Turmoil at Top of Trump’s IRS May Deter Future Legal Candidates

The Trump administration has an uphill battle to find its next pick for the top IRS attorney position, after the president in a surprise move withdrew Donald Korb’s nomination days before his expected Senate confirmation vote.

The abrupt reversal came after far-right activist Laura Loomer questioned Korb’s loyalty to the Republican party. Citing reporting and an opinion piece published in Bloomberg Tax, she challenged Korb’s “by-the-book” style and criticism of whistleblowers.

The withdrawal comes after Billy Long, President Donald Trump’s confirmed IRS commissioner, was ousted just two months into his tenure. The removals, combined with historic churn among IRS leaders and rank-and-file workers, make it difficult to predict who would be willing to accept a nomination.

It’s also unlikely the Senate Finance Committee would be willing to consider another nominee quickly, said Pete Sepp, president of the National Taxpayers Union.

“With only two posts at the entire IRS that are subject to the confirmation process, finding people to get into these posts and presumably push the administration’s brand ought to be important,” Sepp said. “But the cycle continues here.”

Korb won the support of every Senate Republican for the IRS chief counsel position during a committee vote, in part thanks to his experience at the IRS and assurances to Sen. Chuck Grassley (R-Iowa) that he would support the agency’s whistleblower program.

But cracks started emerging in the GOP conference last week, spelling danger for Korb’s prospects of Senate confirmation.

Republicans hold a 53-seat majority in the Senate, and Sen. Sheldon Whitehouse (D-R.I.) was on record backing him.

But at least one Republican was opposed to moving forward, according to a Senate Republican aide familiar with conference dynamics. Further defections could have endangered his confirmation.

Loomer alleged Korb’s nomination removal came in part because of donations to Democrats. Sepp said it will be hard for the administration to find a new nominee amid changing vetting standards.

At the same time, some whistleblower attorneys sees Korb’s nomination withdrawal as a win because of his past criticism of the IRS program.

Legal Division Upheaval

The IRS Office of Chief Counsel—which lost hundreds of workers and a slate of managers this year—is central to most agency decisions, including implementation of major tax laws and issues that arise during filing season. Attorneys also represent the IRS in disputes with corporate taxpayers, who tax professionals say are becoming bolder because the agency is starved for resources.

Korb, a Sullivan & Cromwell LLP counsel, has decades of tax controversy experience and already served in the chief counsel role under President George W. Bush.

The withdrawal could deter those in a similar pool of tax lawyers from wanting the position, said Mark Mazur, former assistant secretary for tax policy during the Obama administration.

“It’s going to be harder to get a high-quality person,” Mazur said.

Lacking a confirmed chief counsel hurts the IRS’s ability to plan long term, such as regulatory priorities and litigation strategies, Mazur said.

The IRS is facing a huge backlog of US Tax Court cases related to conservation easement and micro-captive insurance transactions that the agency believes to be abusive. A confirmed chief counsel could help reduce that backlog through internal staff memos, settlement initiatives, or regulatory changes, Sepp said.

“Under an acting chief counsel, that’s more difficult to pull off,” he said.

Ken Kies, assistant Treasury secretary for tax policy, is serving as acting chief counsel. The Treasury Office of Tax Policy oversees regulations that implement new tax laws while the IRS Office of Chief Counsel drafts those regulations. Continuing to have the same person lead both offices—especially amid implementation of the new GOP tax law—could harm the development of regulations.

Robin Greenhouse, former IRS division counsel, said she worries one person in both positions creates an echo chamber when it comes to regulations. The IRS chief counsel’s office typically gives input on how easy it is to administer regulations and the agency’s legal positions.

“Good discussions are what make good, reliable guidance,” Greenhouse said.

Whistleblowers Claim a Win

Korb, previously a strong critic of the IRS whistleblower program, promised during his September confirmation hearing he would be more supportive.

But Chris McLamb and Michael Ronickher, partners at Whistleblower Partners, said they were still concerned about Korb’s intentions after his longtime criticism.

“All things being equal, it would be hard to find someone with a worse track record than what Korb had as it relates to whistleblowers,” McLamb said.

The IRS whistleblower program allows people to receive a reward if their information is used by the IRS to investigate noncompliance. The program can help combat tax fraud even if the IRS is short on workers and resources, the lawyers said.

“We’re hoping the next nominee is going to recognize that,” Ronickher said.