WASHINGTON, D.C. — The Wall Street Journal revealed in new reporting last night that the Trump administration is planning to overhaul IRS rules “to enable pursuit of left-leaning groups.” This comes as the federal government shutdown enters its third week and as many Americans face looming health insurance premium spikes of up to 600%.
In response, the Congressional Integrity Project released the following statement:
“President Trump’s revenge tour never takes a day off – even as Americans face soaring health insurance premiums and a federal government shutdown entering its second week.
“Instead of focusing on lowering costs for American families, the President is spending his time trying to rig IRS rules so he can go after progressive groups over baseless allegations that only his most fervent online supporters take seriously.
“The President may be afraid of free speech, but the American people continue to loudly object to his economic mismanagement. Rather than silence millions of ordinary folks, the President should listen to what they’re saying: it’s time to change course.”
Excerpts from the Wall Street Journal story published last night:
The Trump administration is preparing sweeping changes at the Internal Revenue Service that would allow the agency to pursue criminal inquiries of left-leaning groups more easily, according to people familiar with the matter.
A senior IRS official involved in the effort has drawn up a list of potential targets that includes major Democratic donors, some of the people said.
The undertaking aims to install allies of President Trump at the IRS criminal-investigative division, or IRS-CI, to exert firmer control over the unit and weaken the involvement of IRS lawyers in criminal investigations, officials said. The proposed changes could open the door to politically motivated probes and are being driven by Gary Shapley, an adviser to Treasury Secretary Scott Bessent.
Shapley has told people that he is going to replace Guy Ficco, the chief of the investigative unit, who has been at the agency for decades, and that Shapley has been putting together a list of donors and groups he believes IRS investigators should look at. Among those on the list are the billionaire Democratic donor George Soros and his affiliated groups, according to a senior IRS official and another person briefed on the list. It couldn’t be determined upon what grounds Shapley would seek to begin such an investigation.
The effort within the IRS coincides with a larger administration effort to probe left-leaning groups for helping to finance organizations that the president says are creating anarchy in Democratic-led cities. Trump has directed Bessent, who is also acting IRS commissioner, to identify financial networks that the president says are fomenting political violence. Democrats say the effort is politically motivated and not based on real evidence.
“Scott will do that. That’s easy for Scott,” Trump said during a recent cabinet meeting about Bessent’s helping with the investigation.
[…]
For months, Trump administration officials have been trying to find a way to alter the rules to revoke tax-exempt status more easily after the president said Harvard University, a nonprofit that is battling the White House, should lose its status.
The administration officials sought to use the “illegality doctrine,” a rule that causes nonprofits to forfeit their status if they break the law. For example, administration officials at the IRS argued that campuses roiled by pro-Palestine protests should lose their status, arguing that allowing such demonstrations was a form of support for terrorism.
IRS lawyers have stymied those efforts by arguing that the law clearly dictates that the IRS would need to be able to produce a lengthy record of an investigation, which could last years.
Shapley and those close to him are also proposing changes to the rules on how IRS criminal probes are conducted, according to people familiar with the matter. Attorneys from the IRS chief counsel’s office typically work with IRS-CI agents as they move through investigations, particularly for steps such as search warrants and bringing a case to the Justice Department for potential prosecutions. The Internal Revenue Manual, the agency’s procedure handbook, spells out the involvement of chief-counsel lawyers and the CI chief in criminal cases. It includes extra steps for sensitive cases, such as those involving federal elected officials and tax-exempt groups.
Shapley wants to change the manual so that the chief-counsel lawyers have less of a role, these people explained.
Some senior IRS criminal tax attorneys are already voicing concern about the methods of investigators while Trump encourages his administration to target donors and nonprofit groups, according to people familiar with the matter. Some of the criminal tax attorneys have privately argued against moving ahead with at least one case, with the argument it is vindictive prosecution and seems politically motivated.
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