President Barack Obama’s nominee to head the Justice Department’s Tax Division said Wednesday that her past criticism of crackdowns on offshore accounts would not affect her performance at DOJ.
Testifying at a Senate Judiciary Committee confirmation hearing Wednesday, Kathryn Keneally stressed her credentials and experience navigating ethical issues, said that the “IRS and Tax Division should be commended,” and that it would be “an absolute privilege to serve one’s country” as she laid out a general vision for running the section.
Sen. Herb Kohl (D-Wisc.), and Sen. Charles Grassley (R-Iowa), the ranking Republican on the Judiciary Committee, had expressed concerns that Keneally’s past criticism of tax law enforcement were inappropriate for a Tax Division Assistant Attorney General.
Grassley asked how she could reconcile the subtitle of a 2007 article she co-wrote – “the War On Tax Shelters Will Give Rise to an Entrenched Enforcement Mindset” – with the responsibilities of her position and the fact that “me and others believe just the opposite.”
Keneally responded that she believed there were certain aspects of the shelter crackdown initiative “that were maybe a bit much in the average examination of the ordinary taxpayer,” and that “the IRS has made some changes along the lines that were suggested in that article.”
Keneally had also stated earlier in the hearing that the Tax Division’s offshore tax compliance initiative is a “very important priority,” and, in response to a question from Kohl, that she would carefully select cases presented to the division by the IRS to “create deterrence.”
The seasoned tax lawyer and Fulbright & Jaworski partner also stated that she has never helped clients set up offshore entities, never conducted tax planning for finance and that she advised clients to bring assets back into compliance when the situation would arise.
And while she said that she has represented clients in IRS amnesty programs, Keneally stated that she was aware of potential “revolving door” conflicts of interest and pointed to her past work on the American Bar Association Ethics Committees as proof that she is “aware of ethical obligations.”
In his opening remarks, Grassley remarked that the position is particularly important “given severe debt and deficit situation facing the country.”
