WSJ Article Reporting Possible Political Changes to IRS CI (10/16/25)

Yesterday’s Wall Street Journal has an article about the Trump Administration’s alleged plan to weaponize IRS Criminal Investigation (“CI”). Brian Schwartz, Richard Rubin, and  Joel Schectman, Trump Team Plans IRS Overhaul to Enable Pursuit of Left-Leaning Groups (WSJ 10/15/25), here [which requires a subscription to read].

The article reports that Trump Administration is preparing to make “sweeping changes” at the IRS by installing “allies of President Trump” at CI “to exert firmer control over the unit and weaken the involvement of IRS lawyers in criminal investigations.” The changes reportedly are “being driven by Gary Shapley, an adviser to Treasury Secretary Scott Bessent.”

The article reports on efforts to have the IRS investigate and revoke tax-exempt status for organizations, such as Harvard University, that do not bend the knee to Trump.

As respects CI, the article reports.

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.

Shapley has previously complained about the IRS criminal-tax attorneys’ work with IRS-CI agents. Criminal-tax counsel “is not a respected organization within IRS-CI,” Shapley said in a 2023 congressional hearing about the Hunter Biden probe.

My editorial comment is that CI is a respected branch of the IRS, or at least was before the Trump Administration. Further, Shapley, Wikipedia here, and Joseph Ziegler contributed to any disrespect of CI by turning political to attack President Biden and the Republican Special Counsel investigating Hunter Biden.

Of course, this type of initiative would generate lots of work for private attorneys that have a criminal tax practice. I have done criminal tax work for years, but am now pretty much retired, although I continue to follow what is going on and write on criminal tax topics.

Stepping back from any personal interest I may have, this is really scary if the article is anywhere near accurate. The future credibility and effectiveness of CI to serve its mission of undergirding the tax system will be severely damaged.

I am reminded of the person who, I think, caused me to be hired at DOJ Tax Division, Johnnie M. Walters, who was then AAG Tax and thereafter continued his interest in my career. From 1971 through 1973, Walters served as Commissioner of Internal Revenue. The key event from his service as Commissioner is described in his Wikipedia page here:

Nixon appointed him [Walters] as Internal Revenue Commissioner, to replace Randolph W. Thrower, who had been fired for resisting attempts by the administration to order tax audits or obtain tax records on Nixon's political opponents. In 1972, three months after the Watergate break-in, Nixon's White House Counsel John Dean gave Walters a list of "enemies" and told him to order IRS investigations on them. Instead, Walters put the list in an envelope, sealed it, and locked in his safe, after obtaining permission to do nothing from his superior, Secretary of the Treasury George Shultz. Walters later commented, "By refusing to implement the request we preserved our tax system and also kept me out of jail." A few months later, after knowledge of the list became public, he turned the still-sealed envelope over to the executive director of the Congressional Joint Tax Committee.

If only we had now Presidential appointees and underlings with the integrity of Johnnie Walters. I hope Treasury Secretary Bessent will rise to this occasion (if the WSJ report is correct). Bessent did right in removing Shapley as Acting Commissioner of Internal Revenue after Shapley served just a few days. Hopefully, Bessent will also take a cue from Treasury Secretary Schulz and stymy this reported travesty.