Dems demand probe of Trump plan to use IRS against political foes

Democrats on the House Ways and Means Committee are asking the Treasury Inspector General for Tax Administration to investigate a recent report that the Trump administration plans to use the Internal Revenue Service to investigate prominent Democrats as well as left-leaning tax-exempt nonprofits, while three prominent Senate Democrats have written a letter of their own to IRS officials. 

According to the Wall Street Journal, the Trump administration is making plans to install Gary Shapley as head of the IRS Criminal Investigation unit and probe prominent Democratic party contributors such as billionaire philanthropist George Soros and his Open Society Foundations, along with other Democratic donors and organizations. 

Shapley was an IRS CI special agent and whistleblower who had complained during the Biden administration about preferential treatment during the tax probe of Hunter Biden, and testified before Congress about the investigation. Under the Trump administration, he was named special advisor to Treasury Secretary Scott Bessent in March and was briefly appointed acting IRS commissioner in April before he was replaced only a few days later amid a power struggle between Bessent and Elon Musk, who was in charge of the U.S. DOGE Service. Earlier this month, Shapley reached a legal settlement with the IRS and the Justice Department, along with fellow whistleblower Joseph Ziegler. 

The group of House Democrats on the tax-writing committee wrote a letter earlier this month to TIGTA's acting inspector general, Heather Hill, requesting an "immediate investigation into this alarming report that the president is directing the IRS to open criminal investigations into Democratic donors and 'left-leaning' nonprofit organizations."

"This report is reminiscent of President Nixon when he directed the IRS to audit and harass his 'political enemies," they wrote. "To guard against this type of political interference, Congress enacted Section 7217 of the Internal Revenue Code. Section 7217 prohibits the president, the vice president, any employee of the executive office of the president, and any employee of the executive office of the vice president from requesting, directly or indirectly, any officer or employee of the IRS to conduct an audit or other investigation of any particular taxpayer. A violation of Section 7217 carries a criminal punishment of up to five years' imprisonment and/or a $5,000 fine."

They referred to earlier investigations during the Tea Party targeting scandal in 2013, when Republicans accused IRS officials of singling out conservative groups seeking tax-exempt status for extra scrutiny before the 2012 election.

"It is well established that the IRS must do its work impartially and without political bias," they added. "The committee investigated this issue in the past and all committee members were in full agreement that taxpayers should not be targeted based on their political beliefs. As our Republican colleagues have routinely stated, the IRS should never be weaponized against the American people or used to target individuals based on their political beliefs." 

They also wrote a letter to the Republican chair of the Ways and Means Committee, Rep. Jason Smith, R- Missouri, asking him to immediately call a special meeting of the committee and invite Bessent, who is acting commissioner of the IRS as well as secretary of the Treasury, to "discuss agency operations amid alarming reports regarding employee furloughs and the administration's reported plans to target taxpayers based on political beliefs."

Three Senate Democrats, including Senate Finance Committee ranking member Ron Wyden, D-Oregon, Senate Democratic leader Chuck Schumer, D-New York, and Elizabeth Warren, D-Massachusetts, are also demanding information from the IRS and the Treasury, sending a letter to Bessent and Shapley.

"Any effort to weaponize the IRS against President Trump's perceived enemies is against the law, an abuse of power, and a threat to the integrity of our democratic institutions," they wrote. "IRS-CI cannot be the president's political attack dog. You must immediately end all attempts to politicize the agency, including attempts to use the agency to attack Americans with different political views." 

David Klasing, a tax attorney and CPA who specializes in criminal tax defense, has been hearing concerns from IRS employees and taxpayers who are worried about the potential probes.

"I've been dealing with the IRS for almost 30 years now, and if you ask an IRS agent their political opinion on anything, most of the time, they're going to clam up and they're not going to give you an opinion because they strive very hard to be apolitical in what they do," he told Accounting Today. "I think there will be attempts to do that, but I think the culture will be resistant."

However, he sees that changing with the widespread cutbacks in IRS staffing this year from DOGE and the government shutdown. 

"Anybody who's taking a job with the IRS after this bloodletting, the rumors I'm hearing is they're basically taking an oath of loyalty to Donald Trump, and they need to be flying the flags of a Republican and not a Democrat to get hired," said Klassing. "That's what I think is going on."

He admitted he doesn't have evidence of this, but he has heard concerns from taxpayers who are worried about being targeted. 

"I get people calling me all the time that are convinced they've got criminal tax exposure, and they quit sleeping at night, and they're getting ulcers," he said.