Finding an Everson successor

[Demosthenes]

Confirming IRS Leader Could Prove Difficult;
Vacancy Might Require Political Arrangement

Confirmation of the nation's 47th Internal Revenue Service commissioner faces unprecedented difficulties that could delay the nomination of a candidate for the job, but the process could lead to a political agreement that would preempt possible confirmation controversies, former senior government officials and tax practitioners told BNA in recent interviews.

The May 4 departure of the 46th commissioner, Mark Everson, led to the appointment of Kevin Brown, deputy commissioner for services and enforcement, as acting commissioner. Under statutory rules, Brown may serve for 210 days provided the Bush administration nominates an individual for the commissioner's job during that time, Treasury Department spokesman Andrew DeSouza told BNA May 11 in a written statement.

If no commissioner is confirmed during that 210-day period, the president again must nominate an individual to be acting commissioner for another 210-day period, the statement said.

The nomination and confirmation process for Everson's successor is complicated by several factors. First, statutory language mandates that Everson's successor must serve for the remainder of his term, which expires in May 2008; after that, another nomination and confirmation must occur to name a commissioner to a standard five-year term.

Second, tax-gap related tensions between the White House and the Senate Finance Committee, which would coordinate any nominee's confirmation process, could influence confirmation proceedings.

Meanwhile, individuals mentioned as possible candidates for the job, some perhaps surprising to the tax practitioner community, are being discussed. The White House already has launched its search for suitable candidates, BNA has learned.


Leadership Succession Under 1998 Restructuring Act

Everson's five-year term as commissioner began May 1, 2003. Under a succession process established by the IRS Reform and Restructuring Act of 1998 (Pub. L. No. 105-206), the individual succeeding Everson as IRS commissioner will serve for the remainder of Everson's term, which expires in May 2008.

Because Everson is the first commissioner not to serve out an entire term as commissioner since enactment of the 1998 act, replacing him is unprecedented and may prove difficult, and delicate.

Any nominee will face not only the possibility of a bruising initial confirmation hearing in 2007, but also a second confirmation process in the midst of a presidential campaign in full swing. Additionally, the possibility that the next president, who will be sworn into office during January 2009, may want to appoint a new commissioner only complicates an already complex situation.

Nevertheless, the White House Office of Presidential Personnel (OPP) already has begun contacting people in an effort to identify candidates who may be interested in the position, one person who was contacted regarding candidates for the commissioner's job by OPP told BNA.

Treasury's DeSouza said in his statement that discussions of what would happen after Brown's initial 210-day service as acting commissioner may be largely inconsequential because Treasury is "expecting the White House to nominate a candidate before that situation would occur."


Leading Scenarios Contemplated

The challenges associated with finding a permanent replacement for Everson have resulted in government officials, former government officials, and tax practitioners contemplating various scenarios for Everson's successor.

Under one scenario, the Bush administration could nominate, but not advocate seriously, a candidate for the job, allowing Brown to serve both the remainder of Everson's term and continue to serve as acting commissioner until the end of President Bush's term--presuming Brown could succeed himself and serve for a second 210-day period as acting commissioner.

This scenario would place an executive in charge of IRS who could provide longer-term leadership stability at the agency while providing the next U.S. president a free hand in appointing the next IRS commissioner.

"Certainly there is the possibility that no one is nominated and goes through the confirmation process before there is a new president," former Assistant Treasury Secretary for Tax Policy and current Skadden, Arps, Slate, Meagher & Flom LLP partner Pamela Olson told BNA May 8.

Because of the requirements associated with confirming a commissioner for the rest of Everson's term and then nominating and confirming a commissioner in May 2008, it would likely be "easiest" to have Brown serve as acting commissioner until a new president took office in 2009, former IRS Office of Professional Responsibility Director Cono Namorato told BNA May 8.

But a chief problem with that scenario is that Brown is essentially serving in a caretaker capacity, former IRS commissioner Lawrence Gibbs said in a May 15 statement. Most acting commissioners of which he is aware have viewed their roles as "one of maintaining the approach of the last confirmed Commissioner until a new Commissioner can be confirmed," Gibbs said.


Possible Agreement With Senate

Exposing a nominee to two Senate Finance Committee confirmation hearings could be bruising and--because 2008 is a presidential election year and the involved agency is IRS--overly political, officials said. Committee Chairman Max Baucus (D-Mont.), a critic of Treasury's efforts to combat the tax gap, would lead the confirmation hearings.

"You generally don't want [politics] to be in the forefront of someone's mind" when nominated to lead an independent government agency, one former IRS official said.

Former Treasury officials outlined another scenario that would smooth that process, under which the Bush administration would reach an agreement with Senate leaders. Under this scenario, the administration's nominee would undergo the confirmation process to fill the remainder of Everson's term. A second confirmation process that would extend the confirmed individual's tenure for a fresh five-year term, under this scenario, would by agreement be perfunctory and noncontroversial, effectively giving the nominee an uninterrupted term of up to six years.

"If a qualified person can be identified and both ends of Pennsylvania Avenue are in agreement with respect to the qualifications, I think what we're talking about can be done," Gibbs told BNA May 9.

"That certainly seems possible," Olson said, particularly because the circumstances surrounding the confirmation of a new commissioner are unprecedented and challenging.

Other practitioners said, however, some current government officials looking to leave government for the private sector might have a different agenda: cap their government service by serving as IRS commissioner, but only for a limited time.

Under this scenario, the commissioner candidate would only be interested in serving the remainder of Everson's term before leaving government service.


Candidate Difficulties

Olson and others said it might be difficult to find candidates from the tax practitioner community willing to shut down their practices for a job that may last for less than one year, particularly since they would be barred from engaging in certain tax-related client engagements for set periods of time after they left the commissioner's job.

Indeed, because the nomination and confirmation process could be difficult for any nominee, the engagement prohibitions, and the possibility that any confirmed individual could nevertheless serve a short time as commissioner, Namorato said it may be difficult to find a highly qualified individual currently in tax law private practice who would be interested in the job.

Another possibility would be for the administration to nominate a well-respected tax practitioner who is contemplating retirement from private law practice. Former commissioners Fred Goldberg and Gibbs were mentioned by some sources as practitioners who might view the job as a suitable farewell to their professional careers, but others who know them told BNA neither would be interested in the job.

"I've had my turn. I've had my shot. What we need is to find someone who has the skills to handle the job's responsibilities at this particular time who would appeal to the Republicans and the Democrats and be the individual who would be there for a six-year term, or five years plus," Gibbs said.

Goldberg could not immediately be reached for comment.

IRS's previous two commissioners did not emanate from the tax practitioner community immediately before their nomination, though Everson at one time worked for a national accounting firm. Rather, they were selected in large part due to their management skills, which the 1998 restructuring law made a requirement for the job.


Possible Candidates for Job

Many practitioners privately endorsed the choice of Brown for the job of acting commissioner before the administration made the appointment, and several prominent individuals in the tax community publicly stated their approval of the selection after it was announced.

"Kevin will be a superb acting commissioner. I have no doubt about that," said Gibbs, now a Miller & Chevalier practitioner.

Former government officials and practitioners told BNA that Brown is a serious candidate to become IRS's leader on a permanent basis. A former IRS official, speaking with Brown after he became acting commissioner, said Brown indicated he was interested in the job. Through a spokesman, Brown had no comment.

Namorato said Brown would be well received on Capitol Hill, and other practitioners said Brown is well regarded in the tax practitioner community.

Other candidates might emerge from the federal government, particularly from the Justice Department, the Office of Management and Budget, Treasury, or perhaps Capitol Hill, Namorato said.

Besides Brown, current IRS Chief Counsel Donald Korb has expressed an interest in the job, practitioners told BNA. Korb did not immediately respond to a request for comment.

Dean Zerbe, senior counsel and tax counsel to Senate Finance Committee ranking Republican Charles Grassley (Iowa), is being discussed as a candidate for the job, sources said. Another possibility: Eileen O'Connor, assistant attorney general for the Justice Department's tax division, sources said.

"I don't know for sure that he's being considered, but Dean Zerbe is very competent. He's got tremendous energy, and he knows the IRS as well as anyone out there," Grassley said in a May 16 statement.

Another candidate might be current Assistant Treasury Secretary for Tax Policy Eric Solomon, but he may not be interested in the job because of his expertise in technical tax matters, which may lead the assistant secretary to prefer his existing job over the commissioner's position, two former officials who worked with Solomon at Treasury told BNA.

DeSouza, citing a policy of not commenting on personnel matters, declined to comment on Solomon's possible candidacy. O'Connor did not immediately respond to a request for comment.


Political Considerations

Political party affiliation also could play a role in deciding the next IRS commissioner, though the Clinton administration nominated a Republican, Charles Rossotti, for the commissioner's job, and the current Bush administration nominated a Clinton administration appointee, Solomon, for Treasury's leading tax policy position, though only after two other candidates declined for various reasons to push ahead with their own nomination bids.

But several former government officials said the current Bush administration likely will want to nominate a Republican due to its past record of highly political appointments, even for presumed independent agencies.

Three officials specifically pointed to recent allegations regarding an overly political countenance at what is professed to be, similar to IRS, a nonpolitical institution: the Department of Justice.

Gibbs said while politics could certainly play a role in who is nominated and confirmed for the job, the successful candidate ultimately will have to be someone with the skills to deal with the unique challenges facing IRS at this moment--challenges including the tax gap, an aging IRS workforce, technology modernization, and difficulties associated with international tax jurisdictions--not necessarily someone who has political heft.

"This is going to require cooperation between the Republicans and Democrats," Gibbs said.

By Stephen Joyce

[Demosthenes]

It would get real interesting real fast for TPs if Dean Zerbe took the position. He's a good friend of mine and isn't, shall we say, patient with cheaters.

[Imalawman]

It would get real interesting real fast for TPs if Dean Zerbe took the position. He's a good friend of mine and isn't, shall we say, patient with cheaters.

Which means you'll be more powerful than you are now? Now that's a scary thought.

(on an unrelated note - what's the timetable on your book? Still waiting to see what happens in NH?)

[Demosthenes]

It would get real interesting real fast for TPs if Dean Zerbe took the position. He's a good friend of mine and isn't, shall we say, patient with cheaters.

Which means you'll be more powerful than you are now? Now that's a scary thought.

(on an unrelated note - what's the timetable on your book? Still waiting to see what happens in NH?)

Not sure what my power change would be, if any. Sometimes, it's better to be exerting pressure from the outside.

Book is wrapped up, unless something happens soon, on the Brown case, so it's in editing.

[gottago]

Not sure what my power change would be, if any. Sometimes, it's better to be exerting pressure from the outside.

Book is wrapped up, unless something happens soon, on the Brown case, so it's in editing.

Many people would not consider someone married to a former highly placed government attorney who is currently a rich government lobbyist to be "on the outside". And that does not even address the issue of who you really are and what your own "relationship" with the government is.

Fire away!!

[Demosthenes]

Got a job yet, Goodess, or are you still leaching off unemployment like a good tax protester?

[gottago]

No to both questions jj

[Quixote]

Got a job yet, Goodess, or are you still leaching off unemployment like a good tax protester?

No to both questions jj

Everson's old job is still open. Send Bush your resume.

[gottago]

Maybe I will just run it by his house, just up the road from me.