The slow unmaking of a tax institution

A system can survive change, but it struggles to survive forgetfulness.

Institutions rarely collapse in one dramatic moment. They thin out. They lose memory. Their edges blur until the work continues out of habit more than design. When a structure has been in place for nearly a century, its disappearance is less a policy choice and more a confession about priorities.

The dissolution of the Justice Department’s Tax Division fits that pattern.

It appears the government reached a point where the form of the thing mattered more than its function, and letting the form go became easier than sustaining it.

What happened?

The Justice Department formally eliminated its standalone Tax Division on November 30. All civil tax litigation now sits inside a new branch of the Civil Division. All criminal tax enforcement was transferred to the Criminal Division.

The move followed months of staff departures. Many attorneys left or were reassigned during a broader push to shrink the federal workforce. By late summer, the division had lost over a third of its career managers. Roughly 40% of appellate tax attorneys had left by August, leading to deadline extensions and withdrawals from active appeals.

In the 3M transfer pricing litigation, government counsel told the court that the restructuring would slow internal review.

Leadership for the new structure is set.

Joshua Wu will oversee civil tax matters. Jennifer Hodge will lead criminal tax work and supervise related enforcement units.

The reorganization leaves regulatory gaps. Numerous DOJ policies and regulations still refer to approvals or procedures anchored in the now-defunct division.

The Justice Manual and other internal authorities will require revision to identify who is empowered to authorize litigation and settlements. Former division leaders noted that these gaps could invite challenges from taxpayers if not corrected quickly.

The pattern beneath the action

The record suggests a fundamental truth.

When capacity shrinks faster than risk, institutions begin rearranging the furniture. The dissolution appears less like a strategic modernization and more like an administrative coping mechanism. The federal shutdown and ongoing attrition forced decisions that, in calmer periods, would have been postponed.

Tax enforcement already suffers from asymmetric incentives.

Civil cases move slowly. Criminal cases depend on coordination with agencies that have their own priorities. When the organizational spine weakens, the system bends toward delay. History suggests that once authority becomes diffused across multiple branches, consistency becomes harder to restore.

This moment also hints at a familiar cycle.

Consolidation is often justified as efficiency. But efficiency without clarity tends to erode accountability. If no one can point to the office that “owns” tax enforcement, the line between policy and improvisation becomes thin.

In practice

• Expect transition costs. Filings that once required a single signoff may now need multiple layers of internal review.

• Assume delays. Appeals, settlements, and approvals could take longer as new managers learn old files.

• Scrutinize authority. When encountering DOJ positions that rely on Tax Division approvals, check whether the underlying regulation has been updated or remains tied to a vacated title.

• Prepare for uneven enforcement. Criminal tax priorities may tighten around politically salient topics such as nonprofits and national security, while routine civil matters may lag.

• Watch the quiet cases. Employment taxes, offshore compliance, return preparer fraud, and promoter cases were long-standing priorities. Their trajectory will reveal whether the system is stabilizing or drifting.

The human element

Attorneys left, deadlines slipped, and the remaining staff had to keep the machinery running while the frame holding it together disappeared. The public sees a reorganization. The people inside know the cost of institutional fatigue.

Forward view

The new structure will function, but unevenly.

DOJ will patch the regulatory gaps, likely in stages. Priorities will shift with leadership and political direction.

In a few years, a report will note the complications of spreading tax enforcement across multiple branches and suggest another round of consolidation under a different name.