According to a source familiar with the talks, Treasury Secretary Scott Bessent approached President Donald Trump to claim that Gary Shapley, the acting commissioner of the Internal Revenue Service, was appointed to the position against his will and at Elon Musk’s request. Shapley is being replaced.
According to the source, Trump gave Bessent permission to reverse the ruling.
The appointment of Deputy Treasury Secretary Michael Faulkender as the new acting head of the IRS was confirmed by a Treasury official.
Bessent said in a statement that Shapley will continue to be a senior adviser to him on IRS reform and that “Trust must be brought back to the IRS, and I am fully confident that Deputy Secretary Michael Faulkender is the right man for the moment,” Bessent said.
“Gary Shapley’s passion and thoughtfulness for approaching ways by which to create durable and lasting reforms at the IRS is essential to our work, and he remains among my most important senior advisors at the U.S. Treasury as we work together to rethink and reform the IRS,” Bessent stated.
Furthermore, according to two people acquainted with IRS operations, Gavin Kliger, a senior officer in the Department of Government Efficiency, has had all of his access to the IRS withdrawn, including its buildings, computer systems, and data systems.
It’s a part of the agency’s larger turmoil and transformation as the Trump administration looks to restructure the federal government.
According to three people familiar with IRS operations, the number of IRS executives in charge of the agency’s IT has decreased from roughly 100 executives to three executives since the start of the administration.
Kaschit Pandya, who had been employed by DOGE as the IRS chief technology officer, took over as chief information officer on Monday, the eve of tax filing day, after IRS Chief Information Officer Rajiv Uppal quit.
Before exposing the government’s actions as a whistleblower in 2022, Shapley, a professional IRS investigator, worked on the Hunter Biden tax fraud case for years.
In March, he was appointed deputy chief of IRS criminal investigations and elevated to a new position as a senior adviser at the Treasury Department.
Senate Judiciary Committee Chairman Sen. Chuck Grassley praised Shapley’s promotion to lead the IRS this week, noting in a March letter that he had asked Bessent to appoint Shapley and Joseph Ziegler, another whistleblower in the Biden case, to top positions.
Melanie Krause, the interim commissioner since February, announced her resignation earlier this month due to a data-sharing arrangement with the Department of Homeland Security.
Shapley took over as commissioner. According to the agreement, immigration officials are allowed to submit personal data, such as names and residences, for comparison with tax returns.
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In recent days, there have been outward indications of disagreement between Musk and Bessent. Musk reshared a tweet made by far-right activist Laura Loomer on social media on Thursday night, accusing the White House of having a “vetting crisis” and criticising Bessent for his relationship with someone she described as anti-Trump. Loomer pledged to “personally tell President Trump and personally show him these receipts.”
Musk shared Loomer’s thread on his social media network, X, with the comment, “Troubling.”
During a Cabinet meeting last month, Trump stated that Musk had “never asked him for a thing” and that he would not go beyond his authority as chairman of the Department of Government Efficiency, which is tasked with decreasing costs.
Musk’s Department of Government Efficiency’s cost-cutting initiatives at the IRS have caused recent upheaval, with changes in leadership being one of the most obvious consequences.
After Douglas O’Donnell, an IRS veteran of around 40 years, announced his retirement due to concerns about DOGE obtaining access to taxpayer data, Krause took over as acting commissioner. Joe Biden selected former IRS Commissioner Danny Werfel, who resigned on Inauguration Day.
However, there have also been more significant adjustments, such as staff reductions. “The agency has undergone a rapid and disturbing shift” since Trump’s inauguration, according to an IRS employee who recently accepted a deferred resignation offer, telling that “human resources, employee engagement, and any non-technical roles” are now considered “no longer essential.”
The pace of the IRS force reductions was not authorised by Treasury leadership, according to three people familiar with IRS operations. This could be another indication of a rift between DOGE and other Trump administration agencies.
Billy Long, Trump’s choice to become the IRS’s permanent leader, was appointed to the position until November 2027, when Werfel’s tenure was about to expire. The Senate has not yet held a confirmation hearing for Long.
