The exterior of the Internal Revenue Service building in Washington, D.C. (AP Photo)
However, by 2025, lawmakers, including Sen. Marsha Blackburn, R-Tenn., warned that the pass-thru-business compliance unit had transformed to be "motivated by ideology rather than principles of sound tax administration."
"Pass-through entities form the bulk of Main Street businesses across the country. This includes countless family businesses, professional services firms, and real estate ventures that serve as the backbone of our local economies," Blackburn and Senate Majority Whip John Barrasso, R-Wyo., wrote to the Treasury in May.
Around that time, Sen. Joni Ernst, R-Iowa., warned Treasury Secretary Scott Bessent that Paz’s team "has made tongue-in-cheek political comments," including their stated wish to "make basis great again" – a phrase regarding taxation loss/gain that hearkens to President Donald Trump’s MAGA slogan.
In that regard, Rep. Lloyd Smucker, R-Pa., wrote to IRS Commissioner Billy Long in July that a Biden-era "basis-shifting transaction rule" had "extended the scope" of enforcement.
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Former Rep. Billy Long, R-Mo., President Donald Trump's nominee to be Internal Revenue Service commissioner. (Andrew Harnik/Getty Images)
"This focus on increasing audits rather than improving compliance suggests an agenda-driven approach to enforcement," Blackburn said.
In her letter, Ernst warned Bessent that Paz’s team members "have also undermined their appearance of impartiality by comparing legally acceptable transactions to obscene material, saying, ‘It’s one of those ‘You know it when you see it’ – a joking reference to [Supreme Court Justice Potter Stewart’s] attempt to define pornography.
"This team is reportedly acting independently and duplicating existing IRS processes, wasting taxpayer money, and not coordinating with the pre-existing offices," Ernst said.
"Most concerning of all, the new pass-through auditors even use a new template for requesting taxpayer information they’ve deemed 'The Art of the IDR,' (versus ‘The Art of the Deal’) which treats taxpayers as guilty until proven innocent."
"Unfortunately, the Biden administration picked up right where Ms. Lerner and her team left off. On September 20, 2023, then-Commissioner Daniel Werfel announced, with language that resembled Democrat talking points, the creation of a duplicative new work unit [led by Paz] to specifically audit pass-through businesses and partnerships. The new office subjects these businesses to potentially two separate IRS examinations in the same year.
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"One would think Commissioner Werfel would go to great lengths to avoid hearkening back to previous scandals. Instead, he thumbed his nose at taxpayers by placing Lois Lerner’s deputy— Holly Paz—at the helm," Ernst wrote.
Lerner was front-and-center during the Obama-era scandal, testifying before Congress as head of the tax-exempt organizations division, as a deluge of reports of targeting right-leaning nonprofits abounded.
During the 2013 investigation by the House Oversight Committee, Reps. Jim Jordan, R-Ohio, and Darrell Issa, R-Calif., demanded Paz answer for "inconsistencies" from a transcribed interview with committee staff involving statements about "intervention" against Tea Party groups.
A 2015 report by then-Senate Finance Committee leaders Orrin Hatch, R-Utah, and Ronald Wyden, D-Ore., found that in other cases, some liberal terminology was also flagged, including "ACORN," "progressive" and "medical marijuana."
"While handled poorly, groups on both sides of the political spectrum were treated the same in their efforts to secure tax-exempt status," Wyden said at the time, while then-Rep. Kevin Brady, R-Texas, said Democrats should be equally outraged as Republicans.
Fox News Digital reached out to Treasury, the IRS and an email connected to Paz for comment.
Charles Creitz is a reporter for Fox News Digital.
He joined Fox News in 2013 as a writer and production assistant.
Charles covers media, politics and culture for Fox News Digital.
Charles is a Pennsylvania native and graduated from Temple University with a B.A. in Broadcast Journalism. Story tips can be sent to charles.creitz@fox.com.
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