Top Treasury Tax Official Forced Out After Warning the White House It Risked Breaking the Law on IRS Audits

WASHINGTON — The Treasury Department's top tax-policy official has been forced out after warning the White House that a request under discussion would violate a federal law meant to shield the Internal Revenue Service from political interference, according to people familiar with the matter.

Kenneth Kies, an assistant Treasury secretary who was also serving as the IRS's acting chief counsel, is expected to leave the administration in mid-August. His departure follows a recent meeting in which Kies argued that a potential White House request would run afoul of Section 7217 of the Internal Revenue Code, the statute that prohibits the president, vice president, White House staff and certain agency heads from asking the IRS to conduct or terminate an audit or investigation of any specific taxpayer.

That provision has long been treated as a primary firewall against weaponization of the tax system, part of a set of post-Watergate protections designed to keep audits insulated from political pressure. By raising it, Kies placed himself between the administration and a course of action his colleagues say he believed crossed a legal line.

Kies is no stranger to the president's orbit. He previously served as Trump's personal tax lawyer before joining the administration, and has said he recused himself from any matters touching the president's own taxes. His willingness to invoke the audit-protection law against the very White House he serves underscores how sensitive the dispute had become.

His exit lands at a fraught moment for the IRS, which has cycled through a series of leaders during Trump's second term and is racing to implement sweeping changes to the tax code enacted by congressional Republicans. Tax specialists warned that losing the department's most senior technical hand in the middle of that rollout could slow guidance that businesses and taxpayers are waiting on. “Particularly at this juncture, that kind of institutional knowledge is very hard to replace,” one former Treasury official noted of the timing.

The Treasury Department did not detail the specific request Kies flagged, and the White House has not publicly addressed his account. But the episode has revived long-running concerns among tax lawyers and former officials about the durability of the legal barriers separating the IRS from the political appointees who now oversee it — barriers that, by design, are supposed to hold regardless of who occupies the White House.

Kies's exit is the latest in a wave of turnover that has left the IRS without stable leadership through much of Trump's second term, with the agency churning through a succession of commissioners and acting chiefs. Tax-policy veterans say that instability is especially risky now, as the agency writes reams of regulations to carry out the Republican tax law and fields questions from businesses trying to comply. Section 7217, the statute at the heart of the dispute, was enacted precisely to prevent the kind of political direction of individual audits that fueled scandals in earlier eras, and former officials note that its protections mean little if the senior lawyers willing to enforce them are shown the door.