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March 6, 2012
The New Politics of Tax Nominations

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By Jeremiah Coder --

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

                                 Date           of
 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

 IRS Commissioner

 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

                               [table continued]

                                                               Total Nomination
                                      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

 IRS Commissioner

 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
                                          3/13/2008                    114

                                                      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
                                          7/24/2009                     99

                                                     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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