About a third of the Justice Department’s criminal tax lawyers have been assigned recently to temporary details with U.S. Attorney offices around the country, depleting the ranks of Tax Division prosecutors while major enforcement initiatives remain on the agenda.

The Justice Department would not confirm how many criminal tax lawyers have been temporarily re-assigned from Washington to local prosecuting offices. At a March 20 Senate Finance subcommittee hearing, Sen. Richard Burr (R-N.C.) said that 33 lawyers from the Tax Division’s criminal ranks had applied to work in the U.S. Attorney offices. A knowledgeable person said around 30 had accepted the details.

It’s also unclear how many criminal tax lawyers the division employs. The Justice Department set the number at “over 100″ in response to questions from Main Justice, while other knowledgeable people said there were slightly under 100.

Whatever the numbers, the division is experiencing a large outflow of talent in 2012, knowledgeable people say.

“Do you think it’s wise to divert a significant portion of the criminal component of the Tax Division to deal with non-tax issues?” Burr asked acting Deputy Assistant Attorney General for the Tax Division Ronald Cimino at the Finance hearing last week.

“What we in the Tax Division did, Senator, is to place for six months our prosecutors and civil litigators… across the country. Some are working more on their own cases in their jurisdiction. We tried to establish where we could the work they were working on would continue with even closer ability,” Cimino replied.

“In other instances I think it will actually help U.S. Attorney’s offices to have prosecutors in their jurisdiction to work with and coordinate with other assistant U.S. attorneys,” he added.

The temporary details were conceived by the Executive Office for U.S. Attorneys and approved by Deputy Attorney General James Cole to help staff U.S. Attorney offices during the department’s ongoing hiring freeze. The temporary assignments last through Sept. 30.

The Tax Division in recent years has helped force an historic opening of Switzerland’s bank secrecy protections in its pursuit of U.S. taxpayers who have been hiding assets in secret overseas accounts. In 2009, Swiss bank UBS entered into a deferred prosecution agreement with the U.S. and agreed to pay $780 million after admitting it had helped U.S. residents evade taxes. That enforcement action is ongoing.

The Tax Division has also cracked down on rogue tax preparers in recent years who file fraudulent returns, mostly on behalf of middle income taxpayers.

At the March 20 hearing before the Senate Finance subcommittee on fiscal responsibility and economic growth, Cimino testified about a growing threat of identity theft through the filing of fraudulent tax returns using stolen Social Security numbers.

Observers point to the absence of a top Tax Division leader as a likely factor in the high number of tax lawyers taking the temporary detail. There has been no Senate-confirmed head of the division during the entire Barack Obama administration.

“This kind of event to me signifies what can happen when there is no presidentially appointed and Senate-confirmed person at the top of the division to fight for their mission and fight for their people,” said Scott D. Michel, president of Caplin & Drysdale Chartered, a prominent tax law firm.

Obama’s first nominee to head the division, Mary L. Smith, was opposed by Senate Republicans for her lack of tax experience. The White House abandoned her nomination in September 2010.

Obama then waited a year to put forward another nominee. Last September, he tapped Fulbright & Jaworski LLP partner Kathryn Keneally for the position.

Although Keneally is an experienced tax lawyer, her nomination has languished, along with those for DOJ Inspector General and head of the Antitrust Division, because Senate Judiciary Committee ranking member Charles Grassley (R-Iowa) has vowed to block Justice Department confirmations over the department’s response to the botched Fast and Furious gun-tracing operation.

In all, 76 lawyers throughout Justice Department headquarters in Washington applied for the temporary details. More than 60 percent - or 46 lawyers - applied from the Tax Division, including 13 lawyers from its civil ranks, according to another person with knowledge of the numbers.

Thomas Zehnle, a former chief of the criminal enforcement section of the Tax Division’s southern region, said that in his experience about five or ten lawyers from the division were deployed to the field at any one time.

He said there can be good reasons to send attorneys out. They gain practical trial experience, as well as foster relationships with local prosecutors to collaborate on future tax cases. But 30 lawyers at once? “That’s a big chunk of skilled prosecutors who are needed right now,” Zehnle said.

Caplin & Drysdale’s Michel noted that 33,000 taxpayers since 2009 have voluntarily disclosed their hidden overseas bank accounts to the Internal Revenue Service in exchange for avoiding prosecution, what he called “one of the most extraordinary enforcement actions in IRS history.”

“That’s yielded a treasure trove of information that could result in dozens and dozens and dozens of very important criminal tax investigations,” Michel said. “So at that moment to divert one third of the criminal Tax Division workforce strikes me as undercutting the work that’s been done.”

In an emailed response to Main Justice, a Justice Department spokesman said: “The detail program will not adversely affect our priority enforcement areas of offshore non-compliance and identity theft, which we will continue to pursue vigorously.  The Tax Division would not have participated in the detail program if doing so would have seriously impacted our efforts in those areas.”

If you look at an organizational chart of the Justice Department, it seems as if career Tax Division lawyer John DiCicco is his own boss.

DiCicco used to be the acting Assistant Attorney General for the Tax Division. But with no presidentially appointed Tax Division chief, he had served in the “acting” capacity for so long, he no longer legally could hold the title.

And so, he became the Principal Deputy Assistant Attorney General in the DOJ Tax Division.

There is no Assistant Attorney General for the Tax Division because no one has been nominated since President Barack Obama’s first choice withdrew.

So who’s in charge?

You guessed it-John DiCicco.

This whole thing is so convoluted that the DOJ published a draft order in the Federal Register to delegate necessary authority to him. The order will run Monday.

John DiCicco (File)

The directive says that the Principal Deputy Assistant Attorney General will have “all of the Assistant Attorney General’s authority to compromise and close civil claims, except when such action is opposed by the client agency or agencies.”

DiCicco, a career DOJ lawyer, became Principal Deputy Assistant Attorney General earlier this month when he could no longer serve in an acting capacity. Federal law limits how long someone can be in an “acting” position. But he remains in charge of the Tax Division, according to the Associated Press.

In DiCicco’s case, he couldn’t be acting Assistant Attorney General after March 2 because it had been 210 days since the Senate returned the nomination of Mary L. Smith for Tax Division Assistant Attorney General to the White House and President Barack Obama hadn’t nominated someone to lead the division.

The Senate returned Smith’s nomination to the president twice. Republicans opposed her nomination, expressing concern about her lack of tax law experience. Smith was a partner at the Schoeman, Updike & Kaufman LLP and former in-house counsel to Tyco International Ltd., the international security products and services conglomerate.

Mary L. Smith (photo by Andrew Ramonas / Main Justice)

She currently is Senior Counsel to Assistant Attorney General Tony West of the Civil Division. Smith, a Cherokee Nation member, would have been the highest-ranking American Indian ever to work at the DOJ.

The president initially nominated Smith for the post in April 2009. The Senate Judiciary Committee first approved her nomination in June 2009 without Republican support. The Senate returned her nomination to the White House for the first time in December. Obama renominated her in January 2010, and she was reported out of committee again in February 2010 without backing from Republicans.

DiCicco has led the office for about two years. Nathan Hochman, who stepped down as Assistant Attorney General in 2009, was the last Senate-confirmed presidential appointee to lead the Tax Division.

White House spokesman Reid Cherlin told the AP earlier this month that Obama administration is looking for a nominee for Tax Division Assistant Attorney General. He said they hoped to nominate someone “soon,” although with the administration more than half over, it’s increasingly unlikely to happen.

DOJ spokesman Matthew Miller told the AP that DiCicco will stay at the helm of the division while there isn’t a Senate-confirmed presidential appointee in place.

He just doesn’t have the title anymore.

This article has been edited to add context since it was first published. This article has also been corrected to reflect that DiCicco is a Principal Deputy Assistant Attorney General, not a Principal Assistant Deputy Attorney. He also was an acting Assistant Attorney General, not a Deputy Assistant Attorney.

Miller & Chevalier Chartered has picked up a former Justice Department Tax Division lawyer, the D.C. law firm announced this week.

Thomas Zehnle, who served in the Tax Division from 1990 to 2004, joined the firm as a member after spending seven years as a partner at the law firm of Bryan Cave LLP in D.C. He will handle criminal tax and white-collar litigation as well as internal investigations.

Thomas Zehnle (Miller & Chevalier Chartered)

“As a white collar defense lawyer and federal prosecutor, Tom has handled hundreds of investigations and trials involving allegations of tax fraud, conspiracy, money laundering, securities, and Bank Secrecy Act violations, among other offenses,” Patricia Sweeney, Miller & Chevalier’s Tax Department chairwoman, said in a statement. “He is highly respected within the Justice Department and the criminal tax bar and brings a new breadth and depth of experience to our Criminal Tax practice.”

Zehnle started at the DOJ in 1990 as a Trial Attorney in the Tax Division Southern Criminal Enforcement Section. He then served as Counsel to Tax Division acting Assistant Attorney General Paula Junghans from 2000 to 2001 and the Chief of the Tax Division Southern Criminal Enforcement Section from 2001 to 2004.

He received his undergraduate degree from University of Missouri-Columbia in 1984. The College of William and Mary awarded him his law degree in 1987.

Senate Republicans urged President Barack Obama to name a new nominee to lead the Justice Department Tax Division after the White House said it will not re-nominate its previous choice for the post.

Sen. Charles Grassley (R-Iowa), the top Republican on the Senate Finance Committee, said in a statement that the nominee should be “qualified to enforce our criminal tax laws and oversee complex tax cases, including tax shelter cases.” Mary L. Smith, whose nomination was returned twice by the Senate, faced stiff opposition from Republicans, who were concerned about her lack of tax law experience. She was a partner at the Schoeman, Updike & Kaufman LLP and former in-house counsel to Tyco International Ltd., the international security products and services conglomerate.

“There hasn’t been a top tax cop on the beat since the President took office,” Grassley said. “It raises questions of how serious the Administration is about tax fraud.”

The president initially nominated Smith for the post in April 2009. The Senate Judiciary Committee first approved her in June 2009 without any backing from Republicans, including Grassley, who sits on the panel. Her nomination was sent back to the White House for the first time in December. Obama re-nominated her in January, and she was reported out of committee again in February with no Republican support.

Sen. Jeff Sessions of Alabama, the top Republican on the Senate Judiciary Committee, said he was glad the president did not re-nominate Smith, who is currently Senior Counsel to Assistant Attorney General Tony West of the Civil Division.

“The Tax Division chief has to have a judgment and experience in taxes — in my opinion — to decide various tough issues,” Sessions said Thursday.

President Barack Obama will not re-nominate his former choice for the Justice Department Tax Division, whose nomination the Senate most recently sent back to the White House in August, a White House official told Main Justice on Tuesday.

Mary L. Smith, whose nomination was returned to the president twice by the Senate, will “pursue other opportunities,” the official said. She is currently Senior Counsel to Assistant Attorney General Tony West of the Civil Division. Smith, a Cherokee Nation member, would have been the highest-ranking American Indian ever to work at the DOJ.

Mary L. Smith (Chicago Bar)

The former nominee faced resistance from Republicans who were concerned about her lack of tax law experience. Smith was a partner at the Schoeman, Updike & Kaufman LLP and former in-house counsel to Tyco International Ltd., the international security products and services conglomerate.

The president first tapped Smith for the post in April 2009. The Senate Judiciary Committee initially endorsed her in June 2009 without any backing from Republicans. Her nomination was returned to the White House for the first time in December. Obama re-nominated her in January, and she was reported out of committee again in February with no Republican support.

Smith was the last Obama administration Assistant Attorney General nominee waiting for a vote in the Senate when her name was returned to the White House in August. Indiana University law professor Dawn Johnsen, who had faced similar opposition to her nomination to head the DOJ’s Office of Legal Counsel, withdrew from consideration in April.

For the second time, the Senate sent back to President Barack Obama his embattled nominee to lead the Justice Department’s Tax Division.

Mary L. Smith (Chicago Bar)

Mary L. Smith has waited more than a year for the full Senate to consider her nomination. She faced stiff opposition from Republicans who were concerned about her lack of tax law experience. Smith was a partner at the Schoeman, Updike & Kaufman LLP and former in-house counsel to Tyco International Ltd., the international security products and services conglomerate.

All pending presidential nominations are returned to the White House if the Senate recesses for more than 30 days and does not vote to hold them over. Smith was not among the nominees that the Senate approved to hold over before it left for its month-long August recess Thursday. The president must re-nominate Smith if he wants the Senate to consider her again.

Obama initially nominated Smith for the post in April 2009. The Senate Judiciary Committee first approved her in June 2009 without any Republican support. Her nomination was returned to the White House for the first time in December. The president re-nominated her in January, and she was reported out of committee again in February without any backing from Republicans.

Smith was the only Obama administration Assistant Attorney General nominee still waiting for a vote in the Senate. Indiana University law professor Dawn Johnsen, who had faced similar opposition to her nomination to head the DOJ’s Office of Legal Counsel, withdrew from consideration in April.

Smith is currently Senior Counsel to Assistant Attorney General Tony West of the Civil Division. A Cherokee Nation member, she would have been the highest-ranking American Indian ever to work at the DOJ.

A former Deputy Director of the Justice Department Office of Tribal Justice this week called on the Senate to take action on President Barack Obama’s pick to lead the DOJ Tax Division.

Lawrence R. Baca, who worked at the DOJ from 1976 to 2008, wrote in an Indian Country Today column that he can no longer remain silent about Tax Division nominee Mary L. Smith, a Cherokee Nation member, who has been stalled for several months. He said Smith should receive “immediate confirmation,” noting that she would be the highest-ranking American Indian to ever work at the DOJ if she is confirmed.

Mary L. Smith (Chicago Bar)

Smith was first tapped for the post in April 2009, but has languished in the Senate over Republican concerns about her lack of tax law experience. The Senate Judiciary Committee first approved her in June 2009 without any Republican support and her nomination was returned to the White House in December. Obama re-nominated her in January and she was reported out of committee again in February without any backing from Republicans.

“There is no reason to treat any presidential nominee with such disrespect,” said Baca, the national president of the Federal Bar Association. “Surely a nomination of such historic importance should not be allowed to languish. This ‘first’ for Indian country deserves a confirmation vote.”

A Democratic aide said earlier this month that Senate Majority Leader Harry Reid (D-Nev.) would have to file for cloture to cut off debate on her nomination. The aide said the minority leadership is holding up any nominee who is opposed by all Republicans in committee.

But Sen. Jeff Sessions of Alabama, the ranking Republican on the Senate Judiciary Committee, said earlier this month that he hadn’t heard any discussion about moving her nomination. The Senate will be on recess next week for the Memorial Day holiday.

Smith is the only Assistant Attorney General nominee who is still waiting for a vote in the Senate.

She was one of three nominees returned to the White House in December and re-nominated in January. One of the nominees, Christopher Schroeder for the Office of Legal Policy, was confirmed last month. The other nominee, Dawn Johnsen for the Office of Legal Counsel, withdrew her nomination last month.

Schroeder was only opposed by a few Republicans in committee. Johnsen — like Smith — didn’t receive any GOP support in committee.

Sen. Jeff Sessions of Alabama, the ranking Republican on the Senate Judiciary Committee, told Main Justice Wednesday that President Barack Obama should consider withdrawing his nominee to lead the Justice Department Tax Division.

Mary L. Smith (Chicago Bar)

Mary L. Smith, who was first tapped for the post in April 2009, has languished in the Senate over Republican concerns about her lack of tax law experience. The Senate Judiciary Committee first approved her in June without any Republican support and her nomination was returned to the White House in December. Obama re-nominated her in January and she was reported out of committee again in February without any backing from Republicans.

The ex-partner at the Schoeman, Updike & Kaufman LLP and former in-house counsel to Tyco International Ltd., the international security products and services conglomerate, is not a tax lawyer or tax law specialist. In February, she started at the DOJ as Senior Counsel to Assistant Attorney General Tony West in the Civil Division, while she waits for the Senate to move on her nomination.

“I think they should bring in a more talented … knowledgeable tax person,” Sessions said.

The DOJ has defended Smith, who served on the Obama DOJ transition team overseeing the Tax Division. They said she has “extensive experience in financial litigation” and would be a “significant asset to the Tax Division.”

“We’ve certainly been working with people in Congress and the White House to try and get her a vote, it’s our hope that we will be able to get her a vote,” Attorney General Eric Holder said in a news conference this week. “We need all of these people — Assistant Attorney Generals. We need U.S. Attorneys confirmed. We need to have judges confirmed. We’ll have a Supreme Court nominee who will be named relatively soon that we’d like to have consideration of that person done as quickly as we can.”

A Democratic aide told Main Justice that Senate Majority Leader Harry Reid (D-Nev.) would have to file for cloture to cut off debate on her nomination. The aide said the minority leadership is holding up any nominee who is opposed by all Republicans in committee.

But Sessions said he hasn’t heard any discussion about moving her nomination.

Smith is the only Assistant Attorney General nominee who is still waiting for a vote in the Senate.

She was one of three nominees returned to the White House in December after waiting months for a vote in the Senate and re-nominated in January. One of the nominees, Christopher Schroeder for the Office of Legal Policy, was confirmed last month. The other nominee, Dawn Johnsen for the Office of Legal Counsel, withdrew her nomination last month.

Schroeder was only opposed by a few Republicans in committee. Johnsen received no GOP support in committee.

Additional reporting by Ryan J. Reilly.

The Justice Department tends to tout its successful prosecutions of tax fraud cases right before April 15 each year, according to a new study set to be published in the Virginia Tax Review.

For the study, Joshua D. Blank of New York University School of Law and Daniel Z. Levin of Rutgers Business School analyzed 782 news releases issued by the Department of Justice Tax Division from 2003 through 2009, in which the DOJ announced a civil or criminal tax enforcement action against a taxpayer.

The study, first reported by The New York Times’ Economix blog, found that DOJ disproportionately issued tax enforcement news releases during the weeks immediately prior to Tax Day — the April 15 deadline day for the filing of most individual tax returns — compared to the rest of the year. According to the authors, the spike is likely by design:

By presenting individual taxpayers with vivid examples in which the I.R.S. has detected tax fraud — whether it involves a popular celebrity’s phony business deductions, a high-profile banker’s offshore bank account or a local tire salesman’s underreporting of gross  income — the government may provide an individual taxpayer with available images that showcase the I.R.S.’s detection capabilities. Because the government consistently provides more of these images to individual taxpayers during the weeks leading up to Tax Day than it does during other times of the year, individual taxpayers may draw upon these available images as they teeter on the decision to claim questionable tax positions on their annual individual tax returns.

Read the full article here.

President Obama signaled last night that he does not intend to make recess appointments next week for three top Justice Department nominees who have languished in the Senate since last year.

Dawn Johnsen (Indiana University)

In a statement following the confirmation of 27 nominees last night, the president indicated that he didn’t plan to make recess appointments while Congress is gone for the President’s Day recess next week for Dawn Johnsen for the Office of Legal Counsel, Mary L. Smith for the Tax Division and Christopher Schroeder for the Office of Legal Policy. But he didn’t rule out bypassing Senate confirmation in the future for some nominees.

Mary L. Smith (Schoeman, Updike & Kaufman)

“While this is a good first step, there are still dozens of nominees on hold who deserve a similar vote, and I will be looking for action from the Senate when it returns from recess,” Obama said. “If they do not act, I reserve the right to use my recess appointment authority in the future.”

A recess appointment lasts until the end of the next congressional session. Recess appointments are done infrequently, because they usurp the Senate’s constitutional role, angering many senators. During his tenure President George W. Bush made a number of recess appointments, spawning objections from Democrats.

Christopher Schroeder (Duke University)

Obama said he was “gratified” that Senate Republicans lifted their holds on nominees that allowed the Senate to confirm three U.S. Attorneys, a DOJ director and 23 other nominees last night before it left Washington for a week-long “state work period.”

The Johnsen, Smith and Schroeder nominations were stalled in the Senate last year for months before they were returned to the White House in December. President Obama renominated them in January.