By Richard Rubin, Brian Schwartz and Tarini Parti

WASHINGTON -- President Trump is replacing the acting IRS commissioner that he appointed just three days earlier, according to people familiar with the matter, making a sudden shift that continues an unusual upheaval at the tax agency.

Deputy Treasury Secretary Michael Faulkender will now run the Internal Revenue Service on an acting basis, becoming the fifth person to hold that job so far this year.

The latest shift at the top adds even further turmoil to the IRS while the agency wraps up the tax-filing season and the Trump administration imposes far-reaching changes to tax administration. The IRS is shedding tens of thousands of workers and dialing back enforcement. It is also coming under pressure to pursue administration priorities, such as sharing data with immigration authorities and revoking the tax-exempt status of Harvard University.

Below the revolving door in the top job, the managers overseeing tax enforcement, human resources, finances, communications, privacy, risk, information technology and legal counsel have all left this year or are leaving soon. In addition, Gavin Kliger, one of the Department of Government Efficiency officials detailed to the IRS, has had his IRS access revoked, according to people familiar with the matter. It wasn't clear whether that was an indication of a diminished DOGE role at the agency, and a DOGE spokeswoman didn't immediately respond to a request for comment.

Faulkender will replace Gary Shapley, the former IRS criminal investigator who had criticized the government's investigation of Hunter Biden. Shapley, who had already been working at the Treasury Department, had just moved into the top IRS job on Tuesday. A memo signed by Trump appointed him to the post. Republicans, including Sen. Chuck Grassley (R., Iowa), cheered Shapley's appointment as the ascendance of a one-time whistleblower getting the chance to lead.

Treasury Secretary Scott Bessent, whose department includes the IRS, said Friday that Faulkender is the "right man for the moment" and that Shapley would remain involved in rethinking the IRS and rebuilding trust. A Treasury spokesperson said Faulkender's experience at managing high-level government programs was important. Shapley is an IRS veteran but not someone who has been a senior manager in the sprawling agency.

"Gary Shapley's passion and thoughtfulness for approaching ways by which to create durable and lasting reforms at the IRS is essential to our work, and he remains among my most important senior advisors," Bessent said.

Bessent recently spoke to Trump about Shapley's appointment to run the tax agency, according to a person familiar with the matter. Bessent said he should have had more input, and argued, in his view, that the appointment was heavily influenced by Elon Musk, the billionaire who is a close adviser to Trump.

This isn't the first time Musk has gone around Bessent and other cabinet officials. In February, after Musk orchestrated the sending of a mass email to all federal employees titled "what did you do last week?" Bessent and the entire cabinet weren't given a heads up or a say in drafting the original email, according to people familiar with the matter.

Shapley had replaced former IRS executive Melanie Krause, who had replaced longtime IRS official Douglas O'Donnell, who had replaced Danny Werfel, the Biden-nominated commissioner who resigned on Inauguration Day. Shapley is expected to remain a senior official in the IRS's criminal investigation division, one of the people said.

Trump has nominated Billy Long, a former Republican congressman from Missouri, to run the agency on a long-term basis. If confirmed, he would replace Faulkender and fill the rest of Werfel's term through November 2027. The Senate Finance Committee hasn't scheduled Long's confirmation hearing, and Democrats are criticizing his ties to firms promoting questionable tax credits.

The Trump administration has been shrinking the IRS, reversing the Biden-era expansion that bolstered tax enforcement. The IRS fired more than 7,000 probationary employees earlier this year. About 20,000 more expressed interest in taking a deferred-resignation offer and layoffs are possible. The agency started the year with about 102,000 workers.

"You can't make this stuff up," said John Koskinen, who was IRS commissioner from 2013 to 2017. "The continual changes at the top of the IRS, along with the loss of thousands of experienced employees, means that the agency will be challenged to provide efficient service to taxpayers and to collect all the taxes owed."

The Trump administration, in coordination with DOGE, has also been reworking IRS computer systems, aiming to reduce the government's reliance on outside contractors and accelerate its deployment of new technology. The administration has also pushed an agreement for the IRS to share certain data with immigration authorities that it had previously not disclosed.

The New York Times earlier reported Shapley's exit from the acting commissioner job.

Faulkender served in the Treasury Department in a nontax role during the first Trump administration, working on the Paycheck Protection Program and other issues before returning to the University of Maryland, where he taught finance courses. The Senate voted 53-43 last month to confirm him as deputy secretary.

Write to Richard Rubin at richard.rubin@wsj.com, Brian Schwartz at brian.schwartz@wsj.com and Tarini Parti at tarini.parti@wsj.com

(END) Dow Jones Newswires

April 18, 2025 16:32 ET (20:32 GMT)

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