Trump names Treasury official to be acting IRS commissioner

The White House named a Treasury official to serve as acting commissioner of the Internal Revenue Service on Thursday, succeeding an IRS commissioner who has drawn the ire of congressional Republicans over his response to the screening of political groups.

The White House announced that David Kautter will serve as acting IRS commissioner effective Nov. 13, allowing current IRS Commissioner John Koskinen to complete the remainder of his term.

The appointment came the same day the Trump administration agreed to what a lawyer described as a "very substantial" payout to hundreds of tea party groups to settle a class-action lawsuit over the extra, often burdensome IRS scrutiny they received when applying for tax-exempt status during the 2012 election.

Kautter appointment

"David will provide important leadership while we wait to confirm a permanent Commissioner," said Treasury Secretary Steven Mnuchin in a statement.

Republican lawmakers have assailed Koskinen for what they called a slow response to an Obama-era scandal involving the tax agency's singling out of conservative tea party groups for extra scrutiny when they applied for tax-exempt status.

A group of House Republicans urged President Donald Trump to fire Koskinen in April and accused the tax head of destroying evidence when Congress was investigating the IRS' oversight of the conservative groups.

But the announcement means Koskinen will finish out his term, a footnote that Republicans pointed to with frustration. President Barack Obama appointed Koskinen in August 2013 in the aftermath of the scandal over conservative groups.

"It's a failure of government that IRS Commissioner John Koskinen will be able to serve his full tenure after consistently abusing the public trust, lying to Congress, and obstructing investigations," said Rep. Mark Walker, R-N.C., the chairman of the Republican Study Committee.

"I can only hope that as he leaves the IRS building, his head is not held high and that he will be remembered as empowering the agency's extensive actions of political abuse," Walker said.

Kautter was confirmed to his Treasury post in August and the department said he would continue to carry out his duties as assistant secretary, including working on Trump's planned tax overhaul, while serving as acting IRS commissioner. Kautter previously led RSM US LLP's Washington National Tax Group and served as a top tax executive with Ernst and Young LLP.

The next full-time IRS commissioner will be expected to help Trump implement his tax agenda and will lead an agency that has been auditing the president's tax returns.

Trump has declined to release his income tax records, breaking with a tradition set by his predecessors. The president has said he would release his returns when the IRS completes the audit.

Tea party settlement

The settlement, which still needs a judge's approval, would end a chapter in a political scandal that dogged the Obama administration and continues to irk Republicans.

Eddie Greim, a lawyer representing more than 400 groups in a class-action suit, described the financial settlement as generous but would not elaborate because details remained sealed Thursday. The Justice Department made no reference to a payout in its announcement.

The department said it is settling a second lawsuit with an apology from the IRS for the intensive scrutiny of the groups, which argued their constitutional rights were violated when they were singled out based on their political views.

Republicans were outraged in 2013 when the IRS admitted the targeting, in part by zeroing in on groups with words such as "tea party" or "patriot" in their names. Many had their applications delayed for months and years. Some were asked improper questions about their donors and even their religious practices, an inspector general's report found.

The Obama Justice Department announced in 2015 that no one at the IRS would be prosecuted. It said investigators found mismanagement but no evidence that the tax agency had targeted a political group based on its viewpoints or obstructed justice.

Republicans were disappointed again when the Trump Justice Department, under Attorney General Jeff Sessions, said it would not reopen its case against Lois Lerner, who had led the IRS office that processes applications for tax exempt status.

Still, Sessions condemned the misconduct in a statement announcing the settlements.

"There is no excuse for this conduct," Sessions said. "Hundreds of organizations were affected by these actions, and they deserve an apology from the IRS.

The groups that sued were "very pleased" with the settlement outcome, Greim said.

"It's a great day for the First Amendment and the promise of a fair and impartial government," he said in a statement. "But this day was too long in coming."

Much of the agency's leadership, including Lerner, resigned or retired over the scandal. One of the proposed agreements calls senior management "delinquent" in providing control and direction over the process. It faults Lerner for failing to tell upper-level management of the long delays in processing applications from tea party and other conservative groups.

"These cases against the IRS shouldn't have happened in the first place," Sessions said during a speech at the Heritage Foundation. "They never would have been necessary if government had acted properly."

Please enable JavaScript to view this content.

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets in {{ count_down }} days.