President Joe Biden nominated consulting executive Daniel Werfel to lead the Internal Revenue Service months after Congress greenlit funding to double the agency’s size.
The term of IRS Commissioner Charles Rettig, an appointee of former President Donald Trump, is set to expire at the end of the week. Werfel previously served as IRS acting commissioner under President Barack Obama.
“In the wake of an Inspector General report alleging various forms of mismanagement and bias in the determination of tax-exempt status for non-profit organizations, President Obama appointed Werfel to serve as Acting Commissioner of IRS in 2013,” according to a statement from the White House. “Werfel provided immediate stability to the IRS, effectively responding to numerous Congressional investigations, successfully launching the Affordable Care Act technology that IRS was responsible for, and navigated the IRS through a multi-week government shutdown.”
Werfel also oversaw the implementation of the American Recovery and Reinvestment Act, an emergency stimulus package passed in response to the 2008 recession, as controller of the Office of Management and Budget. He has spent the past nine years leading the North American public sector practice at Boston Consulting Group.
“I strongly support President Biden’s intent to nominate Daniel Werfel to serve as the next Commissioner of the IRS,” Treasury Secretary Janet Yellen said in a statement. “Danny’s prior service under both Democratic and Republican administrations, his deep management experience, and his work directing significant transformation efforts, make him uniquely qualified to lead the agency at this critical juncture.”
The Biden administration’s Inflation Reduction Act recently approved $80 billion in funding for the IRS, which the agency will leverage to hire 87,000 new employees over the next decade. More than doubling the agency’s payroll is intended to decrease wait times for phone calls and in-person help centers, as well as upgrade information technology used by agents.
Yellen has vowed that the new resources will not be utilized to increase audit rates for American households earning less than $400,000 per year “relative to historical levels.” However, she failed to clarify that “historical levels” of audits were far higher as recently as one decade ago. Rettig likewise said in a letter to members of Congress that the resources “are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” contending that new technology and staff will induce a “lower likelihood of being audited” as taxpayers are able to more quickly process their returns.
The agency is dealing with a backlog of individual tax returns that Rettig vowed to process by the end of the year. Republican members of the House Ways and Means Committee sent a letter to Rettig this week asking for a status update on the bottlenecks.
IRS National Taxpayer Advocate Erin Collins, who is charged with representing taxpayer interests within the agency, raised similar concerns in her most recent midyear report, which noted that the agency delivered refunds to paper filers within four to six weeks prior to the pandemic, while refund delays now generally surpass six months. According to Collins, the IRS processed 205,000 individual income tax returns per week during the month of May, falling short of the pace required to completely eliminate the backlog by the end of the year.