Biden IRS nominee draws heat — and some support — from GOP senators

Republican senators dialed up the heat on President Biden’s nominee to head up the IRS, Danny Werfel, during his confirmation hearing on Wednesday.

Republicans pressed Werfel, who served as acting IRS commissioner in 2013 during the Obama administration, about how the agency will utilize the roughly $80 billion in extra funding greenlighted by Democrats without GOP support last year.

At the top of the hearing, Sen. Mike Crapo (Idaho), the top Republican on the Senate Finance Committee, grilled the nominee for details about the agency’s plans for the cash while also expressing concerns about how the funding would impact taxes for Americans going forward.

“The battle has been over this completely uncontrolled and undefined commitment of 60 percent of the $80 billion to enforcement,” Crapo said during the line of questioning.

The funding was approved as part of the Inflation Reduction Act, a cornerstone of Biden’s domestic agenda, last year.

“[There has been] a decade of Republican budget cuts [that] gutted the IRS’s ability to do the kind of in-depth enforcement work that’s needed to make sure that the multinational corporations and the very wealthy pay what they owe,” Senate Finance Committee Chairman Ron Wyden (D-Ore.) said.

Democrats say the funding is aimed at modernization efforts for the agency as well as bolstering tax enforcement with a focus on wealthy tax cheats they say abuse the system.

“From 2012 to 2020, our economy got a whole lot bigger,” he said. “Yet the total dollar amount of unreported taxes uncovered by corporate audits fell by nearly 60 percent. … On the other hand, the audit rate for working people didn’t budge, even though the IRS was working with fewer resources.”

Treasury Secretary Janet Yellen directed IRS officials not to use the new funding secured for the agency to increase audits on households making under $400,000 annually.

GOP questions who might be affected by new taxes

But there is immense skepticism within the GOP over which Americans could see the burden over the beefed up agency.

“From the IRS’s own data, the two largest single components of the tax gap, that’s the difference between taxes owed and paid, are small businesses, small-business income and individual nonbusiness income,” Crapo said.

Crapo said in response to questions brought to the Joint Committee on Taxation that he was told that “upwards to 90 percent of these shortfalls fall on hardworking Americans with modest incomes for under $400,000.”

“I want to know whether you are going to commit today that the plan will not allow this supersized enforcement money to be utilized against people who make less than $400,000 per year,” he asked. “Will you make that commitment?”

Werfel agreed while pointing to an official statement made earlier in response in which he also said he “made that commitment” and added that he was “committed to Secretary Yellen’s directive on how the audit should move forward under the Inflation Reduction Act.”

“Secretary Yellen statement leaves a lot of wiggle room. I want to be sure you know that I don’t expect to see wiggle room in this commitment,” Crapo added before continuing with his line of questioning.

Former IRS problems raised as enforcement concerns surface

The exchange was followed by a series of questions from Republicans about IRS enforcement throughout the hearing, with some also zeroing in on past scandals at the agency as the party ramps up attacks on the recent funding boost.

Sen. James Lankford (R-Okla.) addressed Werfel’s past serving with the IRS after it garnered scrutiny over its treatment of certain Tea Party groups roughly a decade ago.

Sen. Marsha Blackburn (R-Tenn.) also took aim at the agency’s “checkered past when it comes to protecting consumer data.”

However, there was a moment during the hearing when Werfel also appeared to have drawn some support in the party, with Sen. Thom Tillis (R-N.C.) telling him that he plans to support his confirmation.

The moment was notable given that Werfel, whom senators expect will likely be confirmed to the head IRS post, needs just a simple majority of the Democratic-controlled Senate to get the job.