WASHINGTON — The Treasury Department said on Friday that the deputy commissioner of the Internal Revenue Service, Douglas O’Donnell, would become the acting commissioner next month when Charles P. Rettig’s term ends, filling a void at the top of the tax collection agency as it embarks on an $80 billion overhaul.
The appointment comes at a pivotal moment of transition for the I.R.S., which is facing intense political scrutiny as it prepares to bolster its enforcement capacity by hiring thousands of new agents. The delay in naming a replacement for Mr. Rettig had raised concerns among former I.R.S. officials that the transformation of the agency could be at risk.
“Deputy Commissioner O’Donnell has dedicated his career to serving American taxpayers through every level of the agency,” Treasury Secretary Janet L. Yellen said in a statement. “His commitment to improving the experience of the American taxpayer will guide his and the agency’s work as they continue their efforts to propel the I.R.S. forward during a critical period of modernization.”
Ms. Yellen also praised Mr. Rettig for his leadership of the agency during the pandemic, when its thin staff had to scramble to deliver relief money to Americans across the country. The outgoing commissioner generally won praise from the Biden administration for helping to make the case that the agency needs more money.
Mr. O’Donnell has worked at the I.R.S. since 1986 and started out as a revenue agent.
The $80 billion allocated to the I.R.S. became a centerpiece of the Inflation Reduction Act that Congress passed earlier this year. It is expected to raise over $120 billion in new tax revenue over a decade by cracking down on big companies and wealthy taxpayers who avoid paying taxes. The money is also intended to go toward improving customer service and upgrading the agency’s antiquated technology.
The money has also emerged as a political flash point, with Republicans warning that the 87,000 new employees that the I.R.S. plans to hire will become a “shadow army” for President Biden. Republicans have said that if they retake control of Congress they will try to claw back the agency’s new pot of money.
If Republicans win control of the Senate, it could be difficult for Democrats to confirm a full-time replacement for Mr. Rettig, an appointee of former President Donald J. Trump whose term expires on Nov. 12.
Earlier this month, a group of four former I.R.S. commissioners issued a public statement urging the White House to speed up the process of nominating a new commissioner.
“A prompt appointment of the next commissioner is essential,” they wrote. “Until that position is filled, essential improvements to the I.R.S. are at serious risk of delay, if not failure.”
The White House declined to comment on the nomination process.
In her statement on Friday, Ms. Yellen expressed confidence that more changes are afoot at the I.R.S.
“Now more than ever, the I.R.S. has the momentum to transform with service, technology and work force improvements that will make it a world-class agency to meet the needs of the American people,” she said.
