Healthcare Law Questions Await New Nominee to Head IRS

WASHINGTON (AP) — President Barack Obama's choice to head the Internal Revenue Service goes before a Senate committee Tuesday to face tough questions about the agency's targeting of tea party groups and its ability to administer parts of the president's health law.

Obama nominated John Koskinen, a retired corporate and government official with experience managing numerous organizations in crisis, to take over the IRS in August. If confirmed by the Senate, the 74-year-old turnaround specialist would sign on to a five-year term, which would last beyond Obama's stay in office.

Koskinen came in to overhaul mortgage buyer Freddie Mac after its near-collapse in the financial crisis at the end of the George W. Bush administration. He also helped restructure the assets of the largest failed life insurance company in U.S. history, Mutual Benefit Life, and helped reorganize the Penn Central Transportation Company after it became the largest bankruptcy in U.S. history.

His government experience includes handling preparations for potential computer problems associated with the Year 2000, and, as District of Columbia city administrator from 2000-03, helping restore it to financial stability after years of mismanagement.

With about 90,000 employees, the IRS processes more than 140 million individual income tax returns each year. Starting next year, the IRS will administer much of Obama's new health care law.

On Tuesday, the Senate Finance Committee will hold Koskinen's confirmation hearing. Sen. Orrin Hatch of Utah, the top Republican on the committee, said he met privately with Koskinen in September. Afterward, Hatch promised a fair but thorough review of his nomination.

"There are a great many questions he'll have to answer and, given the experience that many of my colleagues and I had with his predecessor, he has a lot of work to do moving forward," Hatch said.

The IRS came under fire in May when agency officials acknowledged that agents had improperly targeted tea party and other conservative groups for additional scrutiny when they applied for tax-exempt status. The Justice Department and three congressional committees, including the Finance Committee, launched investigations.

The investigations, which are ongoing, have shown that IRS workers in a Cincinnati office started singling out conservative political groups in the spring of 2010, and continued to do so until 2012. IRS supervisors in Washington oversaw the targeting, but there has been no evidence released so far that anyone outside the IRS knew about the targeting or directed it.

After the targeting became public, Obama demanded the resignation of the acting IRS commissioner and several other top officials were removed from their positions or allowed to retire. The commissioner in charge of the agency when the targeting occurred, Douglas Shulman, left last year when his term expired. Shulman was a Bush appointee.

The IRS is under renewed scrutiny because it will manage big parts of the president's health law, which has gone through a troublesome rollout.

The IRS, which is part of the Treasury Department, will be in charge of enforcing the mandate that most individuals have health insurance, and collecting fines from people who don't. The IRS will also distribute subsidies to help people buy insurance in new state-based marketplaces known as exchanges.

Obama has asked for a 14 percent increase in the IRS budget for next year, in part to help the agency administer the health care law. House Republicans have responded by proposing to cut the agency's budget by about one-fourth.

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