IRS reorganizes leadership structure with 1 deputy commissioner

The IRS will reorganize its leadership structure for the first time in two decades with a previous acting commissioner serving as second-in-command, Commissioner Danny Werfel said Wednesday.

Under the new structure, the agency will have one deputy commissioner instead of two, Werfel said. Doug O’Donnell, the current deputy commissioner for services and enforcement and the acting IRS commissioner from November 2022 to March 2023, will fill that position.

Four new IRS chief positions also will be added, Werfel said. The changes will “streamline operational efficiencies and align with major transformation work underway at the agency” through funding from the Inflation Reduction Act of 2022, P.L. 117-169, he said.

“Here’s a pivotal reason for this change,” Werfel said Wednesday during a call with reporters. “The new structure provides heightened importance to these four key areas that are central to our efforts to transform the IRS: taxpayer service, tax compliance, IT, and operations. These are absolutely critical areas we need to focus on, and this structure will reflect those pressures.”

Under the Inflation Reduction Act, the IRS was allocated $80 billion over 10 years, but that figure was cut to $60 billion during negotiations over the debt ceiling. In addition, congressional funding for the annual IRS budget is lagging. For example, in fiscal year 2023, Congress did not appropriate any funding to the IRS for business systems modernization, and appropriations for taxpayer services and operations support remained flat despite inflation, according to a report from the IRS Advisory Commission.

The new arrangement, which should be effective in early 2024, changes a structure that has been in place since 2000. The IRS will work with Congress, the National Treasury Employees Union, and others as the plans progress, Werfel said.

The new IRS chief positions are:

• Chief, Taxpayer Service: Ken Corbin, the current IRS Wage and Investment commissioner, will lead a new taxpayer service group.
• Chief, Taxpayer Compliance Office: Heather Maloy, currently the IRS chief of staff, will serve in this new role.
• Chief Information Officer: Rajiv Uppal will serve in this role when he joins the IRS in 2024. The Service announced his selection in November. He now serves as director of the Office of Information Technology and chief information officer for the Centers for Medicare and Medicaid Services.
• Chief Operating Officer: Melanie Krause will serve in this new position. Krause joined the IRS in October 2021 in her current role as the chief data and analytics officer.

The leadership changes do not affect the IRS budget, Werfel said. The Service has to notify Congress of the new structure, but it does not need congressional approval.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.