Statement on Reports of IRS Overhaul to Target Ideological Opponents

Yesterday, The Wall Street Journal reported that the Trump administration is planning to overhaul the IRS to pursue criminal inquiries of the administration's ideological opponents. 

According to the Journal, senior Treasury and IRS officials — led by Gary Shapley, an adviser to Treasury Secretary and acting IRS Commissioner Scott Bessent — have already begun compiling a list of potential “targets” that includes major Democratic donors such as George Soros and other progressive groups. They will then look to revoke the tax-exempt status of these organizations.

The reported plan would weaken the role of career, non-partisan IRS lawyers in criminal investigations and install political allies inside the agency’s criminal-investigations division, giving the administration greater control over who gets investigated and how.

AAGC Spokesperson Caitlin Legacki released the following statement:

“This is no longer theoretical. The IRS is supposed to serve the American people — not the political whims of any president. Turning one of the most powerful enforcement agencies in the federal government into a political weapon against ideological opponents isn’t ‘reform’ — it’s a dramatic abuse of power in pursuit of retribution.

“The targeting of nonprofits, donors, and advocacy groups over their political views is an attack not just on those entities, but on every American who believes in the right to speak freely, organize peacefully, and challenge those in power.”

Read the full story from the Wall Street Journal below:

WSJ: Trump Team Plans IRS Overhaul to Enable Pursuit of Left-Leaning Groups

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.

Shapley and a Treasury Department spokesperson didn’t answer questions about changes to the IRS criminal unit, or desired targets. “I’m grateful to continue in my role in reforming the IRS,” Shapley said.

The Treasury spokesperson said Bessent’s team at the IRS is bringing “the best of America’s private sector practices and organization” to the agency. “The team’s focus remains collections, privacy, and customer service,” the spokesperson added.

Trump previously said on Truth Social that Soros and his son Alex should face federal charges under the RICO Act and added in a separate interview that the elder Soros “should be in jail” without offering specific reasons. A senior Justice Department official recently urged several U.S. attorneys offices to investigate Soros’s Open Society Foundations, The Wall Street Journal previously reported.

Open Society Foundations has denounced the Justice Department effort as an attempt to silence Trump’s critics.

Trump has ordered Bessent as the acting IRS commissioner to refer certain tax-exempt organizations to the Justice Department for further investigation. Bessent has also been directed to use the Treasury’s terrorism and financial-intelligence office to examine groups’ financial flows and try to trace any illicit funding streams.

The IRS has long tried to steer clear of political controversies, though not always successfully. During the Obama administration, an inspector general’s report concluded in 2013 that the IRS had used inappropriate criteria to select conservative groups for what proved to be lengthy, invasive scrutiny when seeking tax-exempt status. The Justice Department investigated the matter and declined to charge Lois Lerner, a former Internal Revenue Service official, concluding that IRS officials had exhibited poor judgment and management but hadn’t committed any crimes.

The IRS-CI is a formidable tool. It has more than 2,000 agents, investigates potential criminal violations of the tax code, and assists other agencies in combating financial crime. It is the part of the IRS where agents often carry firearms, and it is distinct from the auditors and collectors who handle civil tax enforcement.

Shapley was a longtime IRS-CI agent who clashed with supervisors and agency lawyers, particularly during his investigation of Hunter Biden, which he publicly alleged the Justice Department had slow-walked. Biden pleaded guilty to nine tax-related charges in 2024 before his father, former President Joe Biden, pardoned him.

Shapley briefly served as acting IRS commissioner this year before he was replaced after just three days of heading the agency, which has had a carousel of leaders in 2025. Despite that, Shapley has recently risen back into the inner circle of the agency’s leadership.

Trump’s allies zeroed in on using the IRS-CI after encountering obstacles in a separate effort to strip tax-exempt status from certain nonprofits, according to current and former officials.

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.

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.

In an interview with Andrew Kolvet on “The Charlie Kirk Show” on Tuesday, Bessent likened his agency’s efforts to the Treasury Department’s work targeting terrorism-financing networks after the 9/11 attacks.

Kirk, a conservative activist, was killed in a shooting in September, and Trump promised to crack down on the “radical left” after the shooting. Tyler Robinson, 22 years old, was charged with murder, and his mother told investigators that he had grown political and left-leaning over the past year. He hasn’t yet entered a plea, and authorities haven’t released any evidence that others were involved.

“We have started to compile lists of the other networks, and there’s a long record here,” Bessent said on the show. “This is mission-critical for us now…. We are operationalizing this here at Treasury. We are going to track down who is responsible for this.”