Julia Demaree Nikhinson/AP
In an exclusive story on Wednesday, the Wall Street Journal reported on the Trump administration’s plans to weaponize the IRS, much as he has weaponized the Department of Justice, against his perceived enemies.
“Sweeping changes” are planned, the Journal reported, citing anonymous sources, “that would allow the agency to pursue criminal inquiries of left-leaning groups more easily.”
A senior IRS official involved in the effort has drawn up a list of potential targets that includes major Democratic donors, some of the people said.
A key aspect of the changes is giving President Donald Trump’s political appointees control over the IRS’s criminal investigations division. Gary Shapley, an adviser to Treasury Secretary Scott Bessent, will take the reins, per the Journal. In April, Shapley, a former IRS agent, was named acting commissioner at the behest of Elon Musk, and then fired days later after Bessent objected. He will now reportedly work to weaken the role of career IRS lawyers in investigations, paving the way for politically motivated probes of people and groups Trump and his allies dislike.
Shapley is already collecting a target list of progressive donors and groups, the paper reported, including, not surprisingly, billionaire George Soros, that bogeyman of right-wing conservatives, and groups with ties to his Open Society Foundations.
“I’ve been speaking to friends…who are just absolutely appalled at at this, and in shock that this would materialize.”
“This is, without doubt, a very troubling development,” John Koskinen, who served as IRS commissioner under President Barack Obama and at the beginning of Trump’s first administration, told me in an email.
Such investigations could be used not only in pursuit of criminal cases, but also as a rationale for yanking a progressive organization’s tax-exempt status, eliminating the ability of its donors to take a tax deduction—a potential death knell for any nonprofit group’s ability to survive and support its mission. (During the 1980s, the Reagan administration tried doing this to Mother Jones. Spoiler alert: We won.)
Partisan IRS enforcement also happens to be illegal. “Section 7217 of the US Criminal Code prohibits the president or anyone in the White House from suggesting or ordering an IRS audit,” Koskinen says. “Putting administration loyalists in charge of the IRS generally and the criminal division in particular with the expressed aim of auditing individual taxpayers or trying to eliminate the tax exemption of nonprofits the administration does not approve of certainly violates the spirit if not the letter of the Criminal Code.”
“We’ve been talking about this a lot,” says a corporate lawyer who specializes in criminal tax defense and asked for anonymity to protect his clients from potential retribution by the administration. “I’ve been speaking to friends of mine who used to work in the government, who believed in the system, and who are just absolutely appalled at at this, and in shock that this would materialize.”
If that lawyer were defending one of these liberal entities—especially one that Trump and his minions have threatened in the past, like the Ford Foundation—he would make the case that the government was practicing selective prosecution: “There is a slim line of authority a defendant could use to argue here, and of course, the danger here is that the government will forum shop.” That is, the Justice Department would file the case in a judicial circuit whose judges were more likely to side with the administration.
“But this seems like a situation,” the attorney adds, “where a lot of juries might rebel at what might be perceived as an overreach of government authority,” even if they believe the defendant is guilty: We’re going to find this person not guilty, and F you for bringing this case!
Even if the group or individual prevails in court, however, the time and money required to defend against such actions is a major drain on resources—and a distraction from a group’s charitable mission. So even if a vindictive government loses in the courtroom, it still wins by harassing its foes.
This whole episode, assuming the administration moves ahead with its plans, represents a wild about-face. After taking over the House in 2010, congressional Republicans were so incensed by the IRS’s investigation of sketchy tea party groups under Obama that they set about gutting the IRS’s enforcement budget, and launched a series of dog-and-pony House hearings to justify further cuts. Representing the government at one 2015 hearing was Koskinen, who had described the evisceration of his budget as “a tax cut for tax cheats.”
Indeed, those cuts decimated the taxman’s ability to conduct audits of wealthy, sophisticated individuals and businesses. A Democratic-led Congress finally restored ample funding under President Joe Biden—an effort Republicans tried to defeat by spreading disinformation. But the GOP has since succeeded in rescinding the lion’s share, not to mention the Trump administration’s layoffs of virtually all IRS employees hired under Biden, which included lawyers capable of tackling those high-level audits.
If the IRS goes after liberal groups as promised, another former agency higher-up told me, it would fall upon the Treasury Department’s Office of the Inspector General (TOIG) to investigate complaints and determine whether there was, in fact, improper politicization of tax enforcement. But in this era of rampant abnormality, it’s unclear that the normal oversight process will stand.
Soon after taking office, Trump unceremoniously fired inspectors general throughout the government. On the list for dismissal was Loren Sciurba, a career deputy inspector general then standing in at TOIG, which didn’t have a confirmed chief. When that office reached out to the White House for clarification on its intent, noting that Sciurba wasn’t even in an “acting” role, it got no reply, and Sciurba apparently stayed on—he’s still listed as IG on the office’s website. (Sciurba did not respond to a message left for him at home.)
Regardless of the outcome, the mere appearance that the IRS is willing to do the administration’s bidding “will undermine the average taxpayer’s confidence that the IRS is acting solely on the merits of the case rather than pursuing a political vendetta when they are contacted by the IRS,” Koskinen says.
“The fear generated by this action is totally inconsistent with the goal of having a government that follows the law rather than doing whatever it pleases or is asked to do by the president,” he continues. And the administration’s goal, per the Wall Street Journal, of trying “to remove to the extent possible the Chief Counsel’s office from criminal enforcement indicates that following the law is not a goal.”
