A senior IRS official closely tied to former Obama appointee Lois Lerner, has been issued a notice of proposed removal from the agency, Fox News Digital has learned.
The notice — a formal step in the federal termination process — gives Holly Paz 30 days to contest her dismissal. She remains on administrative leave while the IRS weighs a final decision, the outlet noted exclusively.
Paz, who most recently served as commissioner of the IRS Large Business and International Division, was a central figure in the agency’s 2013 scandal involving the targeting of conservative groups seeking tax-exempt status. At the time, Paz was one of Lerner’s top deputies in the Exempt Organizations unit and admitted in closed-door congressional testimony that she reviewed and approved applications flagged for “political activity.”
Critics said her involvement helped institutionalize bias against Tea Party and other right-leaning organizations.
Lerner later resigned amid the uproar, while Paz kept a lower profile but continued rising through the agency’s ranks.
Paz’s removal notice, sources said, was delivered Monday, Fox reported.
Paz was placed on administrative leave last month and was later notified of her proposed removal following an internal review, according to sources. Her attorney told Fox News Digital that the review is still ongoing.
A longtime deputy to Lois Lerner during the Obama administration, Paz played a prominent role in the 2013 controversy that revealed the IRS had improperly scrutinized applications for tax-exempt status containing terms such as “Tea Party,” “9/12,” and “Constitution.”
The Treasury Department’s inspector general confirmed that “inappropriate criteria” were used to single out conservative groups, faulting the agency for lax oversight that allowed political bias to shape the review process, Fox noted further.
The IRS’s targeting spanned more than two years, delaying approvals and drawing widespread condemnation. Paz has been identified as a key figure in the operation, reviewing applications and serving as a conduit between the Cincinnati field office where the screenings occurred and IRS headquarters in Washington.
Paz’s proposed removal comes amid congressional scrutiny of a specialized IRS unit she oversaw that was tasked with auditing pass-through businesses, Fox reported.
The unit was created under Biden-era Commissioner Danny Werfel, who described it as a major step toward ensuring the nation’s wealthiest taxpayers are held accountable. Paz at the time called the initiative an “important change” in the agency’s structure.
Her case also revives memories of the IRS’s 2013 scandal, when Tea Party and other conservative groups accused the agency of unfairly targeting their tax-exempt applications. After years of litigation, the Trump administration reached settlements with the affected groups in 2017.
During the Tea Party targeting litigation, Lerner and Paz petitioned federal courts to permanently seal their testimony, citing fears of death threats.
The scandal erupted in 2013 after the IRS admitted it had subjected conservative groups applying for tax-exempt status to heightened scrutiny. Lerner quickly became the public face of the controversy, though other officials, including Paz, were also implicated in the review process.
In a 2017 settlement, the IRS issued an apology and added it “admits that its treatment of Plaintiffs during the tax-exempt determination process, including screening their applications based on their names or policy positions, subjecting those applications to heightened scrutiny and inordinate delays, and demanding some Plaintiffs’ information that TIGTA determined was unnecessary to the agency’s determination of their tax-exempt status, was wrong.”
“For such treatment, the IRS expresses its sincere apology,” the IRS said at the time.
The move marks the latest step in Treasury Secretary Scott Bessent’s push to “de-weaponize” the IRS while serving as acting commissioner.
According to sources, Bessent has been in close contact with Hunter Biden whistleblowers Gary Shapley and Joseph Ziegler and has held multiple meetings with senior IRS leadership.
Sources told Fox News Digital that Bessent and IRS leadership are focused on improving taxpayer services and outcomes, streamlining technical upgrades, and reducing what they view as excessive hiring under the Biden administration, Fox noted.
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