Earlier this week we wrote about the Senate’s confirmation of Mary Smith to head up the Tax Division of the Department of Justice:
The paucity of Ms. Smith’s tax qualifications sticks out like a sore thumb.
Many others have been highly critical of the nomination.
The DOJ has responded in defense of Ms. Smith:
“It is true that she is not a traditional tax lawyer or a tax specialist,” the department’s statement reads in part. “However, Smith has extensive experience in financial litigation, both for and against the government.”
The statement continues: “The Tax Division is not a policymaking entity — it enforces the federal tax laws and defends the United States when it is sued by taxpayers seeking refunds for taxes that have been paid. For this reason, the Assistant Attorney General for the Tax Division needs first and foremost to be a person with significant litigation experience, preferably experience in tax, corporate or financial litigation.” (Emphasis added)
Sounds compelling, right?
Not so fast, Kowalski.
DOJ’s Own Description of its Mission Includes Policymaking
Here is the mission statement of the tax division of the DOJ:
The Tax Division’s mission is to enforce the nation’s tax laws fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system, and promote the sound development of the law. (Emphasis added)
Here is what the Tax Division itself says it’s lawyers do:
By litigating these cases, our lawyers play an essential role in developing federal tax law and in assuring the American public that everyone pays the tax they owe in accordance with the law. (Emphasis added)
If the lawyers Ms. Smith will be called upon to supervise play “an essential role in developing federal tax law” how is it that the tax division itself is “not a policymaking entity?” And how is it that an essential qualification of the job is not a thorough grounding in substantive tax law?
Now listen to what the Tax Division says it does under it’s What We Do web page:
The Tax Division represents the United States and its officers in most civil and criminal litigation that concerns or relates to the internal revenue laws. Tax Division attorneys seek to secure correct, uniform and fair interpretations of the internal revenue laws in federal district and appellate courts and to ensure that uniform standards are applied in criminal tax prosecutions.
Tax Division attorneys work closely with the Internal Revenue Service and United States Attorneys’ Offices to develop tax administration policies; handle civil trial and appellate litigation in federal and state courts; pursue federal grand jury investigations; and handle criminal prosecutions and appeals. (Emphasis added.)
Is it possible to “secure correct, uniform and fair interpretations of the internal revenue laws” without knowing them?
Former Tax Division Heads Had Strong Tax Backgrounds
If the White House and the DOJ truly believe that a solid background in substantive tax law is not a prerequisite for running the Tax Division, how come those who have formerly held the position have had such experience in spades?
Here are the last 2 DOJ tax division heads and a brief summary of their tax qualifications:
Eileen O’Connor - Prior to becoming DOJ head, O’Connor was a corporate tax law specialist with the national office of the IRS. For more than 20 years, O’Connor, who is also a certified public accountant, was a national tax consultant with several national accounting firms. She has taught in the graduate tax law program of Georgetown University School of Law, and was also an adjunct professor at the George Mason University School of Law.
Nathan Hochman - Hochman, whom Attorney General Michael Mukasey described as having “a superb record as an accomplished federal prosecutor and a recognized authority on tax law,” was nominated by President Bush in November and confirmed by the full U.S. Senate on December 19, 2007.
(In fairness, it should be noted that Mr. Hochman wrote a letter to the Senate Judiciary Committee in support of Ms. Smith’s confirmation.)
To be sure, Ms. O’Connor and Mr. Hochman weren’t supremely qualified. Neither possessed those twin pillars of sound tax lawyering: Native Americanism and woman-owned law firm founding.
Withdraw the Nomination Mr. President
It couldn’t be more clear.
The Tax Division of the Department of Justice is, in fact, a tax policy making arm of the United States Government and for the White House, in a desperate attempt to bolster support for it’s thinly qualified nominee, to suggest otherwise is simply dishonest.
Do the right thing, Mr. President.
Withdraw the nomination of Mary Smith and submit a nominee who, like all other nominees before her, has a strong and long background in tax law.
If we are serious about closing the tax gap, can we afford to have the head of the DOJ’s Tax Division learning tax law on the job?
I don’t think so.
11 responses so far ↓
1 Steven M. Harris // Jun 19, 2009 at 4:39 pm
Did you mean “baloney?” Whichever, you are 100% correct.
2 Peter // Jun 19, 2009 at 10:16 pm
Steven,
I meant bologna – - – fancy baloney.
From Wikipedia: Bologna can alternatively be made out of chicken, turkey, beef, or pork. It is commonly called bologna and often pronounced and/or spelled baloney.
3 Abe Carnow // Jun 21, 2009 at 12:17 pm
Thank you for your courageous blog. Thanks for telling the truth. I am a CPA who teaches nationwide continuing professional education in taxation, so I know something about our field. I am not qualified to judge our President’s appointments in other fields, but in taxation, which I know a bit about, I see that our President’s nominations are unqualified. Makes me wonder about the rest of his appointments. Are they equally “qualified”? Yikes!
Abe
4 just another tax lawyer // Jun 21, 2009 at 8:46 pm
Do you guys have short term memory problems or what-?! Lee O’Connor was a lightweight for that job when she started and there was little to no improvement for her entire tenure. If she knew tax law, it was a well kept secret- and don’t get me started on her lack of litigation experience. I’m not crazy about the Smith appointment either but don’t justify your rant by holding Lee O’Connor up as the benchmark!
5 Peter // Jun 21, 2009 at 9:50 pm
Abe,
Thanks for your kind comments.
I think the appointment of Ms. Smith is more about cowtowing to special interest identity groups than it is about finding the best candidate for the job.
But Obama isn’t the only one who plays that game.
Like Tip O’Neil said, “politics ain’t bean bag.”
6 Peter // Jun 21, 2009 at 9:52 pm
Just another tax lawyer,
Eileen O’Connor had substantial tax experience, that is readily apparent and it is why I mentioned her.
She may have been a horrible Tax Division leader for all I know, but that is not the point.
The position requires knowledge of substantive tax law and Mary Smith doesn’t have that knowledge.
7 Peter // Jun 21, 2009 at 9:54 pm
By the way, my post is an argument, not a rant.
Rants lack facts, arguments do not.
8 WD Kebchull // Jun 21, 2009 at 11:19 pm
Some have argued that the Tax Division at the Justice Department has a role in Tax Policy.
Now here is what the opponents to the appointment of Mary Smith to head the Tax Division at the Justice Department running scared:
“She had previously received a B.S., magna cum laude, in mathematics and computer science from Loyola University of Chicago”.
Having Mary Smith head the Tax Division at the Justice Department would be like having Harry Markopolos (B.S. Loyola College in Baltimore), the Madoff Ponzi Scheme whistleblower, working at the SEC. In his 60 Minutes interview Markopolos indicated that he had taken intergral and differential calculus, linear algebra, and normal and non-normal statistics.
Unlike prior assistant attorneys general that have headed the Tax Division at the Justice Department, Mary Smith would have no trouble recognizing the multi-billion fraud on the Treasury that has resulted from the exclusion of ALL taxes entered on lines 10 and 21 of Form 1040 from alternative minimum taxable income since 1988. See section 56(b)(1)(D) of the Internal Revenue Code and line 8 on Form 6251 (2008).
Also, there is IRS’s swindle of millions of taxpayer that has resulted from the inclusion of itemized deduction recoveries in the income based phase-out calculations of deductions, exclusions, exemptions, eligibilities, and credits in violations of section 111(a) of the Internal Revenue Code. This swindle goes back to at least 1980.
If a $500 state income tax refund in 2008 was added on line 10 of Form 1040 and then included in overlapping phase-outs of the Social Security benefit exclusion and the Hope Education Credit for two students per IRS instructions, the refund could have produced $472 (nominally)of tax on a taxpayer in the 15 percent tax bracket. Thus, it should be evident that something is seriously wrong with the instructions. BTW, the $500 used for the state income tax overpayment in 2007 could have yielded $369 of tax. So the total tax on $500 of real income could total $841.
9 Peter // Jun 22, 2009 at 7:22 am
WD Kebchull,
Thanks for the comment.
I’m not sure I get the “IRS swindle” you are talking about.
Any links?
10 Steven M. Harris // Jun 22, 2009 at 5:04 pm
Ok – Bologna. You are much too kind to an appointment that is actually worse than baloney. BTW, I did not mean to endorse your praise of certain prior AAG’s, one qualified, one not so, because neither (in my opinion) deserved “A”s. One was a C- and the other a B.
IRS-CI is nearly in shambles. Let’s wait to see how the POTUS messes that one up too.
11 Peter // Jun 22, 2009 at 9:20 pm
Steven,
I wasn’t praising Ms. O’Connor’s job performance, but merely pointing out that historically the DOJ Tax Division heads have been well-grounded in tax law.
The fact that someone who is had extensive tax experience ends up doing a bad job as tax division head is irrelevant.
Unless you are suggesting that because we have past tax division heads who had significant tax backgrounds we should dispense with the requirement that future tax division heads have tax experience.
Of course, in order to support that recommendation you would first have to conclude that the conjunction of two independent events – the tax experience of Eileen O’Connor and her bad performance as Tax Division head – are somehow causally connected.
There is no evidence of that.
If Ms. O’Connor failed to do a good job as tax division head, basic principles of logic require that we conclude that her bad performance was in spite of her tax background and not because of it.
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