Former IRS Commissioner Koskinen reflects on a career in public service

Subscribe to Federal Drive’s daily audio interviews on iTunes or PodcastOne.

Looking at the public career of former Internal Revenue Service Commissioner John Koskinen, you see a man who was called upon by two presidents to handle the tough jobs.  But if you asked Koskinen, he’d  likely talk about his colleagues, as well as the rewards and satisfaction gleaned from his years in public service.

Both inside and outside government, Koskinen honed his skills in tackling difficult situations.  After early ventures in politics as assistant to Sen. Abraham Ribicoff (D-Conn.) and then to New York Mayor John Lindsay, he worked on the turnaround of large, failed companies like Penn Central, Levitt and Sons, and the Teamsters Pension Fund.

Advertisement

Koskinen found his way back to government work as deputy director for management at the Office of Management and Budget.  In 1998, President Bill Clinton called on him to chair the President’s Council on Y2K, dealing with the year 2000 conversion problem.  Later, he was recruited to serve as head of the Freddie Mac at the crux of the housing crisis. And, in 2013, President Barack Obama nominated him as IRS commissioner after a scandal made the tax agency the target of conservative political groups.  His term at IRS ended on Nov. 12, 2017.

Kiskinen’s time at IRS was characterized by a turbulence that actually led to an impeachment drive by House Republicans.  “It was an interesting four years, but to the surprise of many, I actually enjoyed them,” Koskinen told Federal Drive with Tom Temin.

Federal Drive host Tom Temin, right, interviews former IRS Commissioner John Koskinen.

At the crux of the IRS scandal was the revelation that it had selected political groups for tax-exempt status for intensive scrutiny based on their names or political themes. Republicans charged the IRS had targeted conservative groups at a lower rate than liberal-leaning organizations.  In recent weeks, the Trump administration agreed to settle a lawsuit on behalf of more than 400 conservative nonprofit groups who claimed the IRS discriminated against them.

Koskinen said the case was clearly political, that no evidence has been found to warrant criminal charges against anyone at IRS.

“We provided 1.3 million documents to the various investigators and over 30,000 emails and nobody ever found an email that indicated anyone outside the IRS said you should do X or Y, or than anyone inside the IRS was trying to affect an election,” he said. “There was no political drive for one party or the other in any of the emails.”

In the aftermath of the IRS scandal, the attacks on federal employees, and the threat of shutdown, furloughs and budget cuts, one might have forgiven IRS employees if they had morale issues.  Much to Koskinen’s surprise, he found workers at IRS who were not grumbling about their lot in life.

“They were concerned about a lack of resources because they couldn’t provide services the way they would like to, and it was refreshing and reassuring to see the agency populated almost without exception by employees dedicated to the mission and anxious to do the best they can, even with constrained resources,” he said.

The lesson for Koskinen was that the IRS often fell target to personal feelings on Capitol Hill.

IRS has lost $1 billion in funding

“That clearly is true,” he said. “My confirmation hearing and (Treasury) Secretary Steve Mnuchin’s confirmation hearing reiterated the same thing. In my 20 years in the private sector, I never saw anyone who said: ‘Let’s starve our revenue-producing arm and just see how it does.'”

As a convenient whipping boy, IRS figures it has lost $1 billion in funding since 2010, which in turn has led to the loss of more than 20,000 employees.  In terms of income, the cutbacks have caused IRS to leave $6-8 billion of potential revenue uncollected from audits that should have been done, but could not be done because of a lack of resources.  “It is really penny wise and pound foolish,” Koskinen said. “It just makes no sense fiscally at all.”

The Obama White House was always supportive of the IRS, according to Koskinen.  In 2016, the Obama administration saw to it that IRS was given a budget for the first time in six years. But then there was a rescission and the money was pulled back. The result was the same — more cutbacks.  “When 70 percent of the budget is personnel, the only way to deal with the shortfalls is simply not to replace people who leave,” Koskinen said.

It’s a story not unfamiliar to many government managers. Just weeks after leaving IRS, Koskinen imagines how the agency will deal with the continuous belt-tightening.

“It’s a challenge obviously,” he said. “It’s a great workforce, a wonderful agency, a ‘can-do” group. I used to tell them they were their own worst enemy because when the budget got cut, they did a remarkable filing season, and people would say we cut the budget and the wheels didn’t fall off, let’s try it again.”

Koskinen said his big concern for IRS is the wheels are going to fall off. He calls it “fantasy” to think IRS can continue to lose resources at this pace. And he said he’s especially concerned that the new tax bill may be the thing that pushes the IRS over the edge.

“I’m sure the agency welcomes the challenge, but accepting that challenge without the resources necessarily risks failure,” he said.

Information sharing key to building partnerships

Among Koskinen’s talents is his continuing ability to build partnerships. It worked for him in planning for the Y2K turnover. And it worked for him at IRS.

“When I started as the so-called Y2K Czar, the focus was really on the government. But if the government functions and systems are all running and electric grid is down, it won’t do anybody any good. So we wound up dealing with the entire critical infrastructure of the country,” Koskinen said.

The key to building those partnerships, according to Koskinen, was the sharing of information through 25 working groups — power, telecommunications, transportation — in which the working groups were co-chaired by a government agency and an organization representing industry.

“Cooperation in those working groups really allowed us to get through the system,” he said. “In fact, we created a similar situation around the world, where we had each continent organized with countries leading the effort with information being provided primarily by companies within the United States. So it was really a global cooperative partnership that resulted in the fact that there was no major disaster.”

Years later, Koskin would test his partnership theory once again at the IRS to target the problems of identity theft and refund fraud.

“We had been battling that problem for 8-10 years without a lot of success. We viewed success as things not getting worse. Within two years, thanks to the partnership and great work by IRS employees, we cut the number of taxpayers who were victims of identity theft and refund fraud by two-thirds,” said Koskinen. “It’s a model that works better than trying to tell people what to do.

Koskinen never fails to credit federal workers for the job they do.  For someone who has seen good times and bad, Koskinen makes sure those in public service get the spotlight they deserve.

“Starting years ago when George Wallace ran against pointy-headed bureaucrats as part of his campaign for president, there’s been kind of a fall-back position by a lot of people to attack government employees, and think those are people who have never actually dealt with employees across government,” he said. “By in large, the employees there care about what they do, they are trying to do the best they can, and they often labor with inadequate resources.”

As IRS commissioner, Koskinen said he also felt employees appreciated that he had their backs. Being the only political appointee in an 80,000 employee workforce, he said he saw his job as defending the agency. He said he believed employees appreciated his support and the feeling that their leader was actually going to lead.

Asked at a press conference recently if, at 78, he was really ready for retirement, Koskinen said: “I’ve never been very good at saying ‘no.’ I used to say I was going to quit answering the phone. My strategy now is to have my wife answer the phone. If you can work your way through her, then maybe I’ll take a look at whatever the next challenge might be.”

That’s just the kind of answer might expect from a go-to problem solver.