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Blog Post | April 28, 2022

Who Is The IRS’ Chief Counsel? Under Biden, No One.

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Who Is The IRS’ Chief Counsel? Under Biden, No One.

The Internal Revenue Service (IRS) is charged with overseeing, implementing, and enforcing the U.S. tax code. Much has been written regarding the IRS’ gutting over the years. The agency has been systematically defunded, de-resourced, and attacked by political operatives for decades, at a grave cost to the basic functionality of our government, and to the benefit of only the richest Americans. These trends were only exacerbated under the Trump administration, which was hyper-focused on dismantling the tax system to benefit its corporate and billionaire cronies. Unfortunately, the Trump administration’s destructive influence remains pervasive throughout the IRS, with Trump’s Commissioner, Charles Rettig, still installed as the governing head of the agency while finishing a 5-year term (at the pleasure of the president) set to expire in 2022.

Rettig was, and remains, a close friend and ally of the Trump administration. A former Beverly Hills tax attorney, Rettig has built his name and net worth off of the defense of venture capitalists, heirs, and billionaires who routinely defraud the government out of billions in tax dollars. Further, he has ridiculed the idea of increased tax enforcement against his now-former clients, defended Trump against congressional investigation, and has stepped up audits against the poorest Americans. 

The Revolving Door Project has continuously argued throughout Biden’s first year in office that Trump-era officials have the ability to cause incredible harm if left in their positions of power. Rettig is no exception. He has continuously proven unwilling and unable to competently exercise the responsibilities of his office. These failures, misplaced priorities, and inefficiencies at the IRS jeopardize the financial safety and security of the country, as well as our national social safety net. Biden must no longer tolerate a saboteur at its helm. He should remove Rettig from his office without further delay. 

In Rettig’s place, Biden must appoint a progressive champion to implement and oversee his promised reforms to the American tax system. Of course, in order to build a competent, people-facing, and public-serving IRS, Biden must also fully staff the agency and prioritize the appointments within the department that have been left unfilled for well over a year. In particular, it is critical that Biden finally nominate a new Chief Counsel to the IRS, one who is aligned with his vision of a more equitable, effective, and sustainable tax system. 


The IRS’ Chief Counsel is, along with the Commissioner, the only Presidentially-appointed, and Senate-confirmed, position at the agency. While the Chief Counsel’s issuances and guidance are not binding, they provide the department with the legal backing and technical interpretations through which it approaches, implements, and enforces its policies and procedures. In short, the subtle yet significant power of the position in part lies in its interpretive authority. The memoranda issued by the Chief Counsel do not compel the agency to take a particular course of action, but they do carry significant institutional credibility. Having a friend and ally of the Biden White House (and its economic agenda) issuing such guidance has the potential to make problematic decisions from the agency’s current Commissioner harder to implement, and easier to pull from the shadows of tax law. 

Of course, having an energetic and effective official in the Chief Counsel’s office also carries with it many affirmative benefits. Such a person would be well-positioned to reestablish the rule of law at the IRS, and to unsettle its decades-long privileging of the extraordinarily wealthy over the interests of the public. Importantly, the IRS is already imbued with the power and authority to actualize a more equitable version of the tax code. Meaning, many positive changes can be won without additional coordination with Congress, and reorienting the IRS’ enforcement priorities is an issue on which many across the ideological spectrum are aligned. Data for Progress has found that the majority of likely voters (including 53% of Republicans) believe that billionaires should be paying more in taxes, and this offers an opportunity for action on which every wing of the Democratic party is wont and often willing to agree. Biden should take advantage of the opportunity such a ready coalition represents, on an issue that people care about, and do all that is in his power to innovate a better IRS.

The Chief Counsel’s office is critical to this effort through the potentials of its use and publication of Chief Counsel Advice papers to advocate for a fundamental reorientation of institutional goals from within it. Having an energetic, public interest-minded partner delivering insight into what the IRS could – and should – be doing, could also bolster advocates’ push for positive actions and their opposition against negative ones. 


While the IRS does not make tax laws, it has been delegated the authority to oversee and administer them, which includes significant interpretative work to determine the most effective way for the letter of the law to be implemented. Through its central role in that work, the Chief Counsel can illuminate the existent opportunities for more equitable policy innovations  in the complicated dimensions of the tax code, including as they relate to the IRS’ oversight responsibilities, rule guidance, and enforcement activities. 

First, the Chief Counsel can and should investigate how the agency might implement more stringent guidance over its administration of the Low-Income Housing Tax Credit (LIHTC). LIHTC is intended to incentivize housing developers to invest in affordable housing projects. The amount of credit awarded is attached to the estimated costs of any given project, but there exists limited oversight measures to determine that these estimates (and the subsequent project implementation) are accurate. This lack of oversight has made LIHTC extraordinarily vulnerable to abuse and manipulation. The Government Accountability Office (GAO) has previously suggested that the IRS, and specifically its Chief Counsel’s office, should “require general contractor cost certifications for LIHTC projects to verify consistency with the developer cost certification” to combat rampant abuse of the program. 

The Chief Counsel could also work to investigate what authorities it already possesses to increase its scrutiny of, and enforcement actions against, potential and actual private equity tax evasion schemes involving offshore tax havens. Private equity interests abuse these regulatory blind spots to allow their partners to dodge and defer taxes while their foreign investors evade them altogether. The IRS must invest time and interrogative resources into exploring its existing oversight authorities, and then use these authorities to emphatically enforce against such flagrant abuses of the tax code. This should involve enforcing the bounds of the infamous carried interest loophole, which “allows private equity barons to claim large parts of their compensation for services as investment gains, which [in turn] allows them to pay lower tax rates than middle class taxpayers pay on their wages and other compensation.” The carried interest rule, while generally a generous giveaway to the ultra-wealthy, does not apply to “U.S. investors in foreign corporations […] if the corporation has a U.S. owner.” As such, it must be a priority of any competent and capable IRS leadership to investigate and enforce against such abuses. 

A new, motivated, Chief Counsel could also provide clarity on, and work to pass finalized rules regarding, policies such as when private equity management fee waivers should be treated as income. Partners of private equity firms manipulate their income sheets (through a simple administrative but legally dubious reclassification of their income) to “radically [lower] their tax bills without reducing their income.” This issue has been on the docket for IRS policymakers since 2015, but has gone nowhere. A bold actor in the Chief Counsel’s office could motivate the finalization of this rule, and prevent the further abuse of the law’s gray area on this issue. 


Of course, having a particularly motivated visionary at the highest levels of the IRS could also force a change of priorities at the agency, and finally turn the tide of fraught enforcement standards that has led the IRS to disproportionately focus on enforcement actions against low-income earners. An effective leader at the IRS could demand that the institution focus its resources on the pursuit of systemic violations of the tax code, such as those carried out by the private equity industry, heirs, tech moguls, and the other super-rich actors who continue to scheme their way out of taxes with near impunity.

Very little tax revenue is lost each year thanks to low-level mistakes or omissions by people who qualify for the Earned Income Tax Credit (EITC). Yet, these investigations and enforcement actions make up the majority of the cases that the IRS currently pursues. To be clear, for an institution strapped for time and low on manpower, EITC audits represent an absurd waste of limited resources. Instead, a new Chief Counsel must work with the Commissioner, or hold them accountable, to develop a new plan to focus on corporations, private equity firms, and the monied elite at rates proportional to the degree of their thievery. Of course, again, this strategy is also extraordinarily popular across the ideological spectrum. Regardless of political affiliation, the DFP numbers prove that the majority of voters believe that the tax code, and current enforcement standards, are rigged, and that billionaires should pay their fair share of taxes. Ahead of what is sure to be a perilous midterm season, Biden should be doing everything he can to give voters what they want, and directing his IRS to prioritize its enforcement of the tax code against these individuals is one of the easiest ways he can do so.  

Donald Trump, unfortunately, understood the powers and authorities of the position, and made confirming an IRS Chief Counsel, presumably to help him evade congressional investigation into his taxes, a priority. Trump’s pick, Michael Desmond, was a political agent who made his career through defending California tax-evaders (and who later revolved to BigLaw firm Gibson Dunn) before becoming the IRS’ top legal counsel and the last person to have institutionally directed and guided the department’s policies and priorities. Biden should not wait any longer to set the office on a new path. He must quickly appoint a new Chief Counsel to helm this imperiled, and critically important, division.


Internal Revenue Service” by saturnism is marked with CC BY-SA 2.0.

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More articles by Toni Aguilar Rosenthal

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