Trump signals new direction for IRS as he announces atypical plan to replace its leadership

President-elect Trump announced his intention to nominate a former Republican congressman to lead the Internal Revenue Service, suggesting he will fire current Commissioner Danny Werfel well before his term is set to expire in 2027. 

Trump will tap former Rep. Billy Long, R-Mo., to lead the tax agency, he said Wednesday evening, selecting a six-term lawmaker without direct experience in tax policy. IRS commissioners are nominated to five year terms so that they do not directly correspond to presidential turnover, though federal statute dictates the agency head “may be removed at the will of the president.”

President Biden nominated Werfel in 2022 after Trump’s choice to lead IRS, former Commissioner Charles Rettig, saw his term expire. Biden opted not to replace Rettig, following precedent that has remained in effect for the last 30 years. Werfel recently said he hoped to stay in his role through the end of his term. 

Werfel is in the midst of transforming IRS—using roughly $60 billion from the 2022 Inflation Reduction Act—including by boosting customer service, modernizing technology and dramatically ramping up staffing to increase enforcement on wealthy individuals and corporations. Congressional Republicans have largely balked at his efforts and attempted to revoke the IRA funding on multiple occasions. With the party now taking control of the White House and both chambers of Congress, Republican leaders have indicated they will push those efforts through. 

Long did not serve on the House Ways and Means Committee, which oversees tax policy, though he did cosponsor relevant legislation. He threw his support behind a measure to ban IRS employees from joining a union in 2013, though did not do so when the bill was introduced in later years. Most IRS workers are part of a union, largely through the National Treasury Employees Union, which declined to comment on Trump’s planned nomination. 

Long has on several occasions backed a bill to move to a national sales tax and abolish IRS. 

Trump said Long has experience running a business and since leaving Congress in 2023 has helped other business owners navigate tax law. 

“He is an extremely hard worker, and respected by all, especially by those who know him in Congress,” Trump said. “Taxpayers and the wonderful employees of the IRS will love having Billy at the helm.”

Sen. Ron Wyden, D-Ore., who chairs the Senate Finance Committee that oversees IRS, said Trump’s decision “ought to set off alarm bells.” 

“If Trump fires Mr. Werfel, it won’t be to improve on his work,” Wyden said. “It’ll be to install somebody Trump can control as he meddles with the IRS.”

He added Long was a "bizarre choice" to lead IRS and has worked in "scam-plagued" industry involving the Employee Retention Tax Credit since leaving office. 

“I’m going to have a lot of questions about Mr. Long’s role in this business, first and foremost why the American people ought to trust somebody involved with a fraud-ridden industry to run an agency that’s tasked with rooting out fraud.”

A New Direction?

Werfel’s ousting may be a signal of a new direction for the tax agency, given that his term was set to last through November 2027. 

The tax agency is currently urging lawmakers to unfreeze $20 billion in agency funding from the IRA in a stopgap funding bill expected to be used to fund agencies after the current continuing resolution ends on Dec. 20.

A debt limit deal between the White House and lawmakers last year already rolled back just over $20 billion of the $80 billion the agency got in the IRA. Language into the current continuing resolution essentially froze another $20 billion. 

House Republicans also proposed additional IRS budget cuts in their 2025 spending bill earlier this year. Lawmakers have yet to nail down full-year funding for agencies for 2025.

The IRS, meanwhile, has said that continued funding is critical after years of underfunding, warning that it may run out of money for technology improvements by fiscal 2026 and that customer service funding cliffs could mean that taxpayers will again see long phone wait times to reach the IRS by the end of the next fiscal year. 

IRS currently employs more than 90,000 workers, up from 79,000 at the end of fiscal 2022. Werfel has said he hoped to grow that figure to more than 100,000 in the coming years, though those plans could now be in limbo. 

If confirmed, Long will enter an agency that has been trying to capitalize on lawmakers’ investment to move into the 21st century.  

The tax agency has been working to replace its 1960s-era system for individual tax account administration next summer. The system is the authoritative data source for all individual tax data, so most other IRS systems rely on its data.

“It’s critical that the IRS has stable, secure funding to allow technology modernization and taxpayer service improvements to continue into the future,” Werfel has previously stressed as the agency has asked Congress to remedy budget cliffs for technology and customer service.

 The Future for Direct File

Long’s appointment also raises questions about the future of the IRS’ free online filing tool, Direct File, which the tax agency piloted earlier this year. Many other countries offer similar tools to Direct File.

Although the tax agency announced in the fall that it was expanding the tool — and calls it a “permanent option” for free tax filing — tax prep companies and some Republicans have targeted the tool.

The 2025 funding proposal from Republicans on the House Appropriations Committee would block funding from going to Direct File, and some Republican state attorneys general have argued that the original pilot was unconstitutional because it didn’t have authorization from Congress.

At the same time, business owner Elon Musk and former presidential candidate Vivek Ramaswamy are reportedly mulling the potential of a free mobile app for free tax filing with the IRS as part of the government efficiency commission they will lead under Trump. 

It’s unclear what this would mean for Direct File, which offers free tax filing via a website. The IRS is planning to offer it across 24 states next year.

This year, the Direct File pilot didn’t fully debut until March, well into the tax season. Next year, the IRS is planning to accept tax returns through the tool when the filing season opens — likely putting its planned debut close to the start of the new Trump administration, as the tax season historically opens in January or February. 

The IRS has relied on a partnership with tax prep companies to offer free filing options for many taxpayers for decades, but the program, dubbed Free File, has largely been vastly underutilized. 

Long sponsored several bills to require the Treasury to continue to operate the Free File program while he was in Congress. 

Werfel has characterized Direct File as an additional option, not a replacement of Free File, and told reporters in May that “the vision that the IRS has for tax administration is a nonpartisan one” when asked about the potential impact of the election. 

Trump’s own IRS pick from his first administration, Charles Rettig, recently urged lawmakers to restrain from rolling back additional IRS funds from the IRA, calling on Congress to “help the IRS earn Americans’ trust and respect rather than attack it for their own political gain.”