By Jacob Bogage
WASHINGTON, July 17 (Reuters) – The U.S. tax agency’s top attorney was forced from his role in recent days after refusing White House demands to participate in tax audits, according to three people familiar with the matter.
Ken Kies, the Internal Revenue Service’s acting chief counsel and Treasury Department assistant secretary for tax policy, told administration officials their requests would violate a law prohibiting the president, vice president and other White House officials from ordering the IRS to “conduct or terminate an audit or other investigation of any particular taxpayer,” said the people. They spoke on the condition of anonymity for fear of professional reprisals.
That law is part of the protections that insulate the tax system from political tinkering, and tax officials consider it the primary safeguard against weaponization of the tax code.
Kies, the people said, also clashed with administration officials over his department’s stance on high-value tax issues, including tax breaks for landowners who agree to restrict development on their property.
Two administration officials, speaking on the condition of anonymity, said concerns about Kies’ temperament led to his dismissal. One of the people questioned his work ethic and computer literacy.
Kies declined to comment on Friday. Representatives from the Treasury Department did not immediately respond to requests for comment.
KIES EXPECTED TO LEAVE IN AUGUST
Bloomberg first reported Kies’ departure and the Wall Street Journal first reported on the tension between Kies and the administration that resulted in his exit.
He will likely leave the administration in mid-August, two of the people said.
Kies worked as President Donald Trump’s tax lawyer before joining the administration. He had said he recused himself from matters surrounding Trump’s taxes.
The IRS chief counsel leads a department that interprets tax laws, drafts official regulations and represents the agency in court.
Kies’ team, the people said, frequently refused work related to a settlement struck by the Justice Department to grant Trump, his family and businesses broad immunity from tax scrutiny.
A federal judge struck down that deal this week and a related $1.8 billion settlement fund for supposed victims of “government weaponization,” holding that Trump and the Justice Department engaged in a mock legal battle to legitimize the improper agreement.
Trump recently nominated another tax attorney – Jim Gadwood, from a firm that also represented Trump on tax matters – to take Kies’ place as the IRS’s top lawyer, but Kies had been expected to remain at the Treasury Department.
Kies played a crucial role in implementing Trump’s agenda. Republicans have routed much of their economic portfolio through the tax code. Kies’ team was busy drafting guidance to implement regulations eliminating certain taxes on tips and overtime wages, and corporate incentives around energy production.
(Reporting by Jacob Bogage; Editing by Colleen Jenkins and Rod Nickel)
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