Treasury official Kenneth Kies forced out after warning Trump administration risked breaking law on IRS audits

Jul 16, 2026

Top Treasury official Kenneth Kies was forced out after warning the Trump administration that its requests regarding IRS audits could violate federal law. Kies, who held dual roles at Treasury and the IRS, cited a law preventing White House interference in specific taxpayer audits. His ouster follows clashes over a now-voided settlement that granted Donald Trump immunity from tax scrutiny. James Gadwood, a lawyer who previously represented the Trump Organization, has been nominated to replace him.

Kies forced departure

▪Before joining the administration, Kies worked as a tax lawyer for President Donald Trump and had recused himself from matters involving Trump's taxes.
▪Two administration officials cited concerns about Kies' temperament, work ethic, and computer literacy as reasons for his dismissal.
▪Kenneth Kies was forced out of his dual roles as Assistant Treasury Secretary for tax policy and acting chief counsel of the Internal Revenue Service.
▪Kies is expected to leave the administration in mid-August.

Illegal audit requests

▪Kenneth Kies warned Trump administration officials that their requests regarding tax audits would violate Section 7217 of the Internal Revenue Code.
▪The law prohibiting political interference in audits is considered a primary safeguard against the weaponization of the tax code.
▪Section 7217 of the IRS code makes it unlawful for White House officials to request the IRS to "conduct or terminate an audit or other investigation of any particular taxpayer."

Trump tax immunity settlement

▪Kies's team at the IRS frequently refused to work on a settlement that granted Donald Trump, his family, and businesses broad immunity from tax scrutiny.
▪A federal judge struck down the Trump settlement and fund, ruling that the lawsuit was filed for an "improper purpose."
▪The settlement was part of a deal to dismiss a $10 billion lawsuit Trump filed against the IRS and included a $1.8 billion fund.

Gadwood nomination

▪James Gadwood is a tax attorney at the law firm Miller & Chevalier and previously represented the Trump Organization.
▪President Trump nominated James Gadwood to be the new chief counsel at the IRS and an assistant general counsel at the Treasury.

Treasury policy role

▪Kies also clashed with administration officials over his department’s stance on high-value tax issues, including tax breaks for landowners.
▪As Assistant Secretary for tax policy, Kies oversaw the development of federal tax policy and the implementation of tax legislation.
▪Kies’ team was drafting guidance to implement regulations eliminating certain taxes on tips and overtime wages.