Senate Panel to Grill IRS Pick on Dubious Tax Credits, Donors

IRS commissioner nominee Billy Long will likely face sharp questions from Senate Democrats at his first confirmation hearing about his work promoting tax credits that the Treasury Department says don’t exist, and over donations from their advocates who helped him pay off old campaign debts.

Long, a former House member from Missouri, is set to appear before the Senate Finance Committee Tuesday. If confirmed, he would take the helm of an agency recently flush with billions of dollars in new funding, but now roiled by employee departures and questions about its independence, after President Donald Trump called for it to strip Harvard University of its tax-exempt status.

Long, a Trump loyalist who once supported defunding the IRS when he was in the House, also faces questions about his lack of typical qualifications for the job. Senate Finance Republicans have continued to stand behind Long, who is working as a senior adviser at the Office of Personnel Management while awaiting confirmation.

“I had a chance to meet with him already, I support him, and I’ll have questions at the hearing,” said Sen. John Barrasso (R-Wyo.). “I think he’s going to do a very good job.”

Here’s what to expect.

Nonexistent Tax Credits

Senate Finance Democrats have prodded Long and companies tied to him about the promotion of so-called sovereign tribal tax credits, the existence of which was disclosed by Bloomberg Tax last December. Ron Wyden (D-Ore.), the panel’s ranking member, and committee member Sen. Catherine Cortez Masto (D-Nev.) asked the IRS in April to open a criminal investigation into the firms that promoted the credits.

Long’s ethics disclosures show that he earned money from White River Energy Corp., the credits’ sponsor, and another company that has promotional materials for the credits on its website. He also received recent campaign contributions, years after his failed Senate run, from people associated with White River and other promoters that were large enough to pay off his campaign debts.

Wyden and Cortez Masto have demanded to know whether Long has a deal with White River to legitimize the tax credits. Other Democrats, led by Sen. Elizabeth Warren (D-Mass.), say donations to his dormant campaign fund could have been illegally influencing Long.

Democrats have also questioned Long’s private-sector work promoting the pandemic-era Employee Retention Credit, which the IRS says has been riddled by fraud, in part because of aggressive marketing. Long has defended his work on the credit, saying it helped small businesses.

IRS Independence

Politicization of the IRS is historically unpopular, and after former President Richard Nixon tried to use the tax collecting agency to punish his political enemies, Congress passed a law to make that a crime.

Still, Trump appears to be pushing the bounds of that law, and Long’s response will be closely watched. Sen. Ben Ray Lujan (D-N.M.), spoke positively of his experience with Long when they served together on a House committee, but expressed concern about the Trump administration’s influence.

“The Billy Long I know is an independent person,” he said. “I’m sure he’s going to get asked those questions in that hearing, and we’ll see what the response is.”

IRS commissioners typically serve five-year terms, but Trump’s nomination of Long bucked that tradition, prompting former Commissioner Danny Werfel to resign Jan. 20.

Qualifications

Long also will likely face questions about his qualifications to lead the agency, which had 100,000 employees at the beginning of the year. Long, a former auctioneer and talk-radio host, lacks tax and management experience typical of IRS leaders.

In the House, he was best known for his work as an Energy and Commerce Committee member and didn’t serve on the tax-writing Ways and Means panel.

IRS Turnaround

Long would come into the IRS as upwards of 25% of workers are leaving, prompted by the Trump administration’s efforts to go after fraud and waste across the federal government. The IRS has also lost more than a dozen senior leaders with decades of collective experience.

The committee may question Long on the IRS’s enforcement priorities and modernization plan. Under Werfel, the IRS made an effort to go after high-net-worth individuals as well as large corporations and partnerships, which will likely change under Long.

Long also will face the mammoth task of leading technological improvements at an agency notorious for its archaic systems—a priority for Trump’s Treasury.