Biden to replace IRS commissioner as Democrats seek to retool tax agency

The Biden administration will replace Internal Revenue Service Commissioner Charles Rettig at the conclusion of his term in November, Treasury Secretary Janet L. Yellen announced Friday.

Douglas O’Donnell, a deputy commissioner and longtime IRS official, will lead the agency on an interim basis beginning Nov. 12.

Rettig, a former Beverly Hills tax attorney, has had a rocky tenure since assuming the IRS role in 2018. Nominated by then-President Donald Trump, he rebuffed subpoenas from Congress to turn over Trump’s tax records. When Biden took office, numerous congressional Democrats called for Rettig’s firing.

Instead, Biden left him in place to complete the post’s five-year term. Rettig’s reputation improved among liberal lawmakers as the IRS worked feverishly to distribute coronavirus stimulus payments and administer a tax code made more complex by pandemic-related economic upheaval.

The IRS in March deployed surge teams of employees and embarked on a hiring spree to sort through a backlog of 24 million tax returns, a quantity of paperwork that officials said it likely would not be able to surmount until the end of 2022.

Democrats later pushed through legislation to strengthen Rettig’s agency, handing it $80 billion to invest in better enforcement capabilities, more staff, upgraded IT systems and improved taxpayer services.

That money, part of the landmark Inflation Reduction Act passed this summer, drew strong rebukes from Republicans who baselessly claimed that the funding would be used to arm federal workers. Some conservatives, including House Minority Leader Kevin McCarthy, Calif., speculated that the IRS could use its beefed up resources to carry out raids similar to the FBI search of Trump’s Mar-a-Lago residence.

The rhetoric induced an increase in threats toward IRS employees, Rettig and union leaders told the Washington Post. Rettig ordered a security review of the agency’s offices nationwide in response.

In some quarters, the new funding was seen as a vote of confidence in Rettig from the Biden administration, especially as Rettig’s forceful response on employee safety endeared him to staffers. But Biden appears poised to nominate a permanent successor in the coming weeks, likely before a new Congress is installed in 2023.

“I want to thank Commissioner Rettig for his tireless service to the American people across two administrations, and his leadership of the IRS during the difficult and unique challenges posed by covid-19,” Yellen said in a statement. “I am grateful to him for his partnership and efforts to ensure taxpayers had the resources they needed to make it through the pandemic.”

She added that O’Donnell, the deputy commissioner for services and enforcement, “has dedicated his career to serving American taxpayers through every level of the agency.” He began work at the agency in 1986 as a revenue agent.

Rep. Bill Pascrell Jr., D-N.J., a leading Rettig critic, said in a statement that the Biden administration was “right to end the term of Donald Trump’s IRS commissioner.”

“With Democrats delivering fresh funding to revitalize the IRS, we expect strong leadership to steer the IRS ship into clearer waters,” Pascrell said. “Many Americans have lost confidence in the IRS. The agency must do a better job with the basics of being responsive to American taxpayers, as well as more to crack down on big business tax cheats and create greater fairness for regular Americans.”