Warren Presses Bessent to Remove Himself From IRS Worker Moves

Treasury Secretary Scott Bessent’s maneuvers to avoid higher tax bills are grounds for recusal from hiring and layoff decisions at the IRS, Sen. Elizabeth Warren (D-Mass.) wrote in a new letter to Bessent.

The letter sent Wednesday, obtained by Bloomberg Tax, argues that Bessent should recuse himself from workforce decisions, and pay the extra tax to offset the legal method he used that allowed him to make lower contributions to Medicare and state jurisdictions.

“I ask that you take steps to pay back the taxes that you owe to the American public and recuse yourself from any decisions regarding the hiring freeze and layoffs at the IRS,” she wrote.

Warren, ranking member of the Senate Banking Committee, previously confronted Bessent in January over the structure of his interest in the hedge fund he founded—Key Square Group LP—which avoided tax on net earnings from self-employment.

Responding to her earlier letter, Bessent said he “faithfully endeavored” to follow the law, though he didn’t answer other questions, she said in her most recent letter.

The tax maneuvers were described in a memo compiled by the Senate Finance Committee’s Democratic staff after a review of Bessent’s financial disclosures, which included personal tax returns between 2021 and 2023.

A Trump transition spokesperson, at the time of the report’s release, called the Democrats’ claims meritless, suggesting the memo’s subjective interpretation of the tax code failed to prove Bessent violated the law.

Limited partners argue they’re exempt from self-employment taxes on their partnership-allocated earnings, but the law is still being vetted by courts. A judge in the US Court of Appeals for the Fifth Circuit in February appeared highly skeptical of the IRS’s argument in favor of a standard for when to disqualify state-law limited partners from a self-employment tax exemption.

Democrats have hammered the Trump administration’s actions downsizing the federal workforce, and raised alarms over an executive order that leaves the IRS hiring freeze in place even after the order expires for other agencies.

They warn that reducing the IRS workforce will erase gains in taxpayer services and enforcement and lead to trillions in lost revenue over a decade.

Warren suggested that the IRS carve-out in the executive order is part of a GOP plan to hamstring the agency, and suggested Bessent might not be capable of being an impartial leader of the agency.

“I am concerned that your own history of using abusive and potentially illegal tax avoidance techniques may impact your ability to objectively determine whether to fire additional IRS employees and when to lift President Trump’s hiring freeze,” the Massachusetts Democrat wrote.

Treasury didn’t immediately respond to a request for comment.