Biden names pick for new IRS head as agency plans for $80 billion funding, wrestles with backlog

The White House announced President Joe Biden intends to nominate Danny Werfel — a former budget official and private sector leader — to run the IRS as the agency prepares for a makeover.

Prior to his current role at Boston Consulting Group, Werfel served President Barack Obama and President George W. Bush as the IRS acting commissioner and Office of Management and Budget controller.

If confirmed by the Senate, Werfel will oversee the agency’s plan for $80 billion in IRS funding over the next 10 years, as enacted through the Inflation Reduction Act in August.  

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“After decades of underfunding, the IRS now has the resources it needs to improve services for taxpayers and modernize outdated technology and infrastructure,” Secretary of the Treasury Janet Yellen said in a statement.

“Danny’s deep commitment to fairness and making sure government works for all will also be invaluable as we improve the taxpayer experience and eliminate a two-tiered tax system,” she said.   

Biden’s nomination comes at a critical time for the agency. After another difficult filing season, the IRS is still wrestling with a backlog. As of Nov. 4, there were 4.2 million unprocessed individual returns received this year, according to the agency.  

“I look at the numbers and see millions of taxpayers that are still waiting for their returns to be processed,” wrote National Taxpayer Advocate Erin Collins in a blog post Thursday. “Tax refunds are a lifeline for some taxpayers and important for almost all.”

Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup, said it’s a “challenging assignment,” and hopes for a swift confirmation from Congress.

“They need to get somebody in place promptly because the services are still inadequate, there are major questions on data security and the filing season is fast approaching,” said Everson, who served the agency under President George W. Bush.  

Yellen in August outlined top priorities for the $80 billion in IRS funding, including clearing the backlog, improving customer service, overhauling the agency’s technology systems and hiring IRS employees to replace retiring workers.

While the influx of IRS funding has been controversial among some Republicans, Everson expects to see transparency during future hearings as the agency irons out spending plans.   

“Tax administration has become too much of a political issue,” he said. “My hope is that [Werfel] will be able to dial that down a little bit and just talk about what’s working, what’s not working and what needs to be fixed.”

IRS Commissioner Charles Rettig’s term with the agency ends Saturday.