John Koskinen: Former IRS commissioner gives TEI members an up-close look at why budgetary constraints presented a major challenge during his tenure - and still do.

• Author: Levin-Epstein, Michael
• Position: Tax Executives Institute - Interview

John Koskinen served as IRS commissioner for almost four years before leaving office in November 2017. As IRS commissioner, Koskinen dealt with thorny issues, including antiquated technology, the growing importance of international tax issues, and, of course, budget constraints. Tax Executive was granted one of the first interviews with Koskinen immediately after his tenure ended. Michael Levin-Epstein, senior editor of Tax Executive, conducted the Q&A.

Levin-Epstein: How did your last day as IRS commissioner compare to your first day almost four years ago?

Koskinen: Before my first day almost four years ago, I already had spent time in the three or four months before that preparing for my courtesy calls on the Hill and my confirmation hearing, but mostly to get as much information as I could about the IRS. I interviewed anybody who ran anything at the IRS. So, when I started on my first day, Ed already met all of the senior executives and had already gotten a pretty good idea as to what the major challenges were. The biggest challenge obviously was responding to the congressional requests for the production of documents related to the major dispute about social welfare organizations and how their applications were handled. My last day--my term expired officially on November 12, but my last day in the office was November 9, the Thursday before Veterans Day--was primarily devoted to a farewell gathering in the lobby of the IRS building. There is a theory in management that you should never let anyone know when you're leaving, because you become a lame duck and they'll start to ignore you. My experience has been that, if you're willing to make decisions, people start lining up outside your door trying to get things decided or approved before you leave. That's been especially true as I left the IRS.

On my last day, we had a two-hour ceremony in the lobby. Jack Lew, who was the Treasury secretary when I started and is an old friend from twenty years ago, was there. Jack and I were deputies together at OMB [the White House Office of Management and Budget] in the mid-nineties in the Clinton administration. Jack was the deputy for budget matters; I was the deputy for management. Tony Reardon, the head of the NTEU, the IRS employee union, spoke as well, along with John Dalrymple, who had been my partner as the deputy commissioner for services and enforcement. Kody Kinsley, the assistant secretary for management at the Treasury Department, represented Secretary [Steven] Mnuchin, who had called me to say he had to be out of town.

So, it was a wonderful occasion. It also gave me a chance to thank all of the employees--there were several hundred crammed into the space--for all of their hard work and the great accomplishments they'd made. They had done this even with the restrictions on our funding and a decline of about 20,000 employees from 2010 until today. My wife, my daughter and her husband, and two of my four grandchildren were there as well. But, after the ceremony, I also spent time signing approvals and authorizations and having a press interview. So, it was a full day. Then, of course, I had to pack up my office and sort through papers for the last time. It was after six by the time I left.

Key Accomplishments

Levin-Epstein: What were your most important accomplishments in your tenure as commissioner?

Koskinen: I always try to make it clear that the agency made great accomplishments, and it was the result of the work of the employees. A lot of times you do get asked, when you finish a tour of duty, "What did you accomplish?" People often say, "Well, I did this and I did that." I've always thought that was a mistake, because the work really is done by the employees. I always tell people I never looked at a filed Form 1040.1 never talked to a taxpayer on the phone or in person at one of our taxpayer-assistance centers. I told the employees throughout my four years that I would always recognize that the progress we were making was really progress as a result of their good work. I really do believe that.

So, the agency, while I was there, with constrained resources, was able to have four very successful filing seasons. During the last filing season, we processed more than 150 million individual returns. I've always said that a successful filing season doesn't happen automatically or by accident--it's a significant undertaking for the agency. We start preparing for the filing season in May of the preceding year, and, with our antiquated IT system, all of the adjustments and changes that have to be made are a significant challenge. So, the fact that we got through four seasons very smoothly was a high priority for the agency, and a great accomplishment.

We also struggled for a number of years with identity theft and refund fraud. Criminals became increasingly adept at masquerading as a taxpayer because criminals have access to enough personal information to appear as the taxpayer, and then file a false return and claim a refund. When I started, the agency was struggling and basically thought it was doing well if it could hold its own in terms of the number of taxpayers who reported themselves victims of identity theft. We put...