Don't Mess With Taxes

Most years, once we’re past Tax Day, the Internal Revenue Service’s work continues quietly, behind the scenes.

Not now.

Last week the IRS got yet another interim commissioner. Michael Faulkender, who had been serving as deputy to Treasury Secretary Scott Bessent, is the agency’s latest acting leader.

Faulkender is the fifth person to take the IRS reins after former commissioner Danny Werfel resigned in January. Faulkender became the third acting leader of the agency in just a week.

The latest quick personnel rotation at the IRS — equivalent to 0.36 Scaramuccis — and that it happened during the week that our tax returns were due earns the figure three this weekend’s By the Numbers recognition.

And thanks to pressure from Department of Government Efficiency (DOGE) and the Trump administration, more IRS changes are on the way.

Still no IRS commissioner hearing: No, I’m not talking about finally getting a permanent IRS head honcho. We’re still waiting on the Senate to hold confirmation hearings on Trump’s nominee, former GOP Republican U.S. representative Billy Long.

Long, who has no tax or financial background, is cooling his heels as an adviser in the Office of Personnel Management while he waits for the call from the Upper Chamber.

   
There’s been no explanation as to why Long’s nomination hasn’t proceeded. There has been, however, speculation on the Senate’s hesitancy.

Concerns about Long's post-D.C. work: Part of the reason for the confirmation wait could be Long’s (pictured at right) affiliation with a COVID-19 tax break that’s come under IRS scrutiny.

After he left Congress in 2023, Long pitched tax products, including Employee Retention Credit (ERC) benefits created to help companies that kept paying staff despite economic struggles at the height of the coronavirus pandemic.

Many of the firms advertising the refundable business tax credit did so aggressively. Too aggressively, according to the IRS.

In September 2023, the agency stopped processing claims that were filed, often at the insistence of these paid promoters, years after the time period to which the ERC applied. The IRS also offered businesses that realized they shouldn’t have claimed the tax credit two chances to disclose their mistake and pay back a portion of the wrongly collected tax benefit.

The IRS also continued its return examination efforts to get the money back through from companies that wrongly claimed the ERC, while its law enforcement arm, IRS Criminal Investigation, focused on pursuit of COVID-connected tax criminals.

So, it’s not surprising that some members of Congress (read Democrats) have concerns about Long’s connection to possibly dubious ERC promotions.

Questions about debt repayment: Then, as the IRS leadership ranks were being shuffled, came an April 15 (yep, Tax Day again) report from The Lever that Long had a $130,000 personal debt paid off by donors at firms policed by the tax agency he’d lead.

The reader-supported investigative news cited new campaign finance filings by Long that disclosed an outstanding personal loan of $130,000 that he had made to his failed 2022 U.S. Senate campaign. The Lever story notes —

“The dormant Senate campaign committee had raised less than $36,000 in the last two years, which could have forced Long to absorb the losses on the loan. But after Trump named Long to head the IRS, the committee suddenly raked in nearly $137,000 in less than three weeks in January — money that Long then used to remunerate himself, according to disclosure documents filed this week.”

In charge of a smaller IRS: When (if?) Long does take over the IRS’ top spot, he’ll be in charge of a smaller tax agency.

The IRS is planning to cut up to 40% of its workforce after wrapping up this year’s tax filing season, according to an internal memo obtained by Federal News Network (FNN). The memo states “taxpayer services and compliance will need to be trimmed.”

The message to IRS staff stated that the agency will begin sending out bi-weekly Reduction in Force (RIF) notices. Those RIFs were to have started last week.

The IRS will conduct the RIF in two phases and will target more severe cuts in specific offices, reported FNN. By the end of these workforce reduction efforts, the IRS will go from an initial workforce of 102,000 employees to approximately 60,000 to 70,000 employees.

Then, on Thursday, April 17, Trump extended the federal hiring freeze, which was set to expire this month, through July 15.

The presidential memo extending the freeze singled out the IRS, noting that the hiring freeze for the agency would remain in effect until the Treasury Secretary, in consultation with the Office of Management and Budget and DOGE, says otherwise.

Of course, this being the Trump administration, things — and numbers — could change again. If that happens, there will be a whole new slew of figures for future By the Numbers consideration.

You also might find these items of interest:

• IRS leadership carousel keeps spinning
• Is the U.S. income tax system on its way out?
• Proposed IRS layoffs could cost U.S. $2.4 trillion
• IRS emphasizes its commitment to taxpayer privacy
• Ernst takes aim at IRS on Tax Day with three new bills

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