When Billy Long, now President-elect Donald J. Trump’s pick to lead the Internal Revenue Service, left Congress in 2023, he quickly set out to make money. Building off the relationships he developed as a Republican from Missouri and auctioneer, Mr. Long began encouraging people to file for a lucrative, pandemic-era tax credit.
At meetings with chapters of Hispanic Chambers of Commerce across the country and at an auctioneering convention in Oklahoma, Mr. Long sometimes wore a hat advertising the Employee Retention Tax Credit as he tried to drum up business. Working with companies that would fill out the paperwork for the tax credit in exchange for a fee, Mr. Long had success.
“What’s working for me is the trust factor because people know me,” he said in a podcast interview last year about his work, describing clients who received tax refunds of more than $1 million. “They’ve known me for 40 years in the auction business, or whatever they see me getting this money for their compadres,” he added.
The money spigot would soon shut off. In September 2023, the I.R.S. temporarily stopped processing claims for the credit, hoping to squash widespread fraud in the program. The tax break, aimed at supporting businesses that kept employees on payroll during the pandemic, had spawned a cottage industry of tax preparation firms steering people, including those who were not eligible for the credit, toward it. The I.R.S. began warning people about scams related to the tax credit, including firms that were “wildly misrepresenting and exaggerating who can qualify for the credits.”
The fiscal cost of the tax refund bonanza was steep. What analysts had initially expected would be a roughly $55 billion program had ballooned into a $230 billion one, with projections that its cost could ultimately hit $550 billion.
Mr. Long, in the 2023 podcast interview, said he would help only clients who were actually eligible for the credit, and added that the fees he and his associates collected would be returned to any clients that had their tax refund revoked by the I.R.S. The companies he said he worked with — Commerce Terrace Consulting, which says on its website that it has provided $400 million in tax savings, and Lifetime Advisors — did not respond to a request for comment.
Earlier this year, Mr. Long traveled to Washington to try to persuade his former colleagues in Congress, who were considering closing the program because of its ballooning cost, not to follow through. The program was not shut down, and the I.R.S. has started processing claims for the credit again, but with new anti-fraud measures in place.
If the Senate confirms Mr. Long to lead the tax collection agency, he will be in a position to ease access to the tax credit. During his time generating claims for the employee retention credit, Mr. Long said, he repeatedly tried to persuade potential clients to disregard the advice of their accountants, who doubted whether they could qualify for the credit.
“I tell them of some cases of where people started down the road with their C.P.A., and their C.P.A., frankly, threw up their hands and said: ‘Go back to Billy. Let Billy do it for you,’” Mr. Long said during the podcast, using the abbreviation for a certified public accountant. “So because when people walk in and say, ‘Hey, this auctioneer, real estate broker, former congressman told me, I’m going to get $1.2 million back. You’re my C.P.A. — why didn’t you tell me that?’ Instantly, the reflex reaction is to go to bashing.”
A spokeswoman for Mr. Trump did not respond to a request for comment.
Mr. Long’s selection to lead the I.R.S. is unusual. Since the 1990s, I.R.S. commissioners have had five-year terms, and the position has been treated as a relatively nonpartisan management job, which now oversees the more than 80,000 employees who collected nearly $5 trillion in taxes last fiscal year. The term for Daniel Werfel, the current leader of the I.R.S., who was nominated by President Biden, is not up until 2027.
“The concern is turning the commissioner into a political position,” said John Koskinen, a former I.R.S. commissioner. “You run the risk that every audit will be a question of: Is this a weaponization of the I.R.S.? Did somebody tell them to make this audit, or is this routine?”
During Mr. Trump’s first term, the tax collector conducted invasive audits of James Comey and Andrew McCabe, formerly top officials at the F.B.I. and perceived enemies of Mr. Trump, though an inspector general later concluded the audits were a random coincidence.
Republicans have long attacked the I.R.S. as a political tool for Democrats. During the Obama administration, Republican lawmakers accused the I.R.S. of unfairly targeting conservative political groups by denying them tax-exempt status, though a watchdog later concluded that the agency had improperly scrutinized both conservative and liberal organizations.
More recently, Republicans have assailed the group for the leak of taxpayer information about Mr. Trump and other wealthy Americans. A former contractor for the agency was ultimately sentenced to five years in prison.
Mr. Biden, whose administration pushed for and won more funding for the I.R.S., chose Mr. Werfel to lead an overhaul of the tax collector after years of budget woes. Democrats plowed roughly $80 billion in supplemental funding into the agency, in hopes of modernizing it and collecting more tax revenue from Americans who do not pay what they owe.
But Republicans quickly mobilized to claw back that money, successfully forcing Democrats to cancel $20 billion of it as part of a deal to raise the debt limit in 2023. An additional $20 billion is also at risk as Republicans have exploited a quirk in spending legislation to freeze more money.
Pulling back more money could slow efforts to upgrade the agency’s antiquated technology systems and respond more quickly to taxpayer questions. Much of the Republican ire has been focused on money earmarked for enhancing the I.R.S.’s ability to conduct audits of complex business arrangements and wealthy Americans, which generates more money for the government and helps narrow the annual deficit. Mr. Trump has faced an I.R.S. audit challenging how he wrote off losses on a Chicago skyscraper.
Mr. Trump’s appointees and allies, including Elon Musk and Vivek Ramaswamy, have also discussed slashing the federal work force, an effort that has some employees at the tax agency bracing for a wave of retirements. The burst of fresh funding approved by Democrats was in part meant to expand the ranks of the I.R.S. to help keep up with the growing size of the economy.
“I think it will have an impact on morale at the I.R.S.,” said Dave Kautter, who led the agency on an acting basis and served in the Treasury Department under Mr. Trump. “I think they’ve built a lot of their internal communications around the momentum they’ve gathered with respect to enforcement.”
It is unclear how Mr. Long would approach the I.R.S. push to modernize. He once sponsored legislation that sought to abolish the tax agency and replace the income tax with a sales tax, a concept Mr. Trump has flirted with. But Mr. Long did not serve on the tax-writing committee in the House, and he is unknown to some key Senate Republicans who will decide his fate.
“Protecting taxpayers and addressing an ever-encroaching I.R.S. is a top priority, and I look forward to learning more about Mr. Long’s vision for the agency,” Senator Michael D. Crapo of Idaho, the top Republican on the Senate Finance Committee, said in a statement.
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