The Color of Money: Running the IRS

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WASHINGTON — John Koskinen could be relaxing in retirement, spending time with his four grandchildren.

Instead, he decided to take on the task of running an agency that is both feared and attacked.

As the 48th commissioner of the Internal Revenue Service, Mr. Koskinen oversees the management of about 90,000 employees and a budget of about $11 billion. Given his background as a corporate and government troubleshooter, Mr. Koskinen was a good go-to choice, even if he does sometimes play hard to get.

When the George W. Bush administration was trying to get him to take the IRS job and found his private cell phone number, he joked, "I need better caller ID." His answer was no. "This time around, I said I just need counseling," he said of his decision to accept the Obama administration's offer.

Mr. Koskinen, who has been on the job for a little more than three months, spent 20 years in the private sector and another 20 in government work, primarily dealing with organizations under stress. He steered Freddie Mac during some of its toughest times following the crisis in the housing market. He also served as deputy mayor and city administrator of Washington, D.C.

The commissioner said in an interview that he wasn't looking for another job but this time couldn't resist the challenge. He said he told the Obama administration if they had "some big problem that nobody wants to touch, why, call."

Except for what he calls the "background noise," Mr. Koskinen says he enjoys taking on complicated circumstances and organizations, sorting things out and getting them to run more efficiently.

The noise he was referring to involves the controversy over the agency's handling of certain organizations applying for tax-exempt status. He says the IRS has put into place procedures to prevent a recurrence of the obstacles thrown up by the agency for Tea Party and other mostly conservative-leaning groups.

"One of the most important things we have to do is restore public trust in the agency, which was shaken by the management problems that came to light last year with regard to the determination process used for applicants to become tax-exempt social welfare organizations," Mr. Koskinen said in a speech to the National Press Club.

It's vital that Koskinen makes sure the agency does indeed fix what led to the tax-exempt problems. But what lies ahead for the agency is work that also fits the commissioner's natural disposition. In addition to dealing with identity fraud problems, assisting Americans who can't pay their tax bills and managing the tax season, the IRS has a lot of responsibility for issues related to the Affordable Care Act.

If you can afford to pay for health care under the act but choose to go without coverage, you'll have to pay a penalty when you file your federal income tax return.

But the IRS has an even bigger role than collecting penalty payments. Under the ACA, families with low or moderate incomes can qualify for what's called an "advanced premium tax credit" to help them pay the monthly premiums for insurance purchased through the health care exchanges. People have the option of having the credit paid in directly to their insurance company or they can claim it when they file their tax return.

If a family's size or income changes during the year, this could affect the amount of credit received. The IRS has to keep track of the differences in the credits payments because they could result in a refund or tax bill. All this means that the IRS is a key player in the mechanism by which people are going to get their health care subsidy.

In last year's budget, the agency sought $440 million to comply with the ACA. It got none of the request. And given the politics surrounding the law, it's not likely the agency will get the $452 million it has requested for the coming fiscal year.

"The problem is going to be that sometime in January, we're suddenly going to have a lot of new callers," Mr. Koskinen said. "So if the Congress, when I go to testify next week on the budget for 2015, decides that it's terrific to watch us struggle where we are, our level of taxpayer services is going to be threatened. If you don't like the time waits now, wait until next spring."

Readers can write to Michelle Singletary c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com.


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