The notion of tax exceptionalism has faced several setbacks in recent years, as courts have suggested that tax law really isn't much different than other types of administrative practice. However, one way in which tax historically has remained different from other areas of law is the largely nonpolitical administrative function of its leaders.
Yes, politicians from both political parties seek favorable results for constituencies, either through statutory changes to the tax code or the submission of advocacy letters to Treasury and the IRS asking for particular administrative treatment of specific tax issues. Yet tax system administration overall is unaffected by the political hang-ups that so often burden other legal areas, such as criminal law, securities enforcement, and environmental regulation.
One possible exception is Treasury's Office of Tax Policy, which as part of the executive branch is involved in shaping White House budget proposals that require input on the tax framework. But while the White House is free to chart its own policy course and ask for administrative support from Treasury, the career makeup of the Office of Tax Policy imbues it with a "let's get it right" mentality that helps insulate it from frequent charges of political bias.
Of course, there have been isolated instances in which politicians have sought to use the nation's tax system to intimidate political opponents. Most people recall President Nixon's attempts to use the IRS to harass his political enemies. And a few charities have cried foul over the denial or revocation of their tax-exempt status after disagreeing with the administration. But no average taxpayer would perceive that the IRS administers the tax code differently based on the political beliefs of the commissioner holding office.
In another arena, the Justice Department's assistant attorney general for the Tax Division oversees tax litigation nationwide in most federal courts. Other than the occasional claim that a taxpayer is the subject of politically motivated litigation, enforcing the tax code through legal action does not -- and should not -- require judgment on whether the alleged tax noncompliance fits within a political agenda. Certainly, litigation strategy must be based on enforcement effects and available resources, but it is not based on the political views of the officeholder.
There is a strong case for advocating that the substantive nature of tax makes it different from other administrative areas in the realm of political nominations. Data tracking the nomination process of top government tax officials over the past 30 years show that with rare exceptions, lawmakers have treated tax positions as noncontroversial and have acted carefully to see that government functions overseeing tax administration have skilled individuals leading them without politics playing a primary role. (See table on the following page.)
Averaging less than 100 days, the confirmation process for all categories of tax nominees historically have been speedy. However, the calculations exclude the nomination of Michael Mundaca as Treasury assistant secretary for tax policy and Mary L. Smith as assistant attorney general at the DOJ Tax Division because they represent sharp departures from the normal process. And it is exactly because those nominations languished that makes scrutiny of the process necessary.
What Treasury tax nominee today could dream of an eight-day process, from nomination to confirmation, like Fred T. Goldberg Jr. had in 1992? Such widespread cooperation among our elected officials today is nonexistent, despite the pressing need to ensure optimal operations of our revenue-collecting functions.
Congressional inaction on the nomination of Smith to head the DOJ Tax Division is easily explained by her lack of tax experience. That experience is essential for a role overseeing an integral component of tax system administration, yet the administration was adamant for some time about seeing the nomination through. Smith's nomination was openly opposed by Senate Republicans and was met with silence from the tax bar. That stands in contrast to the current DOJ Tax Division nominee, Kathryn Keneally, a partner with Fulbright & Jaworski LLP in New York. Keneally received a letter of support from nearly every prior officeholder in every administration since Kennedy's. (For the letter, see Doc 2012-1519 or 2012 TNT 17-33. For prior coverage, see Tax Notes, Jan. 30, 2012, p. 522, Doc 2012-1532, or 2012 TNT 17-5.)
Some observers accuse Senate Republicans of retaliating against President Obama's recess appointments by putting an effective hold on all future executive nominations, but the Senate has generally dithered on confirming nominees who have been approved by committee. It is also fair to assign the Obama administration some blame for its laissez-faire attitude regarding the fate of its tax nominees. The White House surprised many when it gave a recess appointment to Mundaca. But the view among the tax bar is that the administration is expending little effort overall to get tax nominees confirmed.
Tax Nominations, 1981-2012
Nominee Nominated Jurisdiction Hearing Date
Treasury Assistant Secretary for Tax Policy
Chapoton, John E. (Buck) 2/12/1981 Finance 3/5/1981
Pearlman, Ronald Alan 12/11/1984 Finance 1/29/1985
Mentz, J. Roger 3/25/1986 Finance 4/9/1986
Chapoton, O. Donaldson 9/19/1987 Finance 9/30/1987
Gideon, Kenneth W. 3/22/1989 Finance 6/7/1989
Goldberg, Fred T., Jr. 1/24/1992 Finance 1/30/1992
Samuels, Leslie B. 2/19/1993 Finance 4/26/1993
Lubick, Donald C.a 10/10/1997 Finance 1/28/1998
Talisman, Jonathan 7/25/2000 Finance 7/26/2000
Weinberger, Mark 2/5/2001 Finance 2/28/2001
Olson, Pamela 7/17/2002 Finance 8/1/2002
Solomon, Eric 5/9/2006 Finance 7/13/2006
Mundaca, Michaelb 9/16/2009 Finance 11/4/2009
Mazur, Mark J. 11/14/2011 Finance pending
Egger, Roscoe L. 1/24/1981 Finance 3/5/1981
Gibbs, Lawrence B. 6/2/1986 Finance 6/19/1986
Goldberg, Fred T., Jr. 5/25/1989 Finance 6/22/1989
Peterson, Shirley D. 1/25/1992 Finance 1/30/1992
Richardson, Margaret Milner 2/23/1993 Finance 5/6/1993
Rossotti, Charles O. 7/31/1997 Finance 10/23/1997
Everson, Mark 1/13/2003 Finance 3/18/2003
Shulman, Douglas 11/21/2007 Finance 1/29/2008
IRS Chief Counsel
Gideon, Kenneth W. 5/5/1981 Finance 7/29/1981
Goldberg, Fred T., Jr. 2/10/1984 Finance 3/12/1984
Nelson, William F. 7/11/1986 Finance 7/22/1986
Shashy, Abraham N.M., Jr. 11/1/1989 Finance 1/25/1990
Brown, Stuart L. 7/1/1994 Finance 9/14/1994
Williams, B. John, Jr.c 7/3/2001 Finance 11/15/2001
Korb, Donald 12/9/2003 Finance 3/8/2004
Wilkins, William 4/17/2009 Finance 7/14/2009
Assistant Attorney General, DOJ Tax Division
Archer, Glenn L., Jr. 11/5/1981 Judiciary 12/11/1981
Olsen, Roger M. 3/26/1986 Judiciary 4/23/1986
Rose, William S., Jr. 9/29/1987 Judiciary 11/17/1987
Peterson, Shirley D. 3/23/1989 Judiciary 5/11/1989
Argrett, Loretta Collins 10/27/1993 Judiciary 11/18/1993
O'Connor, Eileen J. 4/5/2001 Judiciary 7/11/2001
Hochman, Nathan J. 11/15/2007 Judiciary 12/18/2007
Smith, Mary L.d 4/8/2009 Judiciary 5/12/2009
Keneally, Kathryn 9/7/2011 Judiciary 12/8/2011
Confirmation Date Length (days)
Treasury Assistant Secretary for Tax Policy
Chapoton, John E. (Buck) 3/10/1981 27
Pearlman, Ronald Alan 1/31/1985 52
Mentz, J. Roger 4/11/1986 18
Chapoton, O. Donaldson 10/1/1987 13
Gideon, Kenneth W. 6/8/1989 79
Goldberg, Fred T., Jr. 1/31/1992 8
Samuels, Leslie B. 5/18/1993 89
Lubick, Donald C.a 2/12/1998 125
Talisman, Jonathan 12/15/2000 142
Weinberger, Mark 3/1/2001 25
Olson, Pamela 9/5/2002 51
Solomon, Eric 12/9/2006 214
Mundaca, Michaelb 3/30/2010 196 (682)
Mazur, Mark J.
Average length: 70.25e
Egger, Roscoe L.
Gibbs, Lawrence B. 3/10/1981 46
Goldberg, Fred T., Jr. 7/23/1986 52
Peterson, Shirley D. 6/23/1989 30
Richardson, Margaret Milner 1/31/1992 7
Rossotti, Charles O. 5/11/1993 78
Everson, Mark 11/3/1997 96
Shulman, Douglas 5/1/2003 109
Average length: 66.5
IRS Chief Counsel
Gideon, Kenneth W.
Goldberg, Fred T., Jr. 7/30/1981 87
Nelson, William F. 3/15/1984 35
Shashy, Abraham N.M., Jr. 7/23/1986 13
Brown, Stuart L. 1/30/1990 91
Williams, B. John, Jr.c 10/4/1994 96
Korb, Donald 1/25/2002 207
Wilkins, William 4/8/2004 122
Average length: 93.75
Assistant Attorney General, DOJ Tax Division
Archer, Glenn L., Jr. 12/17/1981 43
Olsen, Roger M. 5/8/1986 44
Rose, William S., Jr. 12/8/1987 71
Peterson, Shirley D. 5/18/1989 57
Argrett, Loretta Collins 11/20/1993 25
O'Connor, Eileen J. 7/20/2001 107
Hochman, Nathan J. 12/19/2007 35
Smith, Mary L.d withdrawn 485
Keneally, Kathryn pending
Average length: 54.57f
FOOTNOTES TO TABLE
a Second appointment for Lubick (previously served as Treasury
assistant secretary from 1978 to 1981).
b Mundaca was given a recess appointment by Obama in March 2010
and was renominated on April 21, 2010. The renomination was returned to Obama
on December 12, 2010. Mundaca was nominated a third time on January 26, 2011,
but withdrew on July 29, 2011. The nomination length here refers to the time
elapsed between the date of nomination and date of appointment; the number in
parentheses is the length between the original nomination and notice of
c Williams's first nomination was returned to President George
H.W. Bush on August 3, 2001.
d Smith's original nomination was returned to the White House on
December 24, 2009, and she was renominated January 20, 2010. Her second
committee hearing was February 24, 2010, but the nomination was returned again
on August 5, 2010, and the White House declined to renominate her.
e Average does not include Mundaca.
f Average does not include Smith.
END OF FOOTNOTES TO TABLE
If the position of IRS commissioner were left open or held by a non-confirmed individual for the same length of time as Treasury assistant secretary for tax policy or assistant attorney general at the DOJ Tax Division, there would be strong objections from all quarters. Everyone knows the IRS plays an integral role in collecting tax, and no one wants to be blamed for leaving the agency without a confirmed leader. Unfortunately, that same rationale doesn't seem to apply to the top tax positions at Treasury or the DOJ Tax Division. Yet those positions also play critical roles in shaping tax administration.
Some believe the White House is talking tough on tax policy but failing to follow through when it counts. Leaving aside actual disagreements over tax policy issues, it should be undisputed that individuals with the requisite tax experience must be entrusted with the duties of their nominated roles. Tax lawyers' disagreements over tax policy nuances might betray personal political preferences, but the profession is nearly unanimous in the belief that sound tax administration does not involve partisan political considerations.
Regardless of what the tax code will look like in the future, the responsibility now is to ensure that it is properly administered and enforced. That requires officials in top leadership positions to capably lead. Even the best and ablest leaders are stymied when their authority is limited by functional constraints such as the effects of being in an acting or non-confirmed leadership position.
Taxes are the nation's lifeblood, because they are the fundamental source of the revenue that provides for most of the federal government's activities. That alone should spur both the administration and the Senate to work quickly and efficiently to see that nominees for tax leadership positions are vetted and confirmed. The Senate must act on the administration's tax nominations, and the administration should use more of its influence to ensure that its tax nominees are confirmed.
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