IRS Proposes Removal of Key Official Linked to Tea Party Targeting Scandal

EXCLUSIVE: The Internal Revenue Service has issued a notice of proposed removal to Holly Paz, a prominent aide to Lois Lerner, who was at the center of a controversy involving the targeting of conservative groups during the Obama administration. This notice, commonly referred to as a pink slip, indicates the agency’s intention to terminate Paz’s employment.

According to sources familiar with the situation, Paz, who served as the IRS Commissioner of the Large Business and International Division, received the proposed removal notice on Monday. As part of the procedure, Paz has 30 days to respond to this notice and currently remains on administrative leave while awaiting a final decision regarding her employment status.

Background on Holly Paz and the Controversy

Holly Paz’s placement on administrative leave occurred last month, following an internal review that raised significant concerns. A representative for Paz has informed that this internal review remains incomplete. During her tenure, Paz served as Lerner’s deputy, working closely with her during a period marked by scandal.

In 2013, it came to light that the IRS had improperly scrutinized tax-exempt applications associated with terms like “Tea Party,” “9/12,” and “Constitution.” An investigation by the Treasury’s inspector general later confirmed that the IRS employed inappropriate criteria to target conservative groups, denouncing the agency’s lack of oversight and systemic bias.

The IRS allegedly spent over two years focusing its resources on the audits of conservative tax-exempt organizations. Throughout this period, Paz played a critical role in reviewing and managing tax-exempt applications, acting as a vital link between the Cincinnati office, where the scrutiny occurred, and the IRS headquarters.

Recent Developments in IRS Leadership

Paz’s proposed removal follows intense scrutiny from lawmakers regarding a newly established work unit for auditing pass-through businesses. Under the leadership of IRS Commissioner Danny Werfel, this unit has been branded as a critical strategy for ensuring accountability among the nation’s wealthiest filers. In her role, Paz referred to this initiative as an important change within the IRS structure.

The Trump administration addressed the fallout from the targeting scandal through several lawsuits, eventually reaching settlements in 2017 with Conservative groups that claimed they had been unfairly targeted by the IRS. The resolution allowed those affected to feel vindicated while drawing attention to the mishandling of their applications.

Significant Legal Actions and Court Requests

In a notable turn of events in 2017, both Lerner and Paz made bids to keep their testimonies in connection with the targeting scandal permanently sealed, motivated by concerns over death threats. The controversy gained widespread media attention after the IRS acknowledged its improper scrutiny methods regarding numerous conservative organizations applying for nonprofit status.

The burden of this scandal fell heavily upon Lerner, who emerged as the public face of the IRS’s shortcomings, though it is essential to recognize that numerous IRS officials, including Paz, were also involved in the controversy.

IRS Apology and Administrator Initiatives

As part of a settlement in 2017, the IRS issued an apology to those affected, acknowledging its wrongdoings during the tax-exempt determination process. The agency noted that its actions, which included screening applications based on affiliations and imposing unnecessary delays, constituted a violation of the rights of the plaintiffs.

In its official statement, the IRS expressed its sincere remorse for these actions, suggesting a desire to take accountability and move forward in a more effective manner.

Efforts to Reform the IRS

The proposed removal of Holly Paz represents the latest in a series of actions taken by acting Commissioner Scott Bessent aimed at what he refers to as the “de-weaponization” of the IRS. Sources indicate that Bessent has been partnering with whistleblowers who provided testimony about Hunter Biden and has engaged repeatedly with IRS leadership on pivotal reforms.

In addition, Bessent and his team are reportedly focused on enhancing customer service for American taxpayers while streamlining technical operations and reducing excessive hiring that characterized the previous administration.

A Transparent Path Forward

This upcoming 30-day response period for Paz offers a glimpse into the procedural steps that will follow her proposed removal. As the IRS navigates these challenges, it continues to face heightened scrutiny from lawmakers and the public in an era where taxpayers demand accountability and fairness from federal agencies.

The agency’s actions in response to this situation will be closely monitored. In today’s climate, where trust in federal institutions is paramount, the outcomes of such decisions could significantly impact public perception of the IRS.

EDITOR’S NOTE: This article has been updated to clarify that Holly Paz remains employed by the IRS on administrative leave pending any final decision regarding her employment status following the review process.

The reporting for this article included contributions from Fox News Digital’s Charles Creitz.