Senate Democrats probe political interference in IRS tax audits

A group of Senate Democrats is asking the acting Treasury Inspector General for Tax Administration to open an investigation into whether the Trump administration is violating federal laws prohibiting political influence over tax audits.

The letter, sent Tuesday by Senate Majority Leader Chuck Schumer, D-New York, Senate Finance Committee ranking member Ron Wyden, D-Oregon, and 11 other members of the Finance Committee to acting inspector general Heather Hill, comes amid press reports that Kenneth Kies, acting chief counsel at the IRS and assistant Treasury secretary for tax policy, clashed with administration officials after refusing White House demands to participate in tax audits and was forced out of his job. Kies was expected to remain in his role until August, but he reportedly cleaned out his office on Tuesday. 

Such actions could impact tax professionals who might well be concerned about the potential for their clients to be audited for political reasons.

"We write to request an investigation into alarming reports about White House officials potentially violating a federal law prohibiting senior officials from influencing federal tax audits, including reports that a top official serving the Treasury Department and Internal Revenue Service (IRS) was forced out of the administration after raising concerns about those potential violations," the senators wrote. "If recent reporting is accurate and Mr. Kies did in fact advise White House officials of such risks, it is gravely concerning that this administration chose not only to ignore the IRS' top legal advisor, but to fire him for attempting to follow the law and protect taxpayers."

Kies reportedly informed administration officials that the White House request would violate Section 7217 of the Internal Revenue Code, which prohibits senior administration officials from requesting, directly or indirectly, that the IRS "conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer."

The senators noted that IRS personnel who willfully fail to report such requests are subject to the same penalties as officials who make such requests, up to a $5,000 fine and up to five years in prison. They pointed out that as an acting IRS official, he had an obligation to report such a request to TIGTA. Congress enacted that provision of the Tax Code in the 1990s, amid reports that President Richard Nixon had demanded IRS audits of his political enemies in the 1970s, while discouraging audits of his allies.

The senators asked TIGTA to find out who in the Trump administration initiated contact with an IRS officer or employee, including Kies and any other Treasury official performing IRS duties, including the president or vice president or any of their employees. They also want to know whether Kies' departure from the Treasury and the IRS is voluntary, whether any audits were opened or closed after communication with him, and what was the justification for his removal.