The Beverly Hills attorney set to lead the IRS likes magic tricks — he'll need a few to run the agency

Feb. 13, 2018 3 AM PT

The Internal Revenue Service this year will have to write and interpret a bevvy of rules as the agency implements the most sweeping set of changes to the tax code in a generation.

And leading the agency through that process could be an IRS commissioner with a resume quite unlike those of his predecessors.

Charles “Chuck” Rettig doesn’t have an Ivy League degree, he’s never been a corporate executive, and it’s almost certain that no previous IRS commissioner has been a member of the Academy of Magical Arts, the club that runs Hollywood’s Magic Castle.

He does, though, have a reputation as a gregarious, topflight tax attorney who for nearly a decade has been an advisor to the IRS and state tax collectors — despite specializing in representing taxpayers with disputes against those same agencies.

President Trump last week nominated Rettig, a Beverly Hills tax attorney, to become the next IRS commissioner. If confirmed by the U.S. Senate, he would be the first IRS commissioner in decades to come from the tax world itself, and he would be tasked with overseeing the agency as it writes scores of rules to implement the new tax law.

That will involve hundreds of decisions ranging from how new tax documents should look to how to precisely define the types of overseas corporate earnings that will be subject to taxation, said Mark Mazur, director of the nonpartisan Tax Policy Center.

“The way this law was written — hastily and without a ton of debate — means there are many, many provisions that need a lot of interpretation,” he said.

A new IRS commissioner will face that task while also leading an agency that’s been burdened in recent years by budget cuts and a tense relationship with Capitol Hill.

Rettig, who lives in Encino, declined a request for an interview, but told The Times in an email that he is honored by the nomination.

“If confirmed, I will do my utmost to improve taxpayer service and protect taxpayer’s rights under the law, and to insure the fair, efficient and impartial but rigorous enforcement of our tax code,” he wrote.

In the recent past, presidents have generally selected executives to run the nation’s tax-collecting agency, a sprawling, 80,000-employee operation that has hundreds of offices around the country.

The most recent commissioner, Obama appointee John Koskinen, spent two decades as an executive of management consulting firm Palmieri Co. Before him, Bush appointee Douglas Shulman came to the agency after serving as vice chairman of finance industry self-regulator Finra.

Rettig, though, has spent his career practicing tax law, setting him apart.

“The simplest analogy for the IRS is a big financial services company,” Mazur said. “They process information, collect bills, maintain accounts. The past four commissioners have been management people. This is a break with that.”

Born and raised in Los Angeles, Rettig attended L.A. public schools in the San Fernando Valley. He earned an economics degree from UCLA and went to law school at Pepperdine.

He had long been a registered Republican before changing parties shortly after the 2012 reelection of Barack Obama. Then, last May, he switched back to being a Republican, according to the Los Angeles County Registrar-Recorder’s office. Over the years, he’s given to candidates of both parties.

Rettig hasn’t, though, jumped around in his career.

For 35 years, he’s been with the Beverly Hills law firm Hochman Salkin Rettig Toscher & Perez, known in the industry as a controversy firm — one that focuses on representing taxpayers in disputes with the IRS or state tax agencies.

And though the nature of his practice is such that he and the IRS are typically on opposite sides, he has also been a longtime member of committees that advise the IRS as well as the California Franchise Tax Board. Attorneys who know Rettig say he has a deep respect for the agency and for the tax system.

“In training me to become the lawyer I became, he told me: ‘You need to respect the IRS. They’re doing their job, and that’s their responsibility,’ ” said Sharyn Fisk, an accounting professor at Cal Poly Pomona who worked with Rettig at Hochman Salkin.

Phil Hodgen, a Pasadena tax attorney, said Rettig, whom he’s known for nearly 30 years, has a reputation for “really taking the whole system of taxation — the integrity of the system — seriously,” even while advocating for clients at odds with the IRS.

“He’s a big believer that the tax system is a good thing,” he said. “When he sees people banging on the [IRS] for political reasons, from either side, that’s inconsistent with how he sees things.”

The IRS has seen its budget ebb over the years, and its reputation on Capitol Hill has not recovered from a 2013 disclosure that the agency targeted tea party-affiliated groups for additional scrutiny when they applied for tax-exempt status. The controversy led to a settlement last year between the Department of Justice and two conservative groups.

Mazur of the Tax Policy Center said the agency needs a leader who can “interact with members of Congress and staff on the Hill to ensure [IRS workers] have the resources they need to do their jobs.”

Last year, Treasury Secretary Steven Mnuchin, during his confirmation hearing, said he wanted to beef up the agency’s staffing after learning that its head count had sharply fallen over time.

Dennis Brager, a Los Angeles tax lawyer and former IRS trial attorney, said the gregarious, self-effacing Rettig — who lists his Academy of Magical Arts membership on his resume — could help soothe tensions and perhaps persuade Congress to boost the agency’s budget.

“He cares about people and, as a result, people care about him. That makes him a great leader,” Brager said. “I think he at least stands a chance of repairing some of the rift between the IRS and Congress.”

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