Making change at the IRS: Commissioner Charles Rettig LLM ’82

A Q&A with alumnus Charles Rettig LLM ’82 in celebration of the 75th anniversary of the Graduate Tax Program.

Charles Rettig LLM ’82, the first Internal Revenue Service (IRS) commissioner since the 1990s to come to the role from a tax law rather than a business management career, says, “I am not a typical pick.” 

Charles Rettig, Head of the IRS
Charles Rettig LLM '82

Rettig spent more than 36 years at the same tax litigation law firm—Hochman, Salkin, Rettig, Toscher & Perez in Los Angeles, California—eventually becoming a name partner and taking on high-profile clients such as CVP Financial Corporation and the estate of Michael Jackson. A Los Angeles native and the son of a German immigrant, Rettig was the only person in his family to graduate from college. Since becoming IRS commissioner in October 2018, he has focused on improving the agency’s technology platforms and its approach to proudly serving the American public. 

In a conversation with Steven Dean, former faculty director of NYU Law’s Graduate Tax Program, Rettig reflected on his time at NYU Law and his unplanned path to assuming the most powerful position in the world of tax.

Let’s start with what I think is the most important question. How did you end up doing an LLM at NYU Law?

My father emigrated from what later became East Germany. In the Eastern European culture, it was more common to learn a trade and work with those skills. I saw myself going into business, which often requires legal knowledge, so that’s why I went to law school. While getting my JD I became actively engaged in tax classes. To know about tax, you have to go to NYU and get your LLM. For a chance at joining the best in the tax profession, go to NYU. It was really that simple.

Did specific faculty draw you to tax, or was it the subject matter itself?

My law school tax professor opened every class with “Aloha.” You think you’re going into a very technical arena, and then as you walk in, he takes all the tension out of the room and makes it enjoyable. There was also the idea of going to NYU. To me, Charlie Lyon [one of the earliest Graduate Tax Program professors] was a legend there. He was always available to everybody to talk about anything, tax or non-tax. He had a huge influence on me. Charlie was one of the original partners in Skadden when it was, I think, a four- or five-person firm. He’d previously been a prosecutor in the Nuremberg trials. With all of his credentials, he was a really nice guy, and he would talk to us as though we were his equivalent, even though we knew we weren’t. 

It’s not just tax that you learn at NYU. It’s the interactions with the professors and your colleagues that provide an appreciation for the importance of effective and fair tax administration and the tax profession in general. Living in the city was huge for me, and it makes you a different person in a very positive sense when you leave. NYU set the foundation for my path forward.

What was your focus in your LLM studies?

I went to NYU with the concept that I was going to go into business. In my mind, I was not headed to a law firm environment. Then I left NYU and joined a tax litigation law firm in Los Angeles. 

I will tell you that in 36 years in private practice and since coming on board here at the Internal Revenue Service, I’ve been fortunate to never have “worked” a day in my life. I have always been passionate about using these opportunities to make a difference for others. I enjoy and appreciate every day. I couldn’t wait to get up and go to work in the firm. It wasn’t work. I was helping people and making a difference. And similarly here—the privilege and opportunities to help others are significant and ongoing. 

I approached courses at NYU in more of a general way, trying to get as much broad-based knowledge as I could. I graduated in 1982. Then we had the ’82 tax act, the ’84 tax act, the ’86 tax act. You could say that my technical knowledge, had I just memorized the code, evaporated in ’82, ’84, ’86. But what I learned was the ability to read the code, understand why it says what it does, and apply that in a commonsense manner on the outside. NYU prepares you to successfully meet the inherent challenges associated with an ever-changing tax environment. 

How did your time at NYU Law affect your career trajectory?

Had I not gone to NYU, I would not be the person that I am nor the tax lawyer I was fortunate to become over time. NYU gave me the knowledge as well as the humility to understand and appreciate that there was so much more to learn going forward. I was fortunate to work with outstanding people who were also outstanding tax lawyers. When I started at the firm I was 25 but quickly learned how to be a person who could make a difference for others, how to be a very technical tax lawyer, as well as how to be an effective tax litigator. I also learned to respect the huge impact tax matters can have upon families and small businesses. Thirty-eight years later, with a few titles behind my name, I still get introduced as “And he got his LLM at NYU,” and you can see people in the audience go, “Wow!” NYU gave me a strong degree of self-confidence to go out and do what I’m doing, but also the recognition that you’re never there from a growth and learning perspective. Continue to learn, continue to absorb, continue to help others.

I was raised, through NYU and also through the firm that I was with in LA, that tax is a profession, and professionals give back to their profession. I did not see myself ending up with the Internal Revenue Service and certainly not as commissioner, but I was raised with a strong sense of pride in government service. So when I got the phone call asking if I’d like to do it, I immediately said yes.

What do you think people should know about the IRS?

We are more than a tax administration agency. During a natural disaster, thousands of IRS phone assistors are deployed to help people who are displaced, lost homes or family members. Our Criminal Investigation agents are deployed to provide security for medical teams or assist in search and rescue efforts. We hire thousands of people for seasonal work during filing season. I can go into a city that's been decimated, bring in 3,000 seasonal jobs, and bring about social change for that community. 

The message I bring to the Internal Revenue Service and to our employees and people we interact with is that 96 percent of the gross revenue of the United States of America flows through the Internal Revenue Service. For the country to be successful, to provide meaningful services, benefits and opportunities to those in need, the IRS must be successful. We need to respect the people we interact with, we must be reflective of the diverse communities we proudly serve, and we need to work hard to earn their trust and respect. In this regard, we’ve pushed forward on a lot of valuable programs. When I came on board, the IRS basically offered limited services in six languages. As a public school kid from Los Angeles, I’m proud that, with respect to the CARES Act provisions and the delivery of more than $270 billion in economic impact payments this year, we distributed outreach materials in 35 languages, we interacted with more than 4,000 homeless shelters and numerous other community organizations around the country. 

The 2020 Form 1040 will, for the first time, be available in English and Spanish, and we now offer phone assistor translation services in 350+ languages. Individuals will have the opportunity to check a box to indicate the language they want us to use when interacting with them. Quite an accomplishment in less than two years, but we are not close to being where we want to be. We have momentum and will continue our push forward assisting the underserved communities in our country.

I’ve said internally to our employees and externally, there is no person in this country who’s more important or less important than any other person, and we interact with most all of them. We interact with people who don’t have broadband as well as some of the most sophisticated individuals and corporations on earth, and we respect them all. I’m privileged to be on this journey. I’m not a typical pick to lead a federal agency, but I’ve been able to open many doors within a historically risk-averse agency, encouraging our 80,000 employees to make a significant difference for millions of people. Our employees care, we have made a difference, and depending on levels of funding received, we will proudly continue to do so going forward.

You’re the first commissioner in a while to come from the actual practice of tax law. Are there lessons you learned from your clients and your practice that you’re bringing to bear?

The IRS has possibly more power than any other federal agency. Having power gives us the opportunity to benefit people, and I'm not sure everybody always looked at the IRS that way.

Most of my clients in private practice were either individuals or groups of individuals and family-held businesses and such, so I wasn’t necessarily a representative of corporate America. Many of my clients cared deeply about helping people in need. They were dedicated to giving back. Most of them were self-made, and I think that’s significant, because if you go without, you can better recognize and are likely to be more sensitive to the other person who’s going without today. I had a lot of opportunities in private practice with people who wanted to bring about massive changes in certain communities, build a community center where there isn’t one or discreetly fund change that benefitted others who did not even know my clients existed. It was a privilege to work with others who cared about those less fortunate and had the desire and ability to make a difference. I’ve brought that viewpoint into the IRS, an organization that interacts with more Americans than any other public or private organization. Without NYU, I would not have had this opportunity. 

During your confirmation hearings, you talked about some of the challenges the IRS faced, including outdated technology and budget cuts, and that your primary goal was to restore trust. How have you tried to do that? What do you have left to do?

During my third month on board, we had the lapse in appropriations, so we were shut down for 35 days. Former career IRS people said, “You’re lucky to get through that. That will be the worst part of your career; you’ll never have anything so difficult to deal with.” Then the COVID situation hit…and I shut down more than 500 IRS facilities, sent home tens of thousands of employees, and we quickly transformed into a virtual, teleworking environment.

In this current filing season, we issued more than $318 billion of refunds and another $270 billion of Economic Impact Payments—we have distributed almost $600 billion to more than 160 million individuals in need during an unprecedented pandemic. We were doing both of those tasks while our facilities were shut down and we had 59,000 employees teleworking. We issued 81 million payments within two weeks of the [CARES] Act being enacted, over $160 billion. That’s not our “day job.” Our day job is the normal tax administration efforts—filing season, services, guidance, enforcement, tax litigation, criminal tax investigations, etc. 

Our people here are spectacular and made a difference while struggling with the same COVID-related concerns for themselves, their families, communities, our country, and the world. COVID was a challenge that unexpectedly came on the radar screen, but our employees successfully faced the numerous challenges that have been presented this year, and we’ve made a significant difference for everybody else in our country. 

 At the end of the day people will probably say that the outreach to underserved communities is one of the hallmarks of my term as commissioner. The Economic Impact Payments gave me the opportunity to interact directly with hundreds of entities around the country—tenant rights organizations, immigrant rights organizations, homeless shelters, unsheltered individuals and traditionally underserved communities. We were charged with getting $1,200 to every eligible American. That required significant efforts to identify eligible individuals, unsheltered homeless people, and those who are otherwise not connected with society in one form or another. 

We are aggressively modernizing our operating systems through a six-year plan at a cost of approximately $2.3 billion to enhance our data security, service and enforcement efforts. We have coordinated our enforcement efforts, with all enforcement functions now working together. Further, we have expanded use of data, analytics, and artificial intelligence across all lanes from selection to examination. We are able to now identify issues of noncompliance that would not have been remotely possible just a few years ago. For our country, knowing where to focus enforcement efforts is as important as knowing where to not focus such efforts.

In the area of cybersecurity, last year we stopped 1.6 billion sophisticated attempted attacks on our IRS systems. A successful cyberattack would affect the emotional stability of the country. We have more data than all but maybe two or three federal agencies that don’t really have names. I think every commissioner would likely say the cyber issues are what keep them awake at night, and all would acknowledge that our dedicated employees in this space are spectacular, none better. 

What advice would you give a student considering a similar career path?

Never, never, never give up. You learn more from the difficult situations presented to you, figure out how to get through that experience, and move forward. If you are happy in your professional career, you’ll be successful, both in your professional and personal life.

When you get to the point in life where you are comfortable—I’m not talking about financially, but where you have a degree of self-confidence in yourself as a person—start to focus on the people who are less fortunate, who don’t have the opportunities to get there. You will think you’re incredibly busy and you have no time. You have time. You always have time to help others and make a difference. 

To me, the driver is work hard, prepare, prepare some more, prepare some more, and then prepare a little bit more. I never went into any environment remotely unprepared. Preparation will provide the self-confidence you need to go in and make a difference.

At the end of the day, it’s a world about people. My NYU LLM put me on a path 38 years ago that provided me with the privilege and opportunity to make a difference for millions of people and our country. Who has that opportunity? I will be forever grateful to NYU and those who have helped me over the past 38 years, including Charlie Lyon, who demonstrated that sophisticated tax lawyers care about helping others be all they can be and can make a difference.… Thank you for this opportunity to possibly help other NYU alumni choose a meaningful path forward.

This interview was conducted in 2020.
Posted January 29, 2021