2-year saga of the tax enforcer who wasn't there

[March 08, 2011]  WASHINGTON (AP) -- Mary L. Smith would have been the top enforcer of the nation's tax laws, the highest Justice Department position ever attained by a Native American.

But in a two-year saga that is pure Washington, the leadership post she was to occupy remains vacant.

So the Justice Department's tax enforcement team heads into a third-straight federal tax-filing season without a chief chosen by the president and confirmed by the Senate. And the Obama White House is still hunting for a new nominee.

Though far less visible than, say, the chief of the department's criminal division, the assistant attorney general who heads the tax division commands nearly 400 lawyers, manages an annual budget of more than $100 million, and supervises thousands of court cases against taxpayers large and small who run afoul of tax laws.

Twice nominated by President Barack Obama and twice done in by Senate Republicans who called her unqualified, Smith is serving elsewhere -- as senior counsel to the assistant attorney general for the civil division, Tony West.

At the tax division, the position for which Smith was nominated has been filled on an interim basis by John DiCicco, a career department lawyer.

DiCicco has become one of those rare federal officials who serve so long in an acting capacity -- more than two years in his case -- that they bump up against a little-known time limit set by the Federal Vacancies Reform Act of 1998. Because of that law, DiCicco was no longer acting assistant attorney general for the tax division as of midnight last Thursday. But the law also prevents naming a new acting chief at this point.

That prompted action of sorts at the White House and the Justice Department.

"We're identifying the best possible candidate to fill this role, and we hope to make the nomination soon," White House spokesman Reid Cherlin said. But such searches are always harder when the job can only be guaranteed for less than two years.

The Justice Department came up with a lawyerly solution to deal with the dilemma posed by the reform act. The department replaced the word "acting" in DiCicco's title with the word "deputy."

"Deputy Assistant Attorney General DiCicco will continue to lead the division until a confirmed assistant attorney general is in place," department spokesman Matthew Miller said.

"The day-to-day operations of the tax division are not affected by the change in his title," Miller added. But the division will now work closely with Associate Attorney General Thomas Perrelli's office on matters that need higher-level attention, such as settlements of major tax cases.

Smith, a member of the Cherokee Nation of Oklahoma, grew up in Chicago and graduated magna cum laude from Loyola University in 1984. She became a lawyer and served in the mid-1990s as a trial attorney in Justice's civil division.

She worked on President Bill Clinton's 1996 re-election campaign, spent three years as associate director of policy planning for Clinton's Domestic Policy Council and was a lawyer in the White House's counsel's office.

After the Clinton administration, she went to the Washington law firm of Skadden, Arps, Slate, Meagher & Flom and specialized in governmental investigations and securities class-action lawsuits. She moved to Tyco International (US) Inc. as senior litigation counsel and managed a massive lawsuit against the company that was settled for $3 billion.

She left Tyco to work full-time for Hillary Rodham Clinton's presidential campaign and later joined Barack Obama's campaign as a member of the Women's Leadership Group, the Native American Policy Committee and the Criminal Justice Policy Committee. After the 2008 election, Obama put her on the Justice Department transition team, where she oversaw tax division issues. In April 2008, Obama announced he would nominate her.

The Senate Judiciary Committee twice voted along party lines to recommend her nomination to the full Senate, which did not act on it either time. Her first nomination was returned to the White House in December 2009; the second nomination, last August. That marked the end of the effort to put her in charge of the tax division.

Sen. Chuck Grassley of Iowa, now ranking Republican on the Senate Judiciary Committee, had called her "a very nice person and a competent attorney." But Grassley opposed her because she "does not have the requisite tax background."

Another Judiciary committee Republican, Sen. Jeff Sessions of Alabama, said he was glad Obama did not nominate her a third time. The tax division chief, said Sessions, "has to have judgment and experience in taxes -- in my opinion."

When Smith's nominations emerged from committee, contentious issues like health care and Wall Street reform soaked up the Senate's time, leaving little room for lesser matters. Smith and some other nominees were squeezed out by Republican opposition and the press of other business.

But does it matter if the tax division goes more than two years without a leader who has the imprimatur of two branches of government?

Yes, says Mark E. Matthews, who was deputy assistant attorney general of the tax division from 1994 to 1998.

"A Senate-confirmed assistant attorney general in the tax division elevates the Justice Department's voice and influence in broader tax administration issues involving the IRS and the Treasury Department," said Matthews, now a partner at Morgan Lewis in Washington.

"Within the Justice Department, it is generally believed a confirmed assistant attorney general has additional leverage in budget discussions that are critical to the division's success," added Matthews, who was chief of the IRS criminal investigation division from 2000 to 2002 and deputy commissioner of the Internal Revenue Service from 2003 to 2006.

[Associated Press; By PETE YOST]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.