IRS Attorney Exodus Gives Companies a Leg Up in Court Cases

The IRS and Justice Department are bleeding tax lawyers, suggesting it will take longer to resolve disputes in court and raising concern the government will recover less money from taxpayers than it should.

More than 170 attorneys with the IRS Office of Chief Counsel have withdrawn from US Tax Court cases since President Donald Trump took office in January, according to a Bloomberg Tax analysis of court filings. Many have left the agency altogether. Some DOJ attorneys have withdrawn from tax-related appeals court cases, and 40% of the DOJ’s tax appellate attorneys have quit or been reassigned amid a planned split-up of the department’s tax unit, according to an August filing by a department attorney in one of the cases.

Among the cases with departing attorneys are those against Amgen Inc., Coca-Cola Co., Meta Platforms Inc., 3M Co., and others with billions of dollars at stake.

While the withdrawals themselves are routine, they’re occurring at a much higher rate since Trump was inaugurated than was the case last year, or at the start of previous administrations. Many of those attorneys were involved with and have withdrawn from multiple cases, so hundreds of cases have been affected.

The IRS and DOJ have tapped other attorneys to replace them. But former officials and government attorneys say the diminished resources could slow down the process of resolving the cases, and push the government into pursuing more settlements—including, possibly, some of the hundreds of cases over syndicated conservation easements that have been an IRS priority.

The likely upshot, the former officials and attorneys say: Prolonged uncertainty over disputed tax bills, for both taxpayers and the IRS; resolutions of some cases on terms less favorable to the IRS; and an erosion of the government’s ability to crack down on tax abuses.

“If there are not enough IRS lawyers to litigate in Tax Court, then you have no choice but to settle under terms that maybe you would not settle otherwise,” said Gil Rothenberg, a former chief of the DOJ Tax Division’s appellate section who teaches at the University of Pennsylvania and American University law schools. “That’s leaving money on the table.”

To be sure, the DOJ and IRS often have multiple attorneys on a case, mitigating the impact of any one attorney’s withdrawal. For instance, 11 IRS attorneys are currently working on Amgen’s Tax Court case.

But it takes time for even a skilled attorney to get up to speed when they have to step into a big ongoing case. “Experienced lawyers are not easily replaceable,” said Rod Rosenstein, deputy attorney general in Trump’s first administration who’s now a partner at Baker & McKenzie.

Also Read: Long Commutes, Fear of the Future: What Made IRS Attorneys Quit

‘Managed and Reduced’

One former attorney with the IRS Office of Chief Counsel, which represents the agency in court, said that before leaving earlier this year, he and colleagues were told a large volumes of cases needed to be “managed and reduced”—which he took as suggesting that the IRS’s leadership would start directing it to stop contesting some cases.

“That wasn’t something I was going to be interested in signing my name to,” said the former attorney, who spoke with Bloomberg Tax on the condition he not be named, to speak freely about his experiences.

The changes have created “a mess it’s going to take decades to clear up,” he said.

A DOJ spokesperson said, “The proposed restructuring of the Tax Division will not impact the ability of its civil litigators and criminal prosecutors from advancing its mission to fairly and consistently enforce the nation’s tax laws.” An IRS spokesperson didn’t provide comment.

At least 60 of the 170-plus IRS attorneys who have asked for and been granted permission to withdraw from cases have left the agency, according to Bloomberg Tax’s analysis. Both numbers are much higher than the same period in 2024, when 65 attorneys withdrew from cases and only about 20 left.

The Office of Chief Counsel lost more than 350 staffers—nearly 13% of its workforce—from January to early June, according to the IRS’s National Taxpayer Advocate, and more have left since then.

”I read the orders every day—that’s how I keep track of my former colleagues,” the former Office of Chief Counsel attorney said.

Picking Spots

Multiple IRS attorneys have withdrawn from Tax Court cases in which the IRS is opposing Facebook, Amgen, and Abbott Laboratories. Attorneys from the DOJ Tax Division, who represent the IRS when Tax Court rulings move to appeals circuit courts, have withdrawn from cases involving Coca-Cola, Liberty Global Inc., and 3M.

In at least two cases in recent months, government attorneys have asked for more time to file briefs because of the attorney departures and increased workloads.

“If you have fewer people working at the IRS, it’s going to take longer,” Rothenberg said. It also could mean higher costs for taxpayers, he said, as interest on disputed tax bills continues to accumulate as cases are drawn out.

The agency’s reduced resources are likely to force some hard choices. The IRS is “going to have to pick its spots for enforcement activity,” said Tom Cullinan, a tax attorney at Chamberlain Hrdlicka and a former senior IRS official.

David Hubbert, a senior fellow at New York University’s Tax Law Center and a former head of the Tax Division who resigned from the DOJ in February, said staff departures will lead to “tremendous pressure” to identify cases with the biggest impact on tax administration and make sure they have enough resources, “while other cases will likely receive less attention than they did before.”

Leaving IRS Vulnerable

The reduced staffing also might push the government into considering settlements in cases when perhaps it wouldn’t otherwise, observers said, though that might depend on how much the case is worth and whether it has any future legal implications.

That could affect the syndicated conservation easement cases, said a second former Office of Chief Counsel attorney—the hundreds of cases in which the IRS alleges abuse of tax deductions on charitable donations of real estate. “These were some of the most labor-intensive cases,” the attorney said.

Taxpayers likely will see a window of opportunity in the IRS’s quandary: They might take more aggressive stances in audits and in court, knowing the IRS no longer has as many attorneys or as much in the way of resources to push back.

If a client stands a good chance of prevailing in litigation, “I’m going to do everything I can to pursue that extremely quickly,” said the first former IRS attorney, who is now in private practice.

Rothenberg sees “a real brain drain going on,” with the IRS and DOJ changes driving capable people away from federal service and depriving the government of their expertise. He recruited two of his law students for the IRS and DOJ, but their IRS job offers were rescinded.

Tax enforcement will suffer, he said, because “until the political climate changes, why would any top-notch person ever want to be hired?”