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IRS chief faces questions over audits of Trump foes

Biden administration officials had already begun interviewing potential replacements for Charles Rettig

IRS Commissioner Charles Rettig appears before a House committee in 2020. (Toni L. Sandys/The Washington Post)

The commissioner of the Internal Revenue Service faces a new onslaught of questions after a report Wednesday showed that two foes of President Donald Trump had been selected for a rare audit.

Charles Rettig, whose elevation by Trump to lead the service in 2018 surprised many tax professionals when it was announced, faced new scrutiny after the New York Times revealed that both former FBI director James B. Comey and his deputy, Andrew McCabe, were the subjects of highly unusual audits for which the IRS says were selected at random. The Washington Post has confirmed the audits.

Former FBI leaders who drew Trump’s ire were both audited by IRS

Rettig was a tax attorney in Beverly Hills, Calif., when Trump put him in charge of the agency, which employs about 71,000 full-time staffers. He had defended a billionaire the IRS accused of hiding money in offshore accounts, a venture capitalist the agency alleged used sham accounting to shelter assets, and the heirs of a millionaire defense contractor who sought to fend off inheritance taxes.

He started out as a Trump ally when his four-year term began in 2018, shielding the former president’s tax returns from public view in the face of a House Democratic lawsuit. But Rettig has proved a willing partner for the Biden administration, as well, supporting its efforts to close the gap between what taxpayers owe and what they pay, and implementing expansive new stimulus measures.

The IRS commissioner’s term is to expire in November, and Biden administration officials had already begun interviewing potential candidates for his replacement before this week’s news, according to two people familiar with the matter, who spoke on the condition of anonymity to describe private conversations. Rettig has expressed openness to a second term, said one other person familiar with the matter, who spoke on the condition of anonymity for the same reason.

Asked Thursday if the president is confident in Rettig’s leadership, White House spokeswoman Karine Jean-Pierre repeatedly refused to answer, telling reporters at her briefing: “He is going to be up in November, so I will leave it there.” Jean-Pierre said the White House otherwise does not comment “on enforcement actions taken by the IRS.”

Still, the revelation about Comey and McCabe’s audits will revive difficult questions for the commissioner and his legacy. Rettig has won praise from Democratic lawmakers under Biden for his outreach and responsiveness to Capitol Hill, but his deference to Trump has come under scrutiny, given the nonpartisan role the IRS is supposed to play. The revelation will also bring new scrutiny to former Trump treasury secretary Steven Mnuchin, since Treasury oversees the IRS. A spokesman for Mnuchin told The Post in a statement that “it is unlawful for the Secretary of the Treasury to ‘request, directly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer,’ with limited exceptions that do not apply.” In a statement, Trump said, “I have no knowledge of this,” and pointed to a 2019 Justice Department watchdog report that was critical of Comey and McCabe’s earlier investigation.

The IRS has been adamant that there is no political interference in its audit process. Comey and McCabe were selected for the National Research Program, which typically selects about 13,000 people and corporations a year out of hundreds of millions of tax returns for the intensive audit program. McCabe’s audit was launched months into the Biden administration, although still under Rettig’s tenure. It focused on his 2019 tax return.

The audit program is run from the IRS’s Research, Applied Analytics and Statistics Division. A group of career employees — statisticians and data scientists — run a computer program that randomly selects taxpayers across the income spectrum to determine compliance levels with the nation’s tax codes, according to John Koskinen, who served as IRS commissioner under the Obama administration and at the beginning of the Trump administration. Once the names are chosen in that random lottery, they are forwarded to the IRS division that handles audits, according to Koskinen.

IRS spokeswoman Jodie Reynolds said in a statement that Rettig personally referred the matter to the inspector general for review after details of the Times’s reporting emerged. She also called it “ludicrous and untrue to suggest that senior IRS officials somehow targeted specific individuals for National Research Program audits,” while adding the IRS was prohibited from commenting on specific taxpayer situations.

“Commissioner Rettig is not involved in individual audits or taxpayer cases; those are handled by career civil servants. As IRS Commissioner, he has never been in contact with the White House — in either administration — on IRS enforcement or individual taxpayer matters. He has been committed to running the IRS in an impartial, unbiased manner from top to bottom,” Reynolds said.

Trump’s pick for IRS chief is now faced with implementing Biden’s economic agenda

Former IRS officials expressed disbelief that there could have been political meddling in the audit program, since there are federal criminal penalties for interference. There is no way for Rettig to have ordered or performed the audit without the support of career staff, said Mark Everson, who served as commissioner of the service under the George W. Bush administration.

“I would be stunned if there was any intentional selection of either McCabe or Comey for audit under this program. That would be truly shocking. I don’t see that,” Everson said. Everson added that even if randomly selected, Comey should have been excluded from the audit because of his high-profile political status. “Somebody should have exercised more judgment before proceeding with the Comey audit. I would have hoped that would be the case. Even if randomly selected, I think a supervisor should have said, ‘We can just knock this one out.’ ”

Still, former IRS officials, including Everson, said the matter should be investigated. The Treasury inspector general did not immediately respond to a request for comment on whether that office had opened an investigation into the selection of the audits.

“For two guys who are enemies of President Trump to be selected together, although in different years, would have to be viewed as unusual,” Koskinen said. “In light of everything else going on in the last few years, it’s worth taking a look at to assure the public that the IRS is treating all taxpayers fairly.”

Some House Democrats have started demanding Rettig’s dismissal over the matter. “If you think the audit of Donald Trump’s purported enemies was a random act of God, then I have a bridge in North Jersey I’d like to sell you,” said Rep. Bill Pascrell Jr. (D-N.J.), a member of the House Ways and Means Committee. “There may be no group on the face of this earth that deserves the benefit of the doubt less than Donald Trump and his government enablers. … Charles Rettig has wrecked public trust in the IRS, and I reiterate my calls for President Biden to fire Mr. Rettig immediately.”

Tony Romm and Josh Dawsey contributed to this report.