The Internal Revenue Service has issued a notice of proposed removal to Holly Paz, a longtime IRS official and former deputy to Lois Lerner who was involved in the agency’s scrutiny of conservative groups a decade ago, Fox News Digital reported.
Paz was placed on administrative leave last month and received the formal notice, sometimes called a "pink slip," on Monday, according to the report. As is standard in the process, she has 30 days to respond while the agency completes an internal review; her attorney told Fox News Digital the review is not finished and she remains employed by the IRS on leave pending any final decision.
Paz served as a deputy to Lerner during the Obama administration and has been described in reporting as a key link between the Cincinnati office where extra scrutiny of tax-exempt applications occurred and IRS headquarters. In 2013, the agency acknowledged it had subjected applications that referenced terms such as "Tea Party," "9/12" and "Constitution" to heightened review. The Treasury Department's inspector general later found that the IRS used "inappropriate criteria" and criticized oversight failures that led to systemic bias.
The proposed removal comes after scrutiny of a subordinate work unit focused on auditing pass-through businesses that Biden-era Commissioner Danny Werfel created and assigned Paz to lead, Fox News reported. Werfel has described the unit as a measure to ensure the IRS holds high-income filers accountable, and Paz has characterized the change as an "important" restructuring.
The targeting controversy drew national attention in 2013 after the IRS admitted it had applied extra scrutiny to conservative and Tea Party-related groups seeking tax-exempt status. After years of litigation, the agency in 2017 settled lawsuits with affected groups. In that settlement the IRS apologized, saying its treatment of plaintiffs "including screening their applications based on their names or policy positions, subjecting those applications to heightened scrutiny and inordinate delays" was wrong.
Fox News Digital reported that the proposed removal has been characterized internally as part of efforts to address concerns about "weaponization" of the agency. The report said Scott Bessent, in roles described by the outlet as overseeing changes at the agency, has sought to improve taxpayer service and streamline operations.
An IRS official, Paz’s attorney and other agency spokespeople did not provide immediate detailed public comment to Fox News. The notice of proposed removal begins an administrative process that gives the employee the opportunity to respond before any final personnel action is taken.
The episode adds a new chapter to a long-running controversy over the IRS's handling of political groups and broader questions about enforcement priorities and internal oversight at the agency. Congressional attention to the matter has persisted since the original disclosures in 2013, and the settlement of civil litigation in 2017 did not end oversight scrutiny from lawmakers on both sides of the aisle.
Fox News Digital’s reporting on the notice of proposed removal has been updated to clarify that Paz remains employed by the IRS on administrative leave while the review continues.
Paz’s response period and the internal review timeline will determine whether the proposed removal becomes final. Any final action or statements from the IRS are expected to be made public as the administrative process unfolds.