Tax Leadership Vacuum in Justice Department Must Come to an End

There is an empty chair in the Justice Department’s Tax Division. The rightful occupant is authorized by law to overrule the IRS about the meaning of the federal tax code, manage civil tax trials and appeals in Article III courts, supervise hundreds of Tax Division lawyers, and direct the 93 US Attorneys about how to handle criminal tax cases.

But the powerful and important position of tax assistant attorney general, or AAG, has been vacant for more than decade. Except for a two-year stint, the office has been unoccupied since January 2009. Leaving the Tax Division without a Senate-confirmed leader is demoralizing for its employees, demeaning for the Justice Department, damaging to tax administration, and detrimental for taxpayers.

The career officials obliged to manage the leaderless Tax Division are lawyers of exceptional experience, skill, and integrity. But senior law enforcement jobs are reserved for presidential appointees for good reasons. Presidential appointees, usually respected private lawyers with subject-matter expertise, bring unique perspectives. They implement changes and take responsibility for hard decisions.

President George W. Bush appointed Senate-confirmed leaders to run the Tax Division in all eight years of his administration. The first, Eileen J. O’Connor, served from 2001 to 2007, and demonstrated that a Senate-confirmed leader could make a positive impact.

She filled every leadership position with a presidential appointee or a career lawyer detailed from elsewhere in the Justice Department. She updated Tax Division policies, expedited criminal investigations, approved parallel criminal and civil enforcement actions, improved recruiting efforts, and created senior-level positions that allow highly skilled trial lawyers to secure promotions and pay raises.

Nathan J. Hochman, who replaced O’Connor in 2008, enhanced tax enforcement before leaving in January 2009. Since his departure, the office has been vacant almost 90% of the time.

President Barack Obama, toward the end of his first term, chose Kathryn Keneally as the Tax AAG. During her service from April 2012 to June 2014, the Tax Division implemented a successful initiative to stop Swiss banks from facilitating tax evasion.

Obama nominated another AAG candidate early in his first term and a third late in his second term, but neither received Senate confirmation. President Donald Trump never filled the job during his four-year term, although he nominated a prospective AAG who didn’t receive a Senate confirmation hearing.

President Joe Biden also left the position vacant for four years, but he didn’t put forward a nominee and placed the Tax Division in the hands of career officials. Unlike previous presidents, he didn’t designate a presidential appointee to lead in the AAG’s absence. The Tax Division now stands alone among the Justice Department’s major litigating components in lacking any non-career official to supervise career government lawyers.

Failing to fill the position held in 1936 by the esteemed Robert Jackson—who a few years later served as US Attorney General and then US Supreme Court Justice—signals the Tax Division’s declining prestige. In the absence of political leadership, there is no AAG to take responsibility for decisions about whether and how to enforce—or not to enforce—the tax laws.

The leadership vacuum echoes throughout the Tax Division. Its website proclaims that an “Assistant Attorney General who is appointed by the president and confirmed by the Senate runs the Tax Division. Four Deputy Assistant Attorneys General, one of whom is a career attorney, help to manage the Division.”

Nobody appointed by the president runs the Tax Division, and only one career deputy assistant attorney general helps to manage it. All other senior positions remain vacant, their duties performed by career civil servants.

There is no ready way to measure the impact of the political leadership vacuum on tax policy decisions and civil tax litigation. On the criminal side, annual federal tax prosecutions have plummeted since the last Senate-confirmed Tax Division leader left, falling 72% since 2013. Tax cases often are unpopular with US Attorney’s offices, and many prosecutors don’t prioritize them absent encouragement from Justice Department leaders who speak for the president.

The empirical decline in criminal tax cases is at least partly a result of the Tax AAG’s absence, as may be the anecdotal perception by many white-collar defense attorneys that some criminal tax grand jury investigations lack the usual justification—“articulable facts [to] support a reasonable belief that a target or subject is committing or has committed a tax crime”—and continue after it is clear that prosecution is unwarranted.

When high-profile tax cases garner national news, the leaderless Tax Division responds with deafening silence. After IRS whistleblowers accused the Tax Division of delaying the Hunter Biden investigation, only career lawyers took the blame. The Tax Division hasn’t adopted new priorities or spoken on tax policy issues since the Obama administration.

For more than a decade, there has been no AAG to hire Tax Division employees, approve their work, celebrate their achievements, or speak at their farewell parties. There has been no AAG to interact with the private tax bar, engage with the news media, revise policies, motivate US attorneys, coordinate with the IRS, or deliver congressional testimony. Those opportunities have been missed for all but 27 months since 2008.

Depriving the Tax Division of politically accountable leadership disadvantages its employees, private attorneys, and law-abiding taxpayers. The next administration and US Senate should make it a priority to bring the Tax Division AAG’s longstanding absence to an end.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Rod Rosenstein, partner at King & Spalding, was US Deputy Attorney General from 2017 to 2019. He previously was US Attorney for Maryland and Principal Deputy Assistant Attorney General in the Justice Department’s Tax Division.

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