In a stunning IRS leadership shake-up, Gary Shapley has been replaced after questions emerged over Elon Musk’s influence. Treasury Secretary Scott Bessent has appointed Michael Faulkender to restore trust amid agency reforms and mounting controversy.

Treasury Secretary Overrules IRS Appointment Following Musk Ties

In a stunning development, Gary Shapley has been removed as acting commissioner of the Internal Revenue Service, just days after assuming the role. The decision followed behind-the-scenes concerns raised by Treasury Secretary Scott Bessent, who reportedly told President Donald Trump that Shapley’s appointment was made without his knowledge and under the influence of Elon Musk, according to a source familiar with the discussions.

After Bessent’s intervention, Trump approved the reversal, triggering a new chapter of leadership at the IRS during a period of rapid, controversial transformation.

Michael Faulkender Tapped to Lead IRS Amid Call for Reform

In Shapley’s place, Deputy Treasury Secretary Michael Faulkender has been appointed as the new acting IRS commissioner. Bessent emphasized that restoring public trust in the agency is a top priority.

“Trust must be brought back to the IRS,” Bessent said in a statement. “Michael Faulkender is the right man for the moment.”

While Shapley has been removed from the top post, Bessent noted that he would continue serving as a senior adviser on IRS reform, citing his deep institutional knowledge and commitment to long-term improvements.

Rising Tensions Between Elon Musk and Treasury Leadership

The shake-up comes amid growing signs of tension between Elon Musk, who heads the Department of Government Efficiency (DOGE), and Treasury leadership. Musk recently reposted far-right activist Laura Loomer’s accusations against Bessent, suggesting a “vetting crisis” in the Trump administration and criticizing Bessent’s political ties.

“Troubling,” Musk posted on X, in response to Loomer’s attack thread.

Although Trump has previously praised Musk’s role in the Cabinet, asserting he has “never asked him for a thing,” this latest development raises fresh questions about the extent of Musk’s influence in shaping federal policy, especially in cost-cutting efforts across agencies.

Sweeping Changes and IRS Leadership Turmoil

The decision to remove Shapley is just the latest in a series of dramatic leadership shifts within the IRS since Trump’s return to the White House. The agency has seen rapid turnover, including the resignation of:

• Melanie Krause, who stepped down earlier this month over a controversial data-sharing agreement with the Department of Homeland Security
• Rajiv Uppal, the IRS Chief Information Officer, who resigned on the eve of Tax Day

Uppal’s resignation paved the way for Kaschit Pandya, DOGE’s former CTO, to step into the role another clear sign of DOGE’s growing control over IRS operations.

Additionally, Gavin Kliger, a top official at DOGE, has had all access to IRS systems and buildings revoked, signaling internal conflict over data governance and operational authority.

Massive Staff Reductions and Efficiency Drives Spark Alarm

Sources familiar with IRS operations say the Trump administration, under DOGE’s leadership, has slashed IRS executive oversight of IT systems from roughly 100 leaders down to just three. These changes are part of a broader cost-cutting campaign led by Musk’s department.

Current and former IRS employees describe the situation as deeply unsettling, with essential departments like human resources and employee support being deemed “non-essential.”

“The agency has undergone a rapid and disturbing shift,” one outgoing IRS staffer told NBC News.

Multiple insiders revealed that these drastic cuts were implemented without full Treasury approval, highlighting an apparent disconnect between DOGE and broader federal leadership.

Shapley’s Whistleblower Past and Political Support

Shapley, a career IRS criminal investigator, gained national attention in 2022 as a whistleblower in the Hunter Biden tax case, publicly criticizing what he described as government mishandling. His elevation to commissioner earlier this week was celebrated by Sen. Chuck Grassley, who has championed Shapley and fellow whistleblower Joseph Ziegler for leadership roles.

Shapley had replaced Melanie Krause, who herself had succeeded Douglas O’Donnell, a veteran IRS official who retired amid growing concerns over DOGE’s access to taxpayer information.

Permanent Leadership Still Pending Senate Confirmation

While Faulkender will serve as acting commissioner, Trump has already nominated Billy Long, a staunch Trump ally, to be the IRS commissioner through November 2027. Long’s nomination is pending a Senate confirmation hearing, expected later this year.

Power Struggles and Reform Collide at a Critical Agency

The IRS, an agency long insulated from political influence, is now at the center of one of the most significant internal restructurings in its history. The sudden dismissal of Gary Shapley, the rise of DOGE-led reforms, and Elon Musk’s perceived influence signal a broader attempt to reshape the federal government’s approach to data, spending, and governance.

Whether this strategy leads to a leaner, more efficient IRS or a fractured one caught in power struggles remains to be seen.