September 28,2023

Crapo: IRS Chief Counsel Must Put Law over Desired Political Outcomes

At nomination hearing, highlights numerous issues at IRS and urges transparency, responsiveness

Washington, D.C.-- At a U.S. Senate Finance Committee hearing on the nomination of Marjorie Rollinson to be Chief Counsel of the Internal Revenue Service (IRS) and Assistant General Counsel of the Department of Treasury, Ranking Member Mike Crapo (R-Idaho) highlighted the myriad issues currently plaguing the IRS, and asked for commitments from Ms. Rollinson to engage Congress with transparency and responsiveness, if confirmed.  Senator Crapo also urged the nominee to adhere to the law over desired political outcomes, and warned against acting unilaterally, without direct statutory authority. 

Watch Senator Crapo's opening statement here. 

On concerns with recent IRS and Treasury actions:

Interpreting the so-called Inflation Reduction Act (IRA) is squarely within the IRS Chief Counsel’s purview.  The IRA created complexity that has proven unworkable in implementation, putting many American businesses and consumers at a significant disadvantage, and has supercharged IRS enforcement while short-changing taxpayer service.

You will also have a significant role in addressing a number of other recent, concerning IRS actions, including: use of IRA funds to increase enforcement in areas with a long history of burdensome and low-utility ‘no change’ audits; leaks of confidential taxpayer information; the destruction of 30 million information returns, which reportedly led to additional audits of earned income tax credit claimants; and the ongoing attempt to stand up and divert resources to an IRS-run tax preparation program without clear statutory authority.

Watch Senator Crapo question the nominee here. 

During questioning, Senator Crapo raised concerns with the IRS exceeding its authority, both by ignoring plain language from recent legislation, and by taking other actions without Congress’s explicit authority. 

On the IRS and Treasury exceeding authority:

One troubling recent trend is the willingness of the IRS and Treasury to ignore the plain language in enacted statutes when issuing regulatory guidance.  For example, in the case of the IRA’s new EV tax credit, the IRS and Treasury proposed rules that had no statutory basis and simply ignored the statutory deadline for issuing guidance--which had the effect of temporarily preventing new requirements from taking effect and allowing scores of credits to be claimed inappropriately.

There are other recent instances where IRS and Treasury have ignored unambiguously stated effective dates and delayed certain provisions from taking effect. 

I realize you were not in the government at the time these actions were taken, but do you believe that it is proper for the IRS to issue guidance that is clearly inconsistent with the statute? 

If confirmed, how will you approach a situation where the statute is clear, but the Administration seeks a different outcome, whether based upon claims of administrative complexity or political expediency?

On the IRS acting without clear Congressional authorization:

I’m very concerned about specific instances where the IRS unilaterally acts without statutory authority—where there is no language to be clear, or unclear, about.  Pursuant to the Administration’s directive, for example, the IRS has recently begun building a program to prepare tax returns and give tax advice.  Allowing the IRS to act as tax collector, tax enforcer and tax preparer puts it at the center of each stage of the process.  Even though it was jettisoned from the partisan IRA, many of us worry that the IRS will also unilaterally require systematic, intrusive reporting on Americans’ bank accounts without statutory authorization.

Do you believe the IRS has the legal authority to prepare tax returns or track Americans’ bank accounts without Congressional authorization? 

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