Mother Jones
A Former IRS Chief on Trump’s Attempts to Gut—and Weaponize—His Agency
The Internal Revenue Service, as the New York Times reported this week, is mulling Donald Trump’s request to revoke the tax-exempt status of Harvard University after Harvard refused to cave in to the president’s demands for a sweeping right-wing overhaul. The Times also reported, just yesterday, that a Treasury official had emailed a high-level official at IRS to find out whether Mike Lindell, a wealthy supporter of the president and spreader of Trump’s Big Lie, was “inappropriately targeted” for an audit.
John Koskinen is appalled. As the tax agency’s commissioner from 2013 through 2017, he understands, more than most, the importance of an independent IRS, and that no president has the right to weaponize the agency to curry favor or settle grudges. We haven’t witnessed this sort of nonsense since, well, Richard Nixon—and look how well that worked out for him.
“This has to be the worst time for the agency I can remember.”
Harvard was just the latest salvo. Republicans have waged an all-out war on the IRS since 1994, calling for its abolition and slashing its budgets—which is not how you behave if you are legitimately concerned about deficits and the national debt. Koskinen, appointed by President Barack Obama, has been hauled before Congress to defend his agency and its employees against an onslaught of tea party–fueled attacks. House Republicans even tried to impeach him, albeit unsuccessfully.
But what he’s seeing now is on another level. Trump is gutting the IRS workforce without congressional consent, and has grown increasingly brazen in his attempts to have the agency do his bidding. IRS is now sharing taxpayer information with Homeland Security to aid in Trump’s deportation efforts, a breach of privacy and independence Koskinen never would have abided.
Now 85 and (finally) retired—”I’ve flunked retirement a couple times,” he says—Koskinen was appointed commissioner at a time when federal agencies were, for the most part, still run by competent and experienced people, and not, to quote Thomas Friedman, “knuckleheads.”
Over a long and illustrious career, he has served under mayors, senators, judges, and presidents. He was a high level staffer for the Kerner Commission, ran the US Soccer Foundation, and chaired the 1994 World Cup host committee. He held a high position in President Bill Clinton’s Office of Management and Budget and chaired Clinton’s council on the “Y2K problem,” so successfully that nothing happened—which was the point. As the deputy city administrator of Washington, DC, from 2000 to 2003, “I was there for 9/11, for anthrax, for the sniper,” he told me. “I thought, ‘People are gonna think this guy’s got a black cloud, like Joe Btfsplk in the old Andy Capp comic.'”
He also spent decades in the private sector as a fixer, working to get tottering entities such as the Penn Central company, Levitt and Sons, and the Teamsters Pension Fund, back on track. One of his retirement “flunks” came about in 2009, when he was tapped to chair Freddie Mac—in the midst of a global mortage meltdown. (Black cloud indeed.)
As for who runs the IRS now, well, what day is it? Commissioner Daniel Werfel, a Biden appointee, stepped down shortly after Trump’s inauguration and well before the end of his five-year term. To replace him, Trump tapped Billy Long, a former congressman from Missouri who has yet to be confirmed by the Senate. Acting Commissioner Doug O’Donnell, a career employee, quit after about a month on the job, when he was asked to share IRS data with Elon Musk’s so-called Department of Government Efficiency. He was replaced by Melanie Krause, who pledged to cooperate with DOGE, only to resign after Homeland got its mitts on private taxpayer information—a development that prompted the exodus of a number of other IRS officials with “chief” in their titles, who probably didn’t want to be associated with whatever came next.
The speed and scope of the staff cuts, tens of thousands to date, could well make the next tax season a “disaster,” Koskinen says. And while Republicans often say that the government should be run like a business, what company in its right mind would deliberately alienate customers, encourage cheating, and undermine its own ability to collect revenue?
“A lot of these people come out of the private sector; you would think they would understand that,” Koskinen says. “Instead, they are barreling ahead. And the only explanation is that they think it’ll be good for them—they won’t get audited. It really is nonsensical if you’re concerned about the deficit.”
This interview has been edited for length and clarity.
The IRS has been under siege for decades, including on your watch. Does what’s happening now feel fundamentally different?
Yes, this feels more like a total frontal attack, and not only the budget—it’s the attempt to get access to protected data. And from the president suggesting that Harvard’s tax-exempt status ought to be reviewed, it’s just a small step to start ordering audits, even though that’s illegal, and we start moving back toward the Nixon “enemies list.” It also seems that this is an attempt to make the IRS less effective.
And this is one federal agency with a positive return on investment.
It’s never been disputed that if you give money to the IRS, you get more money in return. It goes the other way, too. If you take money away from the IRS, you lose multiples of whatever it is you think you’re saving. In my days, even the Freedom Caucus never disagreed with that.
The New York Times reports that about 22,000 IRS employees accepted a buyout. What happens when you eliminate so many people so quickly?
I am confident that includes a significant number of very experienced managers and executives. Over 30 percent of the IRS has always been eligible for retirement, but they don’t retire, because they’re committed to the mission. When, literally overnight, you lose that many people, you’re losing leadership. You’re losing guidance and mentoring. You really are disabling the IRS.
What people don’t understand is the IRS starts preparing for the next tax season in June or July. There’s a tremendous amount of reprogramming that has to go on. And then you have to make sure it works. And the underfunding? A lot of that money is coming out of IT.
What do the mass resignations tell you about agency morale?
Well, it has to be a problem. My theory has always been, if you want to know what’s going on in an organization, go talk to the people doing the work. When I was there, I went to two large IRS offices a week for three and a half months, holding town halls and lunches, and was just delighted with the level of [commitment].
“If the money is short, that’ll be a good reason to cut social programs—’We just don’t have the funds.‘”
The IRS was under tea party attack and people’s primary concern—these were employees, not managers—was how to get the work done with fewer people. We lost about 20,000 in the four years I was there because of the budget cuts, but that happened over time; we just didn’t replace people who left. Now, with the rattling of the cage that’s gone on, and the demeaning of government workers and attacks on the IRS, it’s not nearly as much fun to work there. This has to be the worst time for the agency I can remember.
Do you think Trump’s people will succeed in making the IRS a tool of his retribution?
They’re trying. I mean, they started out wanting access to all sorts of information about taxpayers, and they got pushback from the interim commissioners. So then we got [the shareable information] down to a narrower category. But even that is a broad category, and nobody seems to have paid attention to the documents: It’s criminal prosecutions and those under criminal investigation—without any explanation of what that means or how they’re measuring it.
Everybody is subject to being under criminal investigation as a way of getting access to your tax materials.
As for Harvard, that’s just the first step. This is an administration priding itself on revenge, and the FBI director and the Department of Justice people are out there saying, in effect, “We’re going to get our opponents.” They’re talking about investigating every member of Congress on the January 6 panel.
It’s one thing to have the agency not collect taxes well enough. It’s another if the administration doesn’t like me or my views, so the next thing I know I could be audited. And even if I don’t have any problem, being audited takes time and money, and you need a CPA or a lawyer or somebody to represent you.
They’ll make your life hell.
Yeah, and the threats to law firms and the press will be designed to intimidate people. You know George Orwell, right? You intimidate lawyers, you intimidate the press, and you intimidate universities. You try to make it so people do what you want, so their view of life is yours.
Then the administration can put out facts and information and there’s nobody to disagree. The head of HHS can say, well, we really do think autism is caused by vaccines, and people will say, Gee, if I object, I’ll lose my contract or grant or I’ll get audited. This is not beanbag anymore.
What do you mean?
This is not kid’s play. This is serious—a threat to the country and the democracy as we know it.
What do you hear from current IRS staffers?
It’s interesting. I hear from almost no one because they are so ingrained to protect taxpayers and their returns and the agency. Even at the executive level—and I know a lot of those people extremely well—they’ve all been very careful not to send me emails or complain or reveal anything. It’s to their great credit.
Michael Lewis just published a book called Who Is Government? Hes says that’s a default trait of federal employees: They aren’t clock-watchers. They tend to work obsessively, for low pay, and never seek credit. It’s just so different from the picture painted by guys like Elon Musk and Russell Vought. And Republican lawmakers, too. When Biden was working to boost IRS funding, they unleashed a propaganda campaign falsely claiming the agency would hire 87,000 new agents—basically jack-booted thugs—to harass ordinary people and small business owners.
They were going to come and get everybody! Yeah, it was just a stunning exaggeration.
The overwhelming majority of the layoffs to date have been probationary employees—Biden hires. Many of them actually had special skills, right?
Yes. They were easier to terminate. But probationary sounds like they’re just out of college. A lot of them came with very sophisticated backgrounds and experience in technology and tax law management. They weren’t 25-year-olds. They were filling important positions. When you lose them, that’s not good.
The Washington Post said almost half of the planned job cuts would come from the compliance division, which oversees audits and criminal investigations into tax fraud and money laundering. What message does that send?
As I used to say, “It’s a tax cut for tax cheats.” I mean, you encourage people not to file, because they’re not going to get caught. You encourage people to take deductions they aren’t eligible for—they figure, well, the worst that happens if I ever get audited, which I probably won’t, is they charge me interest or a penalty.
About 85 percent of Americans try to be compliant, because if you aren’t, the IRS will get you. If word starts to spread—and it will spread first among wealthy people with sophisticated CPAs and attorneys—that the audit rate has gone down by 80 percent, a lot of people are going to try to take advantage of that.
Say more about who benefits, and who pays the price.
When revenue agents and revenue officers were cut by 30 percent or 35 percent while I was there, large partnerships basically didn’t get audited. Everybody knew who was involved in those: usually wealthy investors and Wall Street types advised by sophisticated counsel. And those people knew the audit rate had to be cut. You can’t just go after rich people—even though you’d get more money that way—because you need to encourage compliance across the board. So ultimately you lose billions of dollars in collections. Then at some point the politicians raise taxes, and the compliant people pay for the taxes not paid by wealthy people.
Or…the politicians use the lower revenues to justify more budget cuts.
That exactly! If the money is short, that’ll be a good reason to cut social programs—we just don’t have the funds.
Do you think that’s the administration’s end game?
I don’t know whether they started out that way, but that’s clearly where it’s going to end up. A number of these people, historically, have thought the best government is no government.
Is there anything about these cuts you’ve found surprising?
The scope of them has surprised me. The irony is, those of us who have spent a lot of time in the government would say you can always find—and it’s important!—ways to be efficient and effective. The administration has missed a great opportunity to do that appropriately.
Having spent 20 years doing turnarounds of large, failed enterprises, the last thing I ever thought was, well, let’s starve the revenue arm. The salespeople—cut them back! No, your goal was to maximize revenues to give them the running room to do what was needed.
The IRS is easy to scapegoat, because Americans are kind of conditioned to hate the agency and hate paying taxes. What would you say to change their minds?
I would say the vast majority of people rely on social programs, some of which they don’t even realize are funded by the federal government. All of those are at risk. When you cut park rangers, suddenly there are long lines trying to get into a park. People are gonna say, “I didn’t mean get rid of a program I rely on.”
“If you cut the IRS by 40 percent, you’re at a minimum going to cut revenue collection by $500 billion a year.”
At the IRS, my approach was to be available and transparent and to try to get people to understand that we spent a lot of time and money trying to help people be compliant. If you had financial difficulties, we could arrange payment systems. You could do offers and compromise.
If you’re trying to be compliant, I used to say, we’re here to help you. If you’re trying to cheat or not file or not pay your fair share, then I’m happy to chase you to the ends of the Earth. I would hope that more people would understand you’ve got to protect the agency, because it’s how the government funds itself and it’s a way of making sure everybody pays their fair share. I don’t want to pay my fair share and have rich guys get away with not paying.
Speaking of helping people, the IRS recently rolled out free online tax filing. But now Trump, who took a $1 million inaugural donation from Intuit, which makes the TurboTax software, reportedly aims to kill it.
DirectFile is a good example of the government providing an important service, allowing people to file at no cost. Since most people aren’t thrilled about paying taxes, making it as easy and inexpensive for them as possible was a great goal. It’s a shame that this option has been arbitrarily taken away from them.
Another blow for compliance.
Even when they get through disabling all these agencies, they won’t have dealt with the deficit problem significantly, especially if they’re collecting less revenues. Just the undocumented immigrants pay almost $70 billion a year in taxes—or they did. Now that Homeland Security has negotiated [with IRS] to find out who they are, where they live, the estimate is half of that money is not going to get paid.
And that’s a tiny slice of what won’t be coming in.
Yes, there are estimates that, if you cut the IRS by 40 percent, you’re at a minimum going to cut revenue collection capacity by 10 percent—$500 billion a year.
And encourage cheating.
Yeah. There are people today who don’t file because they think the chances getting caught haven’t been large for the last 15 or 20 years.
So, does it worry you to see the DOGE kids mucking around in IRS systems?
It certainly does. These are people have no idea about how the place runs. Somebody told me that they had decided on Monday, the day before the tax filing deadline, to fiddle around with the website, and parts of it either had bad spelling or didn’t work. Who in their right mind would touch anything in the last week—or month—before the filing season ends?
You really are fixing the plane while you’re flying it. You can’t just shut down for a couple months and say nobody can file. Filing season ended on Tuesday, but a lot of people filed extensions and there’ll be returns, and the system will have to operate through October 15—and by then they’ll be testing the system to get ready for January 1.
After cutting so many people, I gather it would take quite a while to put things right.
Yes. Part of the problem is Trump’s people have no background in government and how things operate, and they tend to come from the private sector. They think, Well, they’re all fungible. We’ll cut them and then, if we need them, we’ll hire some new people back.
But the level of complexity of these programs and agencies is such that you just can’t hire people off the street who, like people at the IRS, understand the IT systems and the processes for dealing with complicated tax situations and dealing with things internationally. When you lose experienced people, you can’t replace them overnight. They are going to destroy the efficiency of agencies, and it’ll take years to build it back.
Too bad we don’t all know someone who works there, to put a face on the IRS.
When I was talking to these thousands of employees, I’d say I understand how, when people ask what you do, you say, “I work for the government.” And where in the government? “Well, the Treasury Department.” And where in the Treasury Department? “Well, I actually work for the IRS.”
“They are going to destroy the efficiency of agencies, and it’ll take years to build it back.”
I’m not saying you should wear an IRS hat to the grocery store, but people know you personally through the PTA or church or the soccer team, and they know you’re a good person. And if you work for the IRS and like it, it must be okay. We needed 80,000 ambassadors to say, “I work at the IRS and I love it!”
Reminds me how Harvard people would always say, Oh, I went to college in Boston.
Well, I went to law school at Yale. I’ve never been a Harvard guy, but you’ve got to hand it to them that they took the position they did. It’s like with the law firms caving. There’s strength in numbers, and if you get picked off one at a time, it’s hard to fight back.