Karen Kelly was quoted in a Tax Notes article titled “Justice Department Tax Division’s Last Day Has Come and Gone.”
Earlier this year, the Justice Department issued a memo that proposed the elimination of the Tax Division. Ultimately, the Department chose to reorganize tax enforcement by installing the Criminal Enforcement Section of the Tax Division into the Criminal Division and installing the Civil Enforcement and Appellate Sections into the Civil Division. The dissolution became official on November 30, 2025. The reorganization is now complete.
“The fairness of our voluntary tax enforcement system was the envy of the world — and its
effectiveness will be substantially hampered by the steps being taken to degrade it. When citizens perceive the tax system as unfair and ineffective, they opt out of voluntary compliance and refuse to pay their fair share,” Karen said.
As the former acting division head, Karen told Tax Notes that criminal tax section personnel are scheduled to move to new offices on December 10, 2025. Joshua Wu, most recently at Latham & Watkins LLP, was installed as deputy assistant attorney general (“DAAG”) for the Civil Division's new Tax Branch.
As a result of the dissolution, some former Tax Division staff will assume new titles at the Department of Justice and others left the agency entirely. The transition will also require updating the agency's manuals and the Department’s internal regulations. At the time of the article, the DOJ's tax manual was last updated in 2020.
"The delay in amending the tax portion of the Justice Department manual could lead to some problems," Karen said regarding the new tax units and delegation for receiving tax return information from the IRS under §6103(h). Karen also observed a lack of progress on updating DOJ regulations to reflect the Tax Division's dissolution and the creation of the two new tax branches.
You can read the complete article here.
About Karen
The former acting head of the Justice Department’s Tax Division, Karen joined Kostelanetz after more than 30 years of federal and state trial practice, including prosecuting tax and white-collar crime. Her practice focuses on representing clients adverse to the government, including in criminal matters, and state and federal civil tax controversies.
