Democrats did not love Charles Rettig when he was Donald Trump’s IRS commissioner. One lawmaker even said he was so bad he literally belonged in jail.
But Democrats like Rettig now that he’s Joe Biden’s IRS commissioner, and nobody has clamored for him to be fired like some other holdovers from the Trump administration.
The IRS is pivotal to Democrats’ domestic policy agenda, and Rettig has been doing his job with gusto ― not only making sure millions of child tax credit payments go out each month, but also helping the Biden administration in its push for much stronger IRS enforcement.
Several congressional Democrats praised Rettig to HuffPost, saying they have a good working relationship and that he’s a competent administrator.
“His work on the implementation of the child tax credit expansion has been important, as it is one of the most transformative policies to come out of Washington in generations,” Sen. Sherrod Brown (D-Ohio) said.
Rettig, 64, doesn’t have much of a political background, having enjoyed a long career representing wealthy clients under IRS audit before Donald Trump tapped him to head the IRS, an agency Republicans have vilified for decades.
Early on, Rettig sent an important signal about how he would do the job.
During his confirmation hearing in 2018, Rettig said he hoped to “put a significant dent in the tax gap,” the revenue that the IRS misses mostly because of nonpayment by wealthy folks like his former clients, whose income often isn’t reported on regular payroll forms. The tax gap isn’t a huge priority for Republicans, but Rettig also said he wanted to modernize the IRS computer system and that he would resist political pressure. Fifteen Democrats ultimately joined with all Republicans that year in voting to confirm him as commissioner.
“People change their attitudes when their job is on the line.”
Some of the good vibes dissipated after Democrats won the House of Representatives and asked Rettig to hand over copies of Trump’s tax returns, per a federal law that says the Treasury Department “shall” furnish any returns that tax policy committees request.
Treasury Secretary Steve Mnuchin — the Cabinet official overseeing the IRS at the time — stepped in to deny the request, which had been directed to Rettig. Under questioning from Democrats on Capitol Hill, Rettig tried to stay out of it, noting that the IRS is a mere bureau of the Treasury.
It was the first time the IRS had ever refused to hand over a requested tax return, as far as anyone knows, and it amounted to a straight-up failure to follow federal law, as many Democrats pointed out at the time. Rep. Bill Pascrell (D-N.J.) even went so far as to say both Mnuchin and Rettig should be locked up.
“If they say no all the way, then I’d put them in jail all the way,” Pascrell said in May 2019. “That’s the law of the land.”
Pascrell told HuffPost this month he didn’t know if he still believed Rettig should go to jail, and that he would want to know more about the decision to withhold the returns. He offered a simple theory for Rettig’s solid work as Biden’s IRS commissioner.
“People change their attitudes when their job is on the line,” he said.
Rep. Lloyd Doggett (D-Texas), another top proponent of getting Trump’s tax returns, said Rettig must be ideologically flexible. “I’d certainly prefer to have a new IRS commissioner,” Doggett said.
Under Biden, the Treasury Department has said it would comply with the Democrats’ request for Trump’s returns, and the only remaining obstacle is a Trump-appointed judge taking his sweet time to make a decision in the case.
In a statement to HuffPost, Rettig said he has taken the same approach to his job under both administrations: “I believe in our country and came on board to help tax administration and everyone who interacts with the IRS including our employees, taxpayers, tax professionals and Congress.”
Rettig is serving a fixed term that’s not up until next year. Congress has given some agency officials terms that don’t correspond with changes in administration as a way of insulating their work from the politics of the moment.
Former IRS Commissioner John Koskinen, who served under both Barack Obama and Trump, said Rettig has done a good job moving between administrations ― and that that’s normal for a political appointee with a five-year term.
“The goal is to have tax administration be non-political and the Commissioner’s term is structured as a five year term to make it clear that it’s not the normal political appointment,” Koskinen said in an email.
But the idea of insulating agency heads from politics might be wishful thinking, and its days might be numbered. The Supreme Court said last year Trump had every right to fire the director of the Consumer Financial Protection Bureau before their term was up, and the court this year blessed Biden’s firing of the head of the Federal Housing Finance Agency.
Too many restrictions on a president’s ability to fire people and control his own administration, the court reckoned in those cases, violates the Constitution’s separation of powers among different branches of government. Biden took this year’s ruling as an opportunity to then rid himself of the Trump holdover at the Social Security Administration.
It’s probably important to have a team player at the IRS, a bureau increasingly important to domestic policy. When Congress wanted to send pandemic relief checks to everyone in America, it had the IRS do it. When Democrats wanted to start up a monthly allowance for parents, they had the IRS do it.
Some doubted whether the IRS could start those child tax credit payments by July, less than three months after the law’s enactment, but Rettig assured lawmakers it would work ― and so far, the program seems to have performed as well as anyone expected, if not better.
The problem with using the IRS for the child allowance is that people with low incomes don’t have to file federal tax returns, so the IRS didn’t have an established way of reaching them. The bureau has tried to reach out through local nonprofits and by creating an online portal where parents can sign up for the payments. At first, the website was shoddy, and didn’t even work on smartphones, but the IRS made improvements after Democrats like Brown and Sen. Ron Wyden (R-Ore.) complained.
“He’s been receptive when I’ve brought issues to him, like the initial website accessibility issues during the rollout, and has worked to address them right away,” Brown said.
“I don’t personally believe he’s just doing what the administration says.”
Rettig has also followed through on his pledge to tackle the tax gap. At the time of his confirmation hearing, the last IRS estimate of the gap, for the years 2011 through 2013, put the annual amount of missing revenue at $441 billion. At a Senate Finance Committee hearing in April, Rettig described some more recent research ― and dropped a bomb.
“I think it would not be outlandish to believe that the actual tax gap could approach and possibly exceed $1 trillion per year,” he said.
Rettig’s claim, that mostly wealthy taxpayers shirk taxes to the tune of a trillion dollars, came just as Democrats were getting ready to propose new funding and new tools for the IRS to find the missing revenue as a way to help pay for major new social policies.
“That changed the debate,” Wyden, chair of the Senate Finance Committee, told HuffPost.
“It surprised me that he said that,” said Sen. Mike Crapo (R-Idaho), the committee’s top Republican, who added that his staff is doing its own research on the matter.
As part of the Build Back Better Act, the bill Democrats are struggling to cobble together this fall, they have proposed an extra $80 billion for the IRS to shrink the tax gap, which the Congressional Budget Office has estimated would yield $200 billion in new revenue.
Another key proposal, which the Biden administration says would raise $400 billion, would require banks to tell the IRS about money flowing into any personal or business accounts containing more than $600. Republicans don’t love the idea of more money for the IRS, but they hate the idea of banks telling the IRS what’s in their customers’ accounts, which they call an invasion of privacy.
Rettig has gone to bat for the proposal in a big way, endorsing it in testimony and letters to lawmakers and describing it as part of an overall effort to modernize the IRS. Rather than an affront to privacy, Rettig said in a letter to Rep. Richard Neal (D-Mass.) last month, “improved information reporting could result in decreasing audits of compliant taxpayers, saving those taxpayers time and money and increasing efficiency for the IRS.”
Rettig told HuffPost the administration’s proposals “present a historic opportunity to create a more equitable and efficient tax system that will benefit every American as well as future generations of Americans,” adding that it’s “critical for the IRS to be able to provide high-quality service to the nation’s taxpayers.”
Crapo said he agrees with Rettig that the IRS needs to modernize and provide good service. “But that doesn’t mean you need to have these schemes,” he said.
Crapo doesn’t think, however, that Rettig is just a tool of the administration.
“I don’t personally believe he’s just doing what the administration says,” Crapo said. “He believes in this very much.”