Kenneth Kies, who served as Assistant Treasury Secretary for Tax Policy and acting chief counsel of the IRS, is reportedly being ousted from his position. This departure follows behind-the-scenes clashes with White House officials, during which Kies contended that a potential White House request would violate Section 7217 of the Internal Revenue Code. This law explicitly prohibits the President, Vice President, White House staff, and certain agency heads from directly or indirectly requesting that the IRS conduct or terminate an audit or investigation of any particular taxpayer. While the specific requests Kies objected to were not detailed, his exit is expected in the coming weeks.
The context of these clashes appears to be related to President Donald Trump's prior lawsuit against the IRS and Treasury, seeking aggregated damages of $10 billion. Trump had alleged that the agency wrongly targeted him, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization. The lawsuit was dropped in January in exchange for a proposed $1.776 billion "anti-weaponization fund" from the Treasury Department, intended to compensate political allies, including those potentially involved in the Capitol riot. This plan has since been tabled due to bipartisan pressure.
A federal judge recently ruled that a related "tax amnesty order" signed by Acting Attorney General Blanche, which purported to exempt President Trump, his family, and businesses from IRS audits or investigations for matters prior to May 19, 2026, directly contravenes 26 U.S.C. §7217. This order was described as "illegal and corrupt" by Senators Elizabeth Warren and Ron Wyden, who pressed Treasury and the IRS to cease its implementation. The judge further stated that acquiescing to such a demand would be "wholly incompatible" with the duties of DOJ attorneys and the IRS CEO, raising constitutional concerns.
Kies's dual roles gave him the final say on tax regulations and guidance, making his departure impactful for the implementation of the landmark 2025 tax law. His exit could slow down regulatory projects with complex policy decisions. The situation highlights ongoing tensions surrounding the independence of the IRS and the enforcement of laws designed to prevent political interference in tax matters, particularly concerning high-profile figures and the presidential office.
