The Internal Revenue Service (IRS) has undergone significant leadership upheaval. This follows earlier news that the widely-criticized Gary Shapley would be replaced as acting commissioner. This decision comes after a public outcry over a controversial Virginia data-sharing agreement with the Department of Homeland Security (DHS). It was a reaction, too, to the effective (and largely unchecked) advocacy of celebrities such as Elon Musk.
Ideally, Melanie Krause, who’d been serving as acting commissioner, before resigning. She resigned after criticisms related to a scandalous data-sharing agreement with DHS. This agreement allowed immigration authorities to submit names and addresses for verification against tax records, raising alarms about privacy and the potential misuse of sensitive information. Krause’s resignation led to broader questions about what these non-disclosure agreements mean for taxpayer rights and confidentiality.
Shapley’s assignment to the IRS had been approved by Treasury Secretary Scott Bessent, but he was completely unaware. Within months of his arrival, Shapley was swept into a long-simmering argument. According to news reports, Elon Musk personally intervened to have Shapley’s placement transferred. This decision put the IRS and the Treasury Department in a difficult position. Given these developments, Bessent agreed to meet with newly elected President Donald Trump to recommend Shapley’s surprising appointment. Trump was briefed on the issue but failed to act for months.
On a macro level, President Trump’s nomination of Billy Long to permanently helm the IRS should be sending alarm bells ringing. But Long has so far not had a confirmation hearing in the Senate, continuing the erratic uncertainty that has marked IRS leadership. At the same time, Michael Faulkender is set to be the next acting head of the IRS after Shapley’s replacement.
Ever since, the White House has largely buttoned up about the topic. They have not provided any further comment when prompted about the sudden leadership changes. Shapley’s replacement is the one that’s drawn all the heat. This interest increased significantly the past week after the New York Times first exposed the backdoor agreements that led to his appointment.
It’s an extraordinary and challenging time for the IRS. Stakeholders are eager to see the result of these changes on the agency’s day-to-day operations and its interaction with the American taxpayer and other government agencies. The ramifications of the data-sharing agreement and its impact on privacy rights continue to be a pressing concern for many.
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