According to USA TODAY, Werfel announced his resignation to IRS employees on Friday, choosing to depart when President-elect Donald Trump assumes office on Monday, despite having three years remaining in his term.

The resignation marks a significant break from IRS tradition, as commissioners typically remain in their positions across presidential administrations. This departure represents the first time since Bill Clinton's inauguration in 1993 that an IRS commissioner has stepped down on inauguration day.

Trump Administration Plans Major Changes to Tax Agency

Former Missouri Republican Representative Billy Long stands as Trump's nominee to lead the tax agency. The nomination comes amid concerns about potential political influences on tax enforcement.

During Trump's first term, according to former White House Chief of Staff John Kelly, there were attempts to use the IRS against political opponents.

The IRS has previously been criticized for its handling of political neutrality. During President Obama's administration, the agency came under fire for subjecting Tea Party groups to extra scrutiny, which eventually led to then-commissioner Steven Miller resigning at the administration's request.

In a letter to agency staff obtained by the Wall Street Journal, Werfel explained his decision to step aside. He noted that staying in his role during Long's confirmation process could have created unpredictable distractions due to the unusual nature of the situation.

Modernization Efforts Face Uncertain Future Under New Leadership

Under Werfel's leadership, the IRS implemented significant reforms funded by the 2022 Inflation Reduction Act. These improvements included enhanced digital services, technology upgrades, and reduced telephone wait times for taxpayers.

The agency's Direct File system, despite opposition from the tax preparation industry, is set to expand to 24 states this year. Trump's Treasury nominee, Scott Bessent, has committed to maintaining the Direct File program for 2025 during a recent Senate panel testimony.

However, several Biden-era enforcement initiatives may face challenges under the new administration. These include increased audits of corporate jet usage by wealthy individuals and other tax enforcement priorities established during Werfel's tenure.

Critical Transition Period Begins at Federal Tax Agency

If confirmed by the Senate, Billy Long will serve the remainder of Werfel's term until 2027. The transition comes at a crucial time for the agency, which has traditionally maintained stability through presidential changes due to the 1998 reform bill establishing five-year terms for commissioners.

The IRS leadership structure allows for only two political appointees - the commissioner and the chief counsel. This limited political influence was designed to maintain the agency's independence and prevent partisan interference in tax enforcement.

The transition raises questions about the continuation of ongoing modernization efforts and enforcement priorities. While some initiatives appear secure, others may undergo significant changes under the new administration's direction.