In January 2022, the Internal Revenue Service was cracking down on a tax dodge from the agency’s “dirty dozen” list of abusive shelters. To fight back, promoters of the scheme turned to the lobbyist Ken Kies.
In a conference call with lawyers and financial advisers, Mr. Kies outlined plans to fight the I.R.S., including by capitalizing on his close relationship with a top agency official, according to a recording of the call obtained by The New York Times.
Now Mr. Kies has become the Treasury Department’s top tax policy official. The former veteran lobbyist, who has worked for some of America’s biggest companies, was confirmed by the Senate last month to serve as Treasury’s assistant secretary for tax policy.
It is not uncommon in President Trump’s Washington for lobbyists or other interested parties to get high-level positions at agencies where they once sought access on behalf of corporate clients. But Mr. Kies is not just any lobbyist. For decades, he has played an instrumental role in enabling some of the most lucrative and most important tax avoidance strategies used by multinational companies and the wealthiest Americans.
When the Clinton administration sought to stem the tide of companies shifting trillions of dollars of profits into offshore havens, Mr. Kies led the effort on behalf of a coalition of businesses to kill the regulation. In the George W. Bush administration, Mr. Kies successfully pushed for legislation to make such offshore tax dodges even easier to execute. During the Obama administration, he fended off another attempted crackdown on those strategies.
In 2017, as part of a sweeping package of tax cuts signed by Mr. Trump, Mr. Kies lobbied for a new tax break that provides a 20 percent deduction to certain businesses, which overwhelmingly benefits the richest Americans. And most recently, he advised the Trump Organization on a dispute with the I.R.S.
His clients have included companies like General Electric, Microsoft, Goldman Sachs, Chevron, Pfizer, Bank of America, Aetna, Anheuser Busch, Time Warner and Caterpillar as well as hedge funds like Millennium Management and Elliott Management, private equity firms like General Atlantic, foreign giants like Deutsche Bank and numerous insurance companies.
In his new role, Mr. Kies will oversee about 100 attorneys and economists at the Treasury Department’s Office of Tax Policy, a powerful corner of the federal government. The office issues regulations to help the government administer tax laws and provides guidance that can render the latest tax-dodging strategy a gold mine — or doom it.
With the passage of a $4.5 trillion tax cut package, Mr. Kies’s office will have the responsibility to write the rules to interpret and administer the new law — an enormously powerful role, particularly given the fast speed at which the legislation was written and passed.
That office “is incredibly important,” said Reuven Avi-Yonah, a tax law professor at the University of Michigan. “In the end, the final call is from the Office of Tax Policy and they call the shots.”
Numerous industry groups are already lobbying the Trump Treasury Department to repeal a variety of rules issued by previous administrations, covering everything from credits for foreign taxes to complex tax shelters used by multinational companies.
Mr. Kies and the Treasury Department did not respond to a list of detailed questions.
Mr. Kies, who is considered technically well versed for a lobbyist, last served in government in 1998, as chief of staff to the congressional Joint Committee on Taxation. His clout was so well established that Fortune magazine nicknamed him “Mr. Tax.” Mr. Kies then left Capitol Hill and joined the accounting and lobbying firm now called PWC, where he took on a major assignment. The Clinton administration was trying to stem the damage from a regulation known as “check the box,” which made it easier for companies to shift profits into offshore tax havens. Mr. Kies rallied lawmakers from both parties to push back against the Clinton Treasury Department and preserve the regulation in full.
A few years later, he cemented that victory by lobbying Congress to pass a temporary law codifying rules that made such tax haven maneuvers even easier. (This temporary provision, known as the “look-through rule,” was made permanent in the legislation passed earlier this month.)
In late 2017, the Republican-controlled Congress passed the Tax Cuts and Jobs Act, a giant package of tax cuts that largely benefited wealthy Americans and big companies. The legislation included a new, reduced rate on the trillions of dollars of profits that multinationals had moved offshore thanks to Mr. Kies’s earlier lobbying successes.
One of the tax breaks that Mr. Kies successfully pushed to include in the law created a 20 percent deduction for the owners of so-called “pass through” businesses. (Those types of businesses, like partnerships, do not pay taxes themselves but instead pass on those obligations to investors.) He then lobbied on behalf of a life insurance trade group and persuaded regulators to ensure that life insurance brokers were eligible for the break. Recent congressional research found that nearly 90 percent of the tax break’s benefits flowed to the top 10 percent of taxpayers.
In 2019, Mr. Kies testified before Congress in favor of Mr. Trump’s argument for keeping his tax returns private. He was later enlisted by Boris Epshteyn, a top lawyer to Mr. Trump, to advise the Trump Organization on an I.R.S. audit, according to a person familiar with the matter. The dispute stemmed from a maneuver to avoid an estimated $100 million in taxes arising from a troubled Chicago skyscraper, according to a separate person.
More recently, Mr. Kies has worked to protect the strategy known as Malta Pension Plans, which wealthy Americans have used to cut their tax bills by moving assets into offshore vehicles.
In 2021, the I.R.S. added the tax dodge to its “dirty dozen” list, and its criminal division later issued summonses to people who may have used the deals, along with their tax advisers. In 2023, the Treasury Department issued a proposed regulation requiring users of the strategies to disclose them to the I.R.S. as so-called “listed transactions.”
Tax advisers convened several Zoom calls to strategize about how to salvage the lucrative arrangements.
Mr. Kies had been retained by the Gottlieb Organization, an Ohio based financial advisory firm whose head, Joshua Gottlieb, was barred by the Financial Industry Regulatory Authority in 2017 for failing to cooperate fully with the inquiries. Mr. Kies did not disclose his Malta assignment in any lobbying report.
In one call, from January 2022, Mr. Kies told the 30 or so assembled tax advisers that he could tap his close relationship with Nikole Flax, who ran the I.R.S. division that oversaw large businesses and international companies. (Ms. Flax, who now works at Mr. Kies’s former firm, PWC, did not respond to a request for comment.)
But if all else failed, Mr. Kies proposed a fallback strategy: Republicans could continue to defund the I.R.S. “I don’t want anyone to get their hopes up like that the I.R.S. is going out of business tomorrow,” he said.
He added: “If we could actually put people at the I.R.S., the world would be a better place.”
Ben Protess contributed reporting and Kitty Bennett contributed research.
Jesse Drucker is an investigative reporter for the Business section and has written extensively on the world of high end tax avoidance.
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