IRS Commissioner Mark W. Everson, who spearheaded
the Service's campaign against tax shelters and its
movement into the electronic age, announced his
resignation on April 18 to become President and CEO of
the American Red Cross. His resignation comes just two
weeks before what would have been his fourth
anniversary as Commissioner on May 1.
Email Announcement
Everson, who turns 53 in September, announced his
resignation in an email to all IRS employees. "I
look back over the past four years with great
satisfaction. Together, we have rebalanced the
organization, bringing to life the equation: Service +
Enforcement = Compliance," he wrote.
Mantra
"Service plus enforcement equals
compliance" was Everson's mantra. He used it
often when speaking to tax professionals, legislators,
corporate executives and taxpayers of all types across
the country to underscore in simple terms how he
envisioned the IRS. Everson would often recount that
the pendulum swung too far away from enforcement and
towards customer service after the Congress cracked
down on abuses in the IRS Restructuring and Reform Act
of 1998 (P.L. 105-206). "We restored the
credibility of enforcement," Everson said in one
of his last public speeches as Commissioner in
Washington, D.C. in March.
Tax Shelters
"He had one of the toughest terms," AICPA
Vice President Taxation Thomas Ochsenschlager told CCH.
"The enforcement part of the IRS's campaign
against tax shelters really fell on his
shoulders."
Under Everson's leadership, the IRS won some high
profile tax shelter cases. In Coltec Industries,
Inc., 2006-2 USTC ¶50,389, the Court of Appeals
for the Federal Circuit handed the IRS a big win by
approving use of the economic substance alone as a
sufficient weapon to deny tax benefits (TAXDAY,
2006/07/13, J.2).
Everson also frequently touted the success of the
IRS's Son of Boss settlement initiative. That
initiative returned nearly $4 billion to the Service.
However, the IRS suffered a setback when a federal
district court denied retroactive application of the
Son of Boss regulations in Klamath Strategic
Investment Fund, LLC,2006-2 USTC ¶50,408 (TAXDAY,
2006/07/21, J.1).
$300 Billion Tax Gap
Going after tax shelters was one of Everson's
tactics to close the $300 billion tax gap --the
difference between what taxpayers owe and what they
actually pay. Audits are up. Recently, Everson told
lawmakers that the Service completed more than 100,000
field audits of higher income individuals in 2006 (TAXDAY,
2007/03/29, C.3). However, Everson also has
acknowledged that the IRS will "not audit its way
out of the tax gap" (TAXDAY, 2007/03/12, I.6). It
will be left to his successor to tackle the tax gap.
Electronic IRS
During Everson's term, the IRS moved steadily away
from processing paper returns to processing electronic
returns. When Everson became Commissioner in 2003, a
majority of individuals filed their returns on paper.
Four years later, a majority e-file. As of March 23,
72 percent of returns had been e-filed this filing
season (TAXDAY, 2007/04/02, I.2).
The IRS also mandated that large businesses and
nonprofits e-file during Everson's tenure. In 2006,
the Service processed the largest corporate tax return
ever e-filed. The return came in at 237 megabytes,
which equaled roughly 24,000 pages (TAXDAY,
2006/06/01, I.1).
Controversial Moves
Not all four years of Everson's tenure were free of
problems. The IRS's private tax collection initiative
and his decision to delay tax enforcement in the Gulf
Coast until after the 2006 mid-term congressional
elections generated controversy. His relationship with
the National Treasury Employees Union (NTEU), which
represents IRS rank-and-file employees, was often
stormy. News reports about stolen employee laptops and
employees abusing email privileges and surfing the
Internet instead of working also stung the Service.
Everson also came under fire in 2007 after reports
surfaced of IRS agents feeling pressure to close big
audits quickly, an issue that appears to have
seriously rattled the Service's top leaders. In one of
his last appearances on Capitol Hill, Everson, who
rarely raised his voice during a hearing, strongly
defended the IRS's audit performance. "No
administration has done more to go after higher income
individuals and corporations," Everson said (TAXDAY,
2007/03/29, C.3).
Vulnerable Taxpayers
Increasingly in recent appearances, Everson
expressed concern for what he calls the vulnerable
segments of the taxpaying public, such as senior
citizens, immigrants and the working poor. Earlier in
2007, he condemned exploitation of these individuals
by "predatory return preparers" (TAXDAY,
2007/03/28, I.4). Everson has praised the work of
volunteer income tax assistance providers and service
organizations, especially those helping lower-income
taxpayers receive the earned income tax credit (EITC).
The IRS also greatly expanded its Spanish-language
outreach under his leadership
Affable Personality
Everson's easy-going personality won praise from
practitioners. "I remember how open he was,"
Roger Harris, EA, Government Relations Chairman of the
National Association of Enrolled Agents (NAEA) and
past Chairman of the IRS Advisory Council (IRSAC) told
CCH. Harris recalled that he first met Everson at an
IRS event in Atlantic City, N.J. shortly after he
became Commissioner. "He asked me what he thought
he should do." Harris, who served as IRSAC
Chairman during the last year of Charles O. Rossotti's
term as IRS Commissioner and for the first year of
Everson's term, said that Everson "always took
the work and recommendations of IRSAC and
practitioners seriously."
"He was very collegial," Ochsenschlager
told CCH. "He did a remarkable job of
administration."
Capitol Hill Reaction
Praise for Everson's tenure came quickly from one
of the chief taxwriters in Congress. "Leading the
IRS is a big job, and Commissioner Everson has brought
a great deal of experience and skill to serving the
nation's taxpayers. He made important strides in the
effective enforcement of our tax laws, particularly by
cracking down on abusive tax shelters," Senate
Finance Committee Chairman Max Baucus, D-Mont., said
in a statement.
Red Cross
"The Red Cross is delighted to welcome such a
capable and compassionate leader," American Red
Cross Chair Bonnie McElveen-Hunter said in a
statement. She predicted that Everson would bring
"new energy and drive terrific results."
Everson will take charge of the American Red Cross May
29.
Everson will need energy and drive at the American
Red Cross. The organization was harshly criticized in
Congress for a poor response to Hurricane Katrina.
Ranking Senate Finance Committee member Charles E.
Grassley, R-Iowa, one of the organization's strongest
critics, predicted in a statement that Everson will be
"good at holding the Red Cross accountable for
its tax exemption."
Paulson Thanks Everson for Service
Treasury Secretary Henry M. Paulson congratulated
Everson for his years of leadership at the IRS.
"Commissioner Everson has taken up the challenge
of both increasing enforcement activities to deal with
those who don't pay their fair share of taxes, while
at the same time, significantly improving the services
and outreach activities the IRS provides to
taxpayers," Paulson said.
By Dave Hansen and George L. Yaksick, Jr., CCH News
Staff
