The new congressional session began before the Senate could vote on President Donald Trump’s three nominees for the U.S. Tax Court and a nominee for the Internal Revenue Service.
The picks expired when the new Congress began at noon on Jan. 3. That means Trump will have to either resubmit his nominees for three judge spots and the role of IRS chief counsel, or select new people.
The Senate Finance Committee in August had approved Trump’s choice for IRS chief counsel and assistant general counsel at the Treasury Department, attorney Michael Desmond. Without a permanent leader in the chief counsel position, the IRS lacks a strong voice to set the office’s priorities and ensure continuity, practitioners said.
And “no matter how good the few senior political appointees are, there is still a need for additional people like Desmond who can bring to bear their diverse experience and judgment, including prior experience in the government,” said Dana Trier, counsel at Davis Polk & Wardwell LLP in New York.
If a nomination is resubmitted to the new Congress, the nominee could be asked to reappear for a committee hearing but can bypass this with senators’ unanimous consent.
The Senate, which confirms nominees, will remain in Republican control. The House is now controlled by Democrats.
The Senate approved dozens of nominees late Jan. 2, before the session ended.
Asked why the three tax court judges and Desmond weren’t included, Sen. John Cornyn (R-Texas) told Bloomberg Tax that it was because Senate Minority Leader Chuck Schumer (D-N.Y.) “wouldn’t allow it.”
IRS Leadership Needed
The chief counsel, one of the agency’s two presidential appointments, is the main legal adviser to the IRS commissioner on the interpretation and enforcement of tax laws and helps set the agency’s litigation policy.
The IRS chief counsel should play a top role in implementing the 2017 tax overhaul, former IRS commissioner Lawrence B. Gibbs told Bloomberg Tax in an email.
There is a need for many “important new regulations,” Gibbs, senior counsel at Miller & Chevalier Chartered in Washington, said in an email. He added that “a confirmed Chief Counsel could and would help to expedite that process.”
Desmond previously ran his own law firm in Santa Barbara, Calif., where he specialized in tax litigation and controversy. He was also Treasury tax legislative counsel under President George W. Bush.
“Michael Desmond is precisely the type that we need more of in the government, but few will be willing to go through what he has gone through,” said Trier, a former deputy assistant secretary for tax policy in the Treasury Department.
The IRS needs to fill this role in order to referee breakdowns of inter-branch coordination, Glenn Dance, a Washington-based managing director at Grant Thornton and former IRS official, told Bloomberg Tax.
“When I was there, we even experienced some breaks in the coordination between the IRS and Treasury, where we needed the Chief Counsel to serve as an advocate for the IRS,” Dance said.
Tax Court Short-Handed
The Tax Court is now three judges short of its full 19-judge roster. The court’s judges are nominated for 15-year terms.
The gaps on the Tax Court contributed to a drop in memorandum and division opinions in 2018 compared with each of the last four years, tax practitioners previously told Bloomberg Tax.
Courtney Dunbar Jones, a senior attorney in the IRS Office of Chief Counsel, is among those still waiting for a vote from the full Senate.
Trump nominated Dunbar Jones, who has worked in the private and public sectors, in January 2018. The Senate Finance Committee advanced the nomination on Dec. 13, 2018.
Two other nominees—Emin Toro and Travis A. Greaves—are waiting for a hearing on their nominations.
Trump nominated Toro, a partner in the Washington office of Covington & Burling LLP, in April 2018. He nominated Greaves, deputy assistant attorney general for appellate and review for the Department of Justice Tax Division, in August 2018.
—With assistance from Robert Lee, Allyson Versprille, Alison Bennett, Lydia O’Neal, and Siri Bulusu.
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(Updates with additional reporting.)