Update: The Senate has confirmed Daniel Werfel to lead the IRS by a 54-42 vote.
The Senate is expected to confirm Daniel Werfel to be the next IRS Commissioner today, but nothing comes easy in the upper chamber.
Procedural Process:
Confirmations are not a one-vote-and-done process.
The Senate holds procedural votes that come before the chamber holds a final vote. Between those two votes is usually 30 hours. This time allotment allows staff to clean up any discrepancies before a final confirmation vote occurs (same timeframe occurs with legislation.)
Senators on March 8th voted 51-44 (51 votes were needed) to limit the debate on Werfel’s confirmation. This is what’s known as a procedural vote, and it sets things up for a final vote for approving the confirmation.
Normally, a victorious vote on a procedural motion is a good indication that the final vote will also be a winner. This is what is expected for Werfel’s confirmation, i.e., the Senate will name Werfel to be the next IRS chief (barring an unforeseen circumstance).
The final vote on Werfel’s confirmation is expected to occur later today.
Timing Coincidence:
Whether planned or not, Werfel’s confirmation vote to head the IRS will occur in the same week that President Joe Biden delivers his budget request to Congress.
Biden’s budget is expected to propose increasing taxes on taxpayers earning more than $400,000 (whether that dollar threshold is for single or joint filers is unclear; the White House has assigned it to both).
The President’s call for tax increases will likely fall on deaf ears among House Republicans, who control the chamber and have vowed to not increase taxes on anybody. This means that the passage of new tax increases is unlikely to occur in the current Congress.
However, the focus of IRS audits can be adjusted without congressional consent, and that is what Werfel plans to do once his heads the tax agency.
In his testimony before the Senate Finance Committee’s hearing on his nomination, Werfel indicated that wealthier taxpayers would see more audits.
From his testimony:
'Last year, Secretary Yellen issued a directive that the IRS will not increase audit rates, relative to historic levels, for small businesses and households making under $400,000, which I am committed to meeting. Therefore, if I am fortunate enough to be confirmed, the audit and compliance priorities will be focused on enhancing IRS capabilities to ensure America’s highest earners comply with applicable tax laws.'
Werfel spelled-out this goal in his answers to the Senate Finance Committee:
[T]here is significant evidence that high earners are paying significantly less than what they owe in taxes. For example, an assessment from the National Bureau of Economic Research indicates that working people pay 99% of the taxes they owe, while 20% of the income from wealthy individuals and large corporations is shielded from IRS view. This outcome degrades public trust in our tax system because honest taxpayers should know that when they file an accurate return with the IRS that all other taxpayers, including the wealthiest Americans, are doing the same… I have an initial hypothesis that one area of priority should be building capacity within the IRS to unpack complex and intricate returns of wealthy taxpayers so we can better assess any balances due that are being uncollected today.
Increasing audits on taxpayers earning more than $400,000 is a priority for congressional Democrats and the President. It would be silly to think that Werfel would not follow their lead.
Prior Eide Bailly coverage on Werfel's confirmation is here and here.
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