expeditiously terminate these individuals too.

I do feel like Werfel “gets it” when it comes to restoring trust.  He appears to be acting decisively and quickly.  He is not dodging questions during hearings.  He has also said that what the IRS needs is not more money; it needs better management, which I think is key.  Although that comment can be taken with a grain of salt because who would ask for more money 3 weeks into the job?  Maybe if we give him a few months he’ll be whining about underfunding too.

Three Projects for the New Commish

image via blog.xssoftware.com

Forbes contributor Stephen Dunn recently blogged about the challenges facing the presently-unnamed IRS Commissioner.  He identified three problems that he feels should be given serious attention once the new commissioner takes office.

1. IRS practioners need a more efficient way to get their hands on taxpayer transcripts.  It is inconceivable that Dunn, as a 27-year tax attorney, would be unable to gain access to his clients’ transcripts through IRS’ E-services.  However, I can personally attest to the complications involved in registering for E-services.  There is no reason why a tax attorney should have to call the IRS simply to order transcripts.  The procedure needs to be simplified.

2. The IRS should change its federal tax lien (FTL) filing procedure.  Dunn believes that the current practice of public lien filing opens the door for abuse by shady tax resolution firms who use lien lists to mass mail thousands of fliers encouraging recipients to call for tax help.  I can see his point here too, even though the abusive tax lien mailers are pretty easy to spot.  Instead, Dunn proposes a solution whereby firms or individuals would have to affirmatively request FTL information from the IRS instead of having that information available to the public.

3. The IRS must stop sending out refunds based on fraudulent 1099 forms.  This popular scam has truly gotten out of control, with millions of dollars being paid to criminals each year.  And it really needs to be prevented on the front end because after the refund has been paid, it costs way too much to try to get the money back.

The new commissioner is certainly going to inherit a large “to do” list.  This is only the start.