More than a decade after one of the most controversial episodes in modern Internal Revenue Service history, a familiar figure has quietly resurfaced in a position of immense authority — and watchdog groups are demanding swift action.
A senior IRS official who played a central role during the Obama-era scandal involving the alleged targeting of conservative organizations has returned to a top leadership post within the agency, reigniting concerns about political bias, accountability, and institutional memory inside the federal tax system.
The official in question, Holly Paz, now heads the IRS’s Large Business and International Division, one of the most influential branches of the agency. Her appointment, which occurred during the Biden administration, has sparked outrage among government oversight groups who argue that the IRS is repeating the very mistakes that damaged its credibility with millions of Americans.
A Controversial Past Reemerges
Holly Paz is not an unknown name in Washington. During President Barack Obama’s first term, she served as the top deputy to Lois Lerner, the former IRS official who became the public face of a scandal that rocked the agency in 2012 and 2013.
That scandal centered on the IRS’s handling of applications for tax-exempt status, particularly those filed by conservative and Tea Party-aligned organizations. Numerous grassroots groups reported excessive delays, unusual document requests, and heightened scrutiny that they claimed was not applied to progressive organizations seeking the same designation.
Internal IRS records later confirmed that applications containing keywords such as “Tea Party,” “patriot,” or references to limited government were flagged for special review. The revelations triggered congressional investigations, inspector general reports, and widespread public outrage.
While Lerner ultimately retired from the agency amid the controversy, Paz was placed on administrative leave and removed from her role in 2013 after investigators concluded she was involved in the internal processes that led to the targeting.
A Quiet Return to Power
Despite that history, Paz has now returned to the IRS in a senior leadership role, overseeing the Large Business and International Division. This division is responsible for auditing major corporations, multinational companies, and complex financial structures involving trillions of dollars in economic activity.
Critics argue that this is not a routine promotion. The division Paz now leads holds enormous discretion over enforcement decisions that can shape entire industries and global markets.
The return of a figure linked to one of the most damaging scandals in IRS history has alarmed watchdog groups who believe the agency has failed to fully reckon with its past misconduct.
Watchdog Group Sounds the Alarm
The American Accountability Foundation (AAF), a conservative government oversight organization, has launched a formal investigation into the IRS following Paz’s appointment.
In a letter sent to Treasury Secretary Scott Bessent, the group demanded that Paz be removed from her position, arguing that her presence undermines public trust in the tax system.
The letter states that the foundation’s investigation into partisanship within the IRS identified Paz’s return as its first major finding.
“Our investigation has uncovered that a senior official previously removed amid allegations of political targeting has been restored to a position of significant authority,” the group wrote. “This raises serious concerns about whether the IRS has addressed its past failures or simply moved them out of public view.”
Why This Position Matters
The Large Business and International Division is one of the most powerful components of the IRS. It handles audits and compliance for corporations, partnerships, and international entities with complex financial arrangements.
Decisions made by this division can have sweeping consequences — not only for individual businesses, but for entire sectors of the economy.
Critics argue that placing someone with a history tied to alleged partisan enforcement into such a role sends a troubling signal.
“Tax enforcement must be neutral, consistent, and blind to ideology,” one watchdog representative said. “When someone previously associated with political targeting is elevated to this level, it calls that neutrality into question.”
Lingering Trust Issues Inside the IRS
The Tea Party targeting scandal permanently altered public perception of the IRS. For many Americans, it confirmed fears that the agency could be weaponized against political opponents.
Although no criminal charges were ultimately brought against senior officials involved in the scandal, the reputational damage to the agency was severe. Congressional hearings exposed internal emails, selection criteria, and management failures that contradicted the IRS’s claims of neutrality.
While agency leadership promised reforms and safeguards, critics argue that the quiet rehabilitation of officials linked to that era suggests those promises were largely symbolic.
Biden Administration Faces Questions
Paz’s promotion occurred under the Biden administration, which has not publicly addressed her past role or explained the decision to place her in charge of such a powerful division.
Neither the Treasury Department nor the IRS has responded publicly to the watchdog group’s letter. The lack of transparency has only intensified scrutiny.
Key questions remain unanswered:
- Who approved the promotion?
- Was Paz’s role in the Tea Party controversy reviewed?
- What safeguards are in place to prevent political bias in enforcement decisions?
Without clear answers, critics say trust in the agency will continue to erode.
A Broader Pattern?
For some observers, Paz’s return is emblematic of a broader issue within federal institutions — the tendency to quietly reassign or rehabilitate officials rather than confront past failures head-on.
They argue that accountability within bureaucracies often amounts to temporary sidelining, followed by eventual reinstatement once public attention fades.
“The public was told lessons were learned,” one government reform advocate said. “But restoring the same people to positions of power suggests otherwise.”
Why This Matters to Taxpayers
The IRS has extraordinary authority over citizens’ financial lives. It can impose penalties, seize assets, and initiate criminal referrals. That authority depends on public confidence that enforcement decisions are made fairly and without political influence.
When that confidence is shaken, voluntary compliance — the foundation of the U.S. tax system — is weakened.
“Taxpayers deserve an agency that operates above politics,” the AAF letter stated. “Anything less undermines the legitimacy of the entire system.”
Potential Congressional Interest
Although no congressional hearings have yet been announced, the issue could draw renewed attention on Capitol Hill, particularly among lawmakers who were involved in investigating the original Tea Party scandal.
If lawmakers decide to revisit unresolved questions about IRS bias, Paz’s promotion could become a focal point of broader oversight efforts.
The Unfinished Chapter
More than ten years after the Tea Party targeting controversy, its consequences are still being felt. The reemergence of a central figure from that period has reopened old wounds and raised fresh doubts about whether the IRS has truly reformed.
For critics, the issue is not just about one individual, but about whether the federal government has learned from one of its most embarrassing failures.
As scrutiny intensifies, the IRS now faces a familiar test: proving that its power will not be used selectively, and that past abuses will not quietly repeat themselves under new leadership.
Whether the agency can meet that test remains to be seen.