A ROCKY START: IRS Commissioner Danny Werfel has only been at the helm of the agency since March, but Republicans are already starting to question his credibility and alluding to a procedural measure that could make Werfel’s stewardship of the IRS quite difficult going forward. Here’s what you need to know: Last week Ways and Means Chair Jason Smith (R-Mo.) requested an urgent briefing with Werfel to discuss IRS whistleblower allegations that the entire investigative team on the Hunter Biden tax probe had been removed by the Department of Justice. The attorney for that same whistleblower, an IRS criminal supervisory agent, wrote lawmakers in April saying that his client wanted to speak out about political interference in the investigation of President Joe Biden’s son. Smith and other GOP tax writers say they are gravely concerned about the alleged removal of the team, especially in light of the fact that Werfel pledged to the Ways and Means Committee last month that there would never be retaliation against whistleblower complaints at the agency. “There’s only two things: either [Werfel is] not telling the truth before sworn testimony before Congress or, two, someone higher up directed him to do this,” Smith said on Fox News last week, adding to a chorus of calls to investigate the matter further from Republicans like Oversight Committee Chair James Comer of Kentucky and Republican Study Committee Chair Kevin Hern of Oklahoma. Notably, House Freedom Caucus member Andy Biggs (R-Ariz.) joined Fox News to talk about the whistleblowers’ allegations and said House Republicans should use a procedural maneuver to fire agency leaders if they don’t provide satisfactory explanations to congressional investigators. BUT FIRST: Welcome to the week. In an interesting installment of tax news that may have flown under your radar, did you know that you can contribute up to $4,150 to your health savings account in 2024 (or $8,300 if you have family coverage)? That’s the highest bump HSA allowances have gotten since their inception thanks to inflationary adjustments. Couples 55 and over can now stash away more than $10,000 of tax-free money. But please, don't hide away any juicy scoops and tips from your hard-working POLITICO tax team. Email: bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. Or Twitter: @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax. BACK TO THE IRS BATTLES: Here’s where things could really go off the rails for Werfel and the IRS if Republicans escalate scrutiny of the agency: If you recall, Speaker Kevin McCarthy made some concessions to renegades in the GOP caucus to secure his gavel at the beginning of the year, and one of the things that made it into the resulting House rules package was something called the Holman rule. The rule, which was revived by Republicans in 2017 but dropped by Democrats when they took control of the House, allows lawmakers to make amendments to appropriations bills on the House floor to fire or reduce the salaries of specific federal employees. We have to “start slashing their budgets… and also use the Holman rule to remove certain leaders,” said Biggs on Fox News, when asked about what he would suggest doing if the IRS and other agencies caught up in the Hunter Biden probe don't comply with requests by congressional investigators. The Holman rule would also allow any lawmaker to offer amendments to appropriate bills to remove agency funds—thereby circumventing the traditional committee mark-up process and, potentially, putting partisan battles over IRS money at the center of a government shutdown standoff. Indeed, Republicans are already leveraging the IRS allegations to press the case for repealing the $80 billion windfall that the agency got as part of Democrats’ Inflation Reduction Act last August. “This is why a lot of people fear the IRS,” said Smith of the whistleblower’s claims. “That’s why we put [IRS defunding] in the Limit, Save, Grow Act.” INSIDE THE AGENCY: On the other side of things, we’ve spoken before with members of the National Treasury Employees Union (NTEU) who said the growing politicization of the IRS has made them increasingly concerned about the safety of agency workers — and particularly revenue officers whose job is it to go out in the field and go to taxpayers’ personal residences for tax collection duties. In that vein the Treasury Inspector General for Tax Administration (TIGTA) released a report last week examining the efficacy of an IRS program designed to prepare employees for active shooter scenarios. “The rise in active shooter incidents across the United States and the increased hostilities directed at Federal agencies make it important for IRS leaders to develop a plan,” the watchdog said. The report found that a high level (98 percent) of full-time IRS employees had completed a mandatory active shooter briefing but also noted that an active shooter report at the agency’s Memphis campus exposed gaps in the IRS’s preparedness. The active shooter report turned out to be unfounded, but TIGTA found it concerning that some IRS personnel called their managers in a panic not knowing what to do in the situation. Employees on the campus also did not receive alerts about developments from the IRS’s emergency notification system, TIGTA said. RECEPTIVENESS ON PERMITTING: Democratic tax writers are championing clean energy tax incentives and tax credits for so-called energy communities under the Inflation Reduction Act, but there’s a critical piece of the tax puzzle here that has been flying under the radar of late: permitting reform. As our Josh Siegel reported, Democrats may end up needing permitting reform as much as Republicans to transmit the energy generated from renewable projects to the grid. And that was made clear, albeit in passing, at a Finance Committee hearing last Thursday on IRA investments in energy communities. “You don’t have a bigger climate hawk than Sen. [Sheldon] Whitehouse (D-R.I.) and … we believe strongly in permitting reform,” said committee Chair Ron Wyden (D-Ore.). “We just believe that permitting reform and protecting the environment aren’t mutually exclusive.” For instance, the National Renewable Energy Laboratory estimates that transmission capacity would need to triple in order for the country to achieve President Biden’s goal of a net-zero grid by 2035, as Daniel Simmons, a witness at the Finance hearing, noted. And Democrats are likely thinking that they can't fully realize the potential of the energy community program —which intends to revitalize and provide clean-energy jobs to communities that have traditionally relied on fossil fuel livelihoods — without finding a way to quickly get energy from those communities to other parts of the country. Notably, permitting is a big priority for Rep. Garret Graves (R-La.), McCarthy’s key deputy in negotiations over the debt ceiling, so we recommend keeping an eye on this issue this week.
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