Biden's pick to head IRS quells GOP criticism at nomination hearing

President Joe Biden's pick to head the Internal Revenue Service appeared to quell some GOP criticism at his confirmation hearing Wednesday by promising to restore trust in the troubled agency.

Through three hours of questioning before the Senate Finance Committee for what chairman Ron Wyden, D-Ore., called "one of the more challenging and least popular jobs in town," Daniel Werfel confirmed his backing of Biden's desire to target high income taxpayers and reaffirmed Treasury Secretary Janet Yellen's promise to not increase audit rates for small businesses and households making under $400,000.

"If I am fortunate enough to be confirmed, the audit and compliance priorities will be focused on enhancing IRS' capabilities to ensure that America's highest earners comply with applicable tax law," Werfel said.

Werfel's nomination comes amid intense GOP scrutiny of the IRS, which received a significant funding boost through the Inflation Reduction Act, passed by Congress in August. That funding, Treasury Department officials say will be used mostly for improving taxpayer services and modernizing antiquated, paper-based IRS operations.

"Also front and center will be efforts to modernize and dramatically improve taxpayer service. If confirmed, I will lead these efforts in close collaboration with this committee and will be unyielding in following my 'true north' -- to increase the public trust, unheralded effective implementation of our taxes and do anything necessary to fund critical government services," he said.

"My understanding is the focus is to hire people with understanding and capacity and talent to unpack very complicated, intricate returns, which is a capacity gap that exists today," he said.

Werfel, a 51-year-old business consultant who has previously held a number of government jobs in both Republican and Democratic administrations, also committed during the hearing to releasing a plan for spending the IRS's recent funding increase -- about $80 billion over the next 10 years.

The IRS is required to submit a plan, which Werfel has not been involved in writing, to Treasury Secretary Janet Yellen by Friday on how it plans to spend the funds.

Werfel said the committee and members of the public would be able to connect the dollars from the IRA to the various activities and investments in the plan.

He also reaffirmed that as IRS commissioner, he'd commit to not increasing tax audit rates on small businesses and households making less than $400,000 per year, something Yellen confirmed in a letter to the former IRS commissioner shared with Congress last year.

GOP opponents of the IRA have claimed funding will be used to hire 87,000 new agents in order to target middle-class Americans and small business

In his first speech to the 118th Congress, newly-elected House Speaker Kevin McCarthy promised: "our very first bill will repeal the funding for 87,000 new IRS agents." Days later, House Republicans voted to do just that, though Treasury Department officials and documents verify the claim is false.

Democratic Sen. Catherine Cortez-Masto of Nevada asked Werfel directly at Wednesday's hearing if he planned on using 87,000 new agents to audit Americans.

"I am not. I think it's patently incorrect," he said, ading that the "notion of armed agents" -- another GOP claim debunked by Treasury officials -- also is incorrect.

"I certainly would have no intention of making that part of any plan going forward."

Werfel also spent part of Wednesday's hearing addressing additional GOP skepticism of the agency, which Sen. James Lankford, R-Okla., said has been leveled to "silence conservative voices" and engages in unnecessary intrusion of the public.

GOP committee members referenced a ProPublica project called the Secret IRS Files -- a series of stories on the tax avoidance techniques of the ultra-wealthy based on tax information provided directly by the IRS.

Sen. John Thune, R-S.D., asked: "There still hasn't been any, you know, accountability on the leak … would you take steps to ensure that that kind of confidential tax information, the one that the breaches, there's accountability there and to that it doesn't happen again?"

Werfel said that maintaining data security would be a "top priority," especially in reaching his goal of garnering additional public trust in the agency.

"Data security is a top priority. I don't know how to build trust with the public when there's a sense that there's there's risk material risk of unauthorized disclosures," he said.

"So, one of the things that I will absolutely do is work with the inspector general to understand what did they see as the risks any specific action or activity that's taken place have been investigated–what are the root causes … if there are their corrective actions because if there are, we will make them."

Nominated to replace Charles Rettig, an IRS commissioner selected by President Donald Trump, Werfel is expected to glide towards a bipartisan confirmation vote.

"I intend to support your confirmation, incidentally" said Sen. Thom Tillis, R-N.C., during his questioning of Werfel.

Wyden ended the hearing saying he expects to move Werfel's nomination quickly after the Senate returns from its Presidents Day break.