The Internal Revenue Service has fired Holly Paz, a senior official who served as a close aide to former IRS official Lois Lerner and was linked to the agency’s 2013 scrutiny of conservative groups, agency sources told Fox News Digital.
Paz, who most recently served as commissioner of the IRS’s Large Business and International Division, was placed on administrative leave last month and terminated Monday following an internal review, according to those sources. The review came after questions were raised by lawmakers about a subordinate work unit focused on auditing pass-through businesses that Paz had been assigned to lead.
Paz had been a deputy to Lerner during the Obama administration and was involved in reviewing tax-exempt applications. In 2013, the IRS acknowledged it had subjected applications containing phrases such as “Tea Party,” “9/12” and “Constitution” to heightened scrutiny. The Treasury inspector general later found that "inappropriate criteria" were used and criticized oversight failures that allowed systemic bias.
The agency has faced years of litigation and political fallout over the episode. In a 2017 settlement with affected conservative groups, the IRS apologized and acknowledged it had wrongly screened and delayed tax-exempt determinations, saying in part that "its treatment of Plaintiffs during the tax-exempt determination process...was wrong."
The recent scrutiny that preceded Paz’s firing centered on a work unit created to audit pass-through businesses. The unit was described by then-IRS Commissioner Danny Werfel as a step to ensure the agency "holds the nation’s wealthiest filers accountable," and Paz previously called the unit an "important change" in IRS structure, according to the sources.
Treasury officials did not comment on the personnel decision. Fox News Digital reported that Scott Bessent, who has been serving in a senior Treasury role, has emphasized efforts to "de-weaponize" the IRS; the outlet said Bessent and IRS officials are also working to improve customer service, streamline technical improvements and reduce hiring expansion from the previous administration.
Paz and Lerner previously sought to keep their depositions in litigation over the Tea Party targeting sealed, citing concerns about threats. The targeting episode drew extensive congressional and inspector general scrutiny, and led to policy and staffing changes within the IRS.
Lawmakers on both sides of the aisle have continued to press the agency on past conduct and current enforcement priorities. The firing of Paz is the latest development as congressional attention remains focused on how the IRS structures enforcement units and ensures impartial application of tax laws.
The IRS has not released a public statement detailing the reasons for Paz’s dismissal. Media outlets and congressional offices have sought further comment from Treasury and IRS leadership.
Reporting on the personnel move relied on sources familiar with the internal review and the Fox News Digital report. The agency’s 2013 targeting revelations, the 2017 settlement, and subsequent oversight findings remain central to ongoing debates in Congress over the IRS’s role and safeguards against partisan misuse of enforcement authority.