With IRS under fire, Obama's tax man choice faces Congress

WASHINGTON Mon Dec 9, 2013 6:03pm EST

Freddie Mac Chief Executive John Koskinen departs the White House after a meeting with U.S. President Barack Obama in the State Dining Room in Washington, March 27, 2009. REUTERS/Kevin Lamarque

Freddie Mac Chief Executive John Koskinen departs the White House after a meeting with U.S. President Barack Obama in the State Dining Room in Washington, March 27, 2009.

Credit: Reuters/Kevin Lamarque

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WASHINGTON (Reuters) - President Barack Obama's choice for U.S. tax commissioner, a multimillionaire with a reputation for troubleshooting, appears headed for confirmation, but on Tuesday will first face some tough questioning in Congress.

The nominee to head the Internal Revenue Service, Democrat John Koskinen, is a 74-year-old lawyer with little tax experience who stepped in to run mortgage finance giant Freddie Mac five years ago when it was engulfed by the credit crisis.

Koskinen draws praise from Republicans and Democrats alike, but confrontation awaits him in the Senate Finance Committee, given this year's IRS tax-exemption scandal involving conservative political groups and the role the agency will play implementing Obamacare.

The committee hearing begins at 10 a.m. (1500 GMT).

If Koskinen wins confirmation in the committee, as expected, his nomination will likely breeze through the full Senate, thanks to the chamber's new policy on procedural roadblocks known as filibusters, tax lobbyists said.

In November, the Democratic-led Senate voted for a rule change that strips Republicans of their ability to block Obama's judicial and executive branch nominees.

No committee vote has been scheduled yet on Koskinen's nomination, a staffer said.

Senator Charles Grassley of Iowa, the No. 2 Republican on the committee, said he was impressed by Koskinen's background, and they had a "favorable" meeting and that he believed other committee Republicans viewed Koskinen favorably.

Mark Everson, who served as IRS commissioner from 2003 to 2007 under Republican President George W. Bush, said: "He will be confirmed."

TAX EXEMPTION SCANDAL SPARKS TRUST ISSUE

With the 2014 tax filing season due to begin in late January or early February, Congress will be eager not to delay the confirmation, especially because acting commissioners have been running the IRS for the last 13 months.

It is the longest the IRS has gone without a confirmed commissioner since at least the 1950s. Koskinen would replace acting chief Danny Werfel, a White House budget official. Koskinen's term would be for five years.

The IRS came under scrutiny this year when lawmakers with ties to the conservative Tea Party movement accused the agency of unfairly subjecting conservative groups that had sought tax-exemptions to extra time-consuming scrutiny.

A two-month political uproar ensued, leading to the resignation of one acting IRS commissioner, the appointment of another, embarrassment for the White House and damage to the agency's politically neutral image. The matter is still under FBI and congressional investigation.

Tuesday's confirmation hearing gives Republicans an opportunity to revive the scandal.

"Koskinen must explain how he will lead this agency out of its recent turmoil and regain the public's trust," Senator Orrin Hatch of Utah, the committee's top Republican, said in a statement.

Grassley said, "The big thing is the intimidation of the IRS. We need to make sure our IRS is non-ideological."

THE IRS AND OBAMACARE

Both Grassley and Hatch said Koskinen must answer questions about how he would handle the IRS's role in the 2010 Affordable Care Act, otherwise known as Obamacare.

Beginning in January 2014, a tax credit will be available to low- and middle-income individuals to help pay for health insurance.

Earlier this month, the IRS's inspector general said the agency needs tighter fraud filters to prevent the tax credits from being issued erroneously.

Grassley has previously raised concerns about Koskinen's campaign contributions. Koskinen has contributed about $80,000 to Democratic candidates dating back to 1989, public campaign records show, including two $2,500 donations last year to Obama.

Senator Max Baucus, a Montana Democrat and the committee's chairman, endorsed Koskinen on Friday.

"He is the right person to take on this challenge, and with filing season approaching, the IRS needs its leader in place," Baucus said in a statement.

(Reporting by Patrick Temple-West; Editing by Howard Goller and Leslie Adler)

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