This transcript has been edited for clarity.

David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: stepping away after two decades.

In 2020 the IRS created its first national fraud counsel role, and tapped a longtime IRS employee, Carolyn Schenck, to serve in it. Now, after 20 years at the IRS, and five years as national fraud counsel, Carolyn has retired from government work. During her career, Carolyn has witnessed many changes at the IRS, from the expansion of the offshore compliance initiative to adjustments made during the pandemic, and recently to the impacts of staff attrition.

Tax Notes senior legal reporter Nathan Richman recently sat down with her to get her take on her career, the agency, and what's next. Nate, welcome back to the podcast.

Nathan Richman: As always, thanks for having me.

David D. Stewart: So first off, could you give us some background on Carolyn?

Nathan Richman: As you mentioned, she's a 20-year veteran of the IRS Office of Chief Counsel, and she was the first IRS national fraud counsel.

David D. Stewart: And so what all did you talk about?

Nathan Richman: We discussed her time as national fraud counsel, the administration's enforcement priorities, and her move to private practice.

David D. Stewart: All right. Let's go to that interview.

Nathan Richman: Well, Carolyn, thanks for joining us on the podcast.

Carolyn Schenck: I appreciate you having me. Thank you.

Nathan Richman: So why don't you start by telling us about yourself? How did you come to the IRS and what attracted you to fraud?

Carolyn Schenck: Sure. Well, I guess a little bit about me. I grew up in Connecticut. I went to high school and college in Arizona. I moved to the Washington, D.C. area, first working for the Department of Defense, and then ultimately worked for John McCain in his 2000 presidential campaign as an aide. I worked on his national appearance schedule as well as managed his advanced teams. He was not successful in his bid for the presidency back in 2000, or 2008, of course. And so I went to law school at Pepperdine University. I started off my legal career as a prosecutor for the Securities and Exchange Commission, and then came to the IRS in 2006.

Nathan Richman: OK. So now you've graduated law school, you're straight to the IRS?

Carolyn Schenck: After I went to the SEC, then I came to the IRS. I was in the Los Angeles office as a line attorney for SB/SE [Small Business/Self-Employed] Office of Chief Counsel. In that capacity, I worked a number of different cases and investigations, both working with revenue agents and revenue officers, as well as CI [Criminal Investigation] agents, as they built all kinds of cases, stemming from just your basic income tax case for unreported income, to some dispensary cases, to the more complicated offshore cases.

So after I was on the front lines as an attorney, I was promoted to senior counsel, and then assistant division counsel for international, where I took over our offshore program. In that capacity, I was responsible for a number of different program areas relating to international information return penalties, foreign bank account penalty cases, as well as cases not only being investigated in the IRS, but also the cases that were at the Department of Justice for trial.

Nathan Richman: And this is when you were working on a lot of these John Doe summonses?

Carolyn Schenck: That's right. One of my other responsibilities and actually great honors was as counsel to the offshore compliance initiative, which was a program set up by the IRS to look at more complicated compliance and enforcement issues. The program originally stood up in connection with the offshore program and offshore banking. It stemmed from the offshore credit card program back in the early 2000s, where the IRS issued approximately 150 or so John Doe summonses in connection with that effort, which then of course led to the offshore credit card compliance project and initiative. And so in my capacity as counsel to the offshore compliance team, I helped generate and supervise approximately 60 John Doe summonses: those related to areas of offshore tax, private banking, correspondent banking, to enablers, both located within the U.S. as well as outside the U.S. And then the program at that point then moved to some of the other areas where the IRS noticed that there was a threat to the overall financial integrity and the collection of tax and that related to digital assets. And then the team moved into the gig economy.

Nathan Richman: And some of those are from your time as head of the international compliance program, but some of that is when you had moved to your most recent role in 2020, right?

Carolyn Schenck: That's correct. But I did keep my other position as well. So from approximately May of 2020 through the time I retired, I held the post of national fraud counsel, as well as what then evolved to be the senior level counsel for offshore. So in those two capacities, I maintained my support for the offshore compliance initiative and leading our counsel team in producing a lot of these John Doe summonses.

Nathan Richman: So you were the first national fraud counsel. What was it like building that role, especially during the pandemic?

Carolyn Schenck: Well, first and foremost, it was an absolute honor. Commissioner [Charles] Rettig appointed me to the position in May of 2020. I was incredibly excited to work with the first ever Office of Fraud Enforcement Director Damon Rowe who's, first of all, just a fantastic human being, but also a very gifted investigator and leader from the Criminal Investigation division. It was quite intimidating, as well as just a phenomenal opportunity to bring programs IRS-wide and Department of Justice-wide together in a collaborative effort to streamline and strengthen the fraud program.

Nathan Richman: So why did you decide to leave the IRS and why now?

Carolyn Schenck: Sure. I was given the opportunity for early retirement, and it was a very difficult decision for me to make on a number of fronts — I mean, personally and professionally. First and foremost, I absolutely loved my job, and I loved the people I worked with. I think, first of all, I realize the IRS is probably one of the least popular places on the planet to work for. And that being said, the people that work for that organization are really top-notch. I had a similar experience with the department as well, not only with Tax Division but also with U.S. attorney's offices around the country. So, it was a difficult decision for me to make. I felt that it was the right time just personally and for my family, given the opportunity to retire.

Nathan Richman: So in 2025, we've heard a lot about changes at the IRS. You've left fairly recently — your last day, the last day of September; first at the new firm, first day of October. What can you tell us about what has been going on at the IRS in 2025?

Carolyn Schenck: Sure. First of all, the timeline is accurate. I left on September 30 and started at Caplin & Drysdale on October 1. As far as some of the changes that the IRS has experienced, I think probably first and foremost is changes in personnel. There were a lot of opportunities for IRS employees to leave early, whether it be they retired under a traditional retirement regime or under an early retirement package that was offered. I know that many of my colleagues did pursue that and they did ultimately retire, and this is colleagues across the board in IRS-CI, Office of Chief Counsel, and then throughout the IRS generally.

Nathan Richman: So this is the drop of approximately 25 percent of the IRS's personnel so far, and pretty heavily weighted towards the top, the people with experience rather than the newcomers, right?

Carolyn Schenck: That's right, because it was people with experience who had the opportunity to retire because there's obviously certain threshold requirements as far as that. And it was not only just people at the top in terms of executives, I think is the word that you used, but down to people who were in different levels of the government as well. Of course, there were other folks who moved on because they didn't want to handle, or they couldn't handle, the uncertainty of where they may be going in terms of any kind of a reduction in force, the prospect of being furloughed. I will say that is a pretty intimidating concept to have at your back door, to [not] know whether or not you are going to be going to work in the next week, the next month, the next year.

I think many people at the government would not think that that's a situation that they would ever be in. I think historically working for the government is something that has always yielded a bit of comfort as far as job security. So I think that's changed for many people who are working for the government now.

So I think personnel is probably one of the biggest changes. With a reduction in personnel and staffing, the obvious downstream collateral damage of that is a reduction in overall function, whether it be taxpayer services, enforcement initiatives, compliance initiatives, or just run-of-the-mill business that the IRS does. And when I say run-of-the-mill, I'm using that term casually, not to minimize the IRS's operations in any way, but just the basic functions that the IRS has. There's been an overall impact on the reduction in staffing on the basic functions of the IRS. I think also we've seen some reductions in the Department of Justice that has impacted the IRS as well.

The IRS relies very closely on the excellent relationship it has with the department in defending tax-related refund suits, as well as other tax-related suits against the government, and prosecuting the IRS's most egregious offenders. So, reduction in DOJ staffing, and of course, with the recent reorganization of the Tax Division, that has had an impact as well on IRS's functions.

Nathan Richman: Do you know if there are any changes besides the personnel coming to OFE [Office of Fraud Enforcement] or the national fraud counsel?

Carolyn Schenck: I believe both programs are still vibrant. The Office of Fraud Enforcement and its partnership with the national fraud counsel still very much exists, and they, from what I understand, are still very much lockstep, which is how it was when I left the government.

The Office of Fraud Enforcement has had a reduction in staffing, which is to be expected. It's similar to the rest of the overall IRS footprint in terms of personnel. But I believe it's maintained a close relationship with the Office of Chief Counsel.

One of the things that I focused on during my time as the national fraud counsel was building up the relationships, not only of the employees to the Office of Fraud Enforcement on the IRS side, but also strengthening the IRS counsel bench in terms of supporting the Office of Fraud Enforcement and the overall fraud initiatives. The way that we structure the national fraud counsel and the supporting team was that there was a person in each counsel office who was the named point of contact for fraud issues.

Now, it didn't mean that that person only worked fraud cases, or that was the only person working fraud cases, because the sheer volume of fraud matters within the government required additional legal support than just one person. That person served as a point of contact for the boots-on-the-ground fraud enforcement adviser to work one-on-one with issues that may have arisen in a particular case, or to work a particular issue with an attorney in the office.

The other thing that having that kind of a structure allow the national fraud counsel team to do generally is, first of all, not only to be nimble, but also to have a line of sight into consistent treatment of cases. Now, when I say consistent treatment, that doesn't in any way mean cookie cutter, it just means that there is some consistency in not only how cases are being examined, but also how cases are being tried. So if there are certain lines of questioning, or approaches to a particular case, or an issue that was successful, or conversely, if it was not successful, then it was communicated through a strong network of attorneys, as well as the Office of Fraud Enforcement to just overall strengthen the program.

One of the other things that I focused on as the national fraud counsel in partnership with the Office of Fraud Enforcement was overall cycle times. And what I mean by cycle time is that the amount of time that a case is spent in fraud development status. Now, I can imagine how incredibly intimidating it is to go through an IRS examination, especially if there are issues that may warrant either a criminal investigation look, or a special enforcement program look, or even to have the potential interaction of a fraud enforcement adviser. Those typically are cases where they are big issues, or big dollar amounts, or complicated issues. And so I can imagine how stressful and scary that would be for the American taxpayer to go through.

Now, that being said, having a case open for one, two, three, four, five years, doesn't behoove the government either, because the nature of evidence changes, for example, things disappear, things no longer are available, things are no longer within the government's reach, taxpayers may have moved, they may have passed away. It just leaves on the table a complicated set of issues.

So for having cases open for long cycle times is something that both the Office of Fraud Enforcement as well as the national fraud counsel tried to reduce. And one of the ways we did that was making sure that both sides of the house, the IRS side, as well as the counsel side, had sufficient training to recognize the issue. And there was a focus put on making sure the case was put in the correct treatment stream.

So early on, detect, is there an affirmative indicator of fraud here? If so, what's the level? Consult with an FEA [fraud enforcement adviser]. Let's throw it over to the Criminal Investigation division as far as a fraud referral. And if not, let's consider it for civil fraud penalty. And if not, then let's just move forward on a regular potentially negligence penalty case. But the goal was to move the cases through the process quicker to maximize efficiency and overall taxpayer experience.

Nathan Richman: Let's give our listeners a quick rundown of what the point of the Office of Fraud Enforcement and national fraud counsel is in the context of civil examinations and criminal examinations. These are the people put in place to follow up on case law saying that the IRS can't hide a criminal investigation behind the guise of revenue agents and revenue officers. So there has to be some transition spot for those fraud cases to move from civil to criminal. Have I summarized that vaguely correctly?

Carolyn Schenck: Sure. Let's back up a little bit though, and let me kind of reframe [where] you might be going here. So, I believe you're talking about the [United States v. Tweel] case, which involved a situation where a misrepresentation was made to a taxpayer by a civil agent, and really the case was in criminal investigation, but it was represented to the taxpayer that it was not.

There is a long-standing history and set of procedures laid out in the Internal Revenue Manual, which governs every single movement of an IRS employee, by the way. It's extremely detailed. It's very thoughtful. That walks through how an examination is to be conducted. And that manual goes from the first contact letter to closing out a case and everything in between. And the Office of Fraud Enforcement was put into place to serve as a liaison between the civil side and the criminal side, when situations come up where there is indicia of fraud, and making the determination, number one, in working closely with the IRS, on when, and if, the appropriate treatment scheme is to refer the case to Criminal Investigation division. So that process has been in place for a very long time. And I believe, and I would hope that it would continue.

Now, in terms of that particular case, I believe that the Tweel case is often misquoted and waved around by defense counsel as a way to potentially poke holes in the government's investigation. I have not seen a Tweel violation or anything that comes close to it during my entire 20 years at the IRS. I have seen situations where there have been allegations that there were Tweel, or there was Tweel present, and I did not think that that happened under those circumstances.

So, I think the other thing is that while the reality of a Tweel violation may be quite low, it's something that the IRS takes incredibly seriously, because the entire system of our examination is set up on very specific rules and touchpoints when it comes to the issue of fraud. And those safeguards are in place to make sure that there is no Tweel violation.

And I will say that during the time that that issue has come up, it has been an all-hands-on-deck situation to evaluate, not only from criminal tax side of counsel, but also on the civil counsel side of whether or not there's ever any even hint of being an issue.

Nathan Richman: So you just left as the first national fraud counsel. Damon Rowe has for a while been at Meadows Collier. Those two positions, OFE head and national fraud counsel, are they currently open? Is there anybody in the running to fill them permanently? Any tea you can spill with us?

Carolyn Schenck: The tea that I will spill is that fraud very much remains an area of focus for the Internal Revenue Service, as well as the Department of Justice, with respect to tax cases.

Damon Rowe left, I believe, in 2022. And after he left, there was a series of actors in place in his position. So the Office of Fraud Enforcement, after Damon left, was still very much functioning and alive. As the national fraud counsel program has evolved, I have had a series of staff attorneys who have worked with me, and they've rotated with me either on an annual or biannual basis. And then of course, we've maintained the cadre of attorneys out in the field.

In terms of the national fraud counsel going forward, all signs at the time that I left pointed to the IRS chief counsel very much remained committed to the national fraud counsel position, and overall program and support of the IRS client in that regard. So to the extent that there's an actor in now that may just be in place, given the current landscape of personnel type issues with the federal government, I would fully expect and support them to appoint another national fraud counsel.

Nathan Richman: As national fraud counsel, I presume you regularly interacted with IRS Criminal Investigation division. Can you tell us anything about what's going on there right about October of 2025?

Carolyn Schenck: Sure. I can talk about some of the things that I know. First and foremost, with respect to the Joint Chiefs of Global Tax Enforcement, or the J5, that very much remains a part of IRS-CI. It remains still a multicountry partnership between not only IRS-CI but also the United Kingdom, Canada, Australia, and the Netherlands. So that's very much still functioning at this point.

Also, there are still numerous tax investigations going on. I think we are seeing some of the fruits of those with indictments being filed and plea agreements coming down. So while I have not been there, as of late, it seems that the office is still very much functioning.

Nathan Richman: Also, we've been hearing a lot about the IRS's enforcement priorities in the new administration, and most recently, about the idea of CI spending more time looking at tax-exempt organizations. On the one hand, we've heard a lot of concern that the administration could be trying to target opponents based on the content of their speech, but on the other hand, there's an idea that maybe if an inquiry is conducted [in] a content neutral manner, there may be some value to placing enforcement against tax-exempt organizations higher on the priorities list. Any thoughts on this ongoing story?

Carolyn Schenck: Sure, I have a couple. I did see the article, and I've seen a handful of other articles that have come out in connection with this issue. The stakes are high with a shift like this, if that's in fact what's happening. I think that we haven't heard, specifically from the government, as far as I can tell, with any specifics or even with direct confirmation that this is in fact going to be happening. So I think we first need to look at whether or not this is true. And then secondly, how in fact this is going to play out, how are cases going to be selected, how are matters going to be selected, or persons going to be selected, and then what's going to be the process.

The other thing that I saw as well is some chatter about criminal tax counsel being removed from the overall review process. I think that would represent a fairly big change in the procedural process that the Office of Chief Counsel has historically gone through with respect to criminal tax cases, and supporting the Criminal Investigation division. Similar to the way the civil side works on the criminal side, criminal tax counsel is assigned to every special agent group throughout the country. They have a hierarchical structure just like the rest of chief counsel where they have local attorneys and then they filter up to a manager, and then ultimately to the division council in D.C. And they support CI during the investigative process and case building process.

So there is a fair amount of interaction between CI and CT [criminal tax] counsel before a case ever gets to the Department of Justice. So something I think we would have to look closely at is how that's going to play out if criminal tax counsel isn't going to be in the mix anymore. So just quite plainly, who's going to be helping CI during this period of time before it is referred to the Department of Justice? Because there has to be a referral in place from a 6103 perspective in order to involve the department.

And in my experience, special agents have benefited from the support from a legal team or a lawyer in case building activities, whether it be from questions relating to issuing a summons, to fashioning to an attachment, or to pursuing a certain line of questioning, or even to whether or not to continue a specific investigation. So I think we'd have to look long and hard at who's going to be supporting CI during the period of time that the case has not gone to the Justice Department. So I think there's that.

Also, case selection is something that I think we need to look closely at too, meaning, how is that going to work? And by the way, not to interrupt myself, but by the way, there are a lot of examples where the IRS has noticed a trend, or noticed a problem, and it has come to the IRS from a variety of different ways, and has acted on that problem. Probably one of the most obvious ones is offshore. The offshore program at the IRS changed substantially through a series of events that happened outside of the service. And an investigation into some of those events yielded ultimately the first John Doe summons that we did on a Swiss bank.

So there are ways that cases do come to the IRS. They are either from other cases, they are from other things that are happening in different agencies. They're referrals from an existing case, a whistleblower, our treaty partner, something like the J5. So there's a variety of different ways that cases come to the IRS.
Now, if there is a problem in that particular area, then I think it would behoove not only the noncompliant taxpayers, but really the compliant taxpayers, that that process remain impartial, not only from the selection, but also through the entire investigation and prosecutorial process as well.

Nathan Richman: That's getting back to the idea of refocusing on tax-exempts.

Carolyn Schenck: That's right. If there is a problem in that industry, just like there potentially have been problems in other industries, then it would be reasonable for the IRS to take a look in that area. But my concern is that the evaluation of the problem remains from an impartial perspective.

Nathan Richman: So every administration has its own set of enforcement priorities. What do you see emerging as the current administration's ideas about how to devote its tax enforcement resources?

Carolyn Schenck: Well, the White House has issued several presidential orders since January. A couple of the main points with one of the orders in January that I saw related to the flow of funds through cartels and organized crime. So I think that is going to remain a focus of the administration. It appears maybe tax-exempt may be a focus of the administration at this point. In terms of how at least IRS and IRS-CI are situated, at least on the first priority relating to cartels and money flowing through organized crime organizations, IRS agents I believe are among the best in the world at ferreting out and following financial frauds and the flow of money. So when you look at an organization like a cartel or any kind of an organized, syndicated crime organization, sometimes it doesn't matter who's driving the bus, because that person could be eliminated or disappear, or no longer be associated, but the operation still continues.

So in order to really effectuate change in some of these organizations and this institutional crime, you have to follow the money, because it's the money that fuels the whole organization. And I believe that IRS is well suited to do that.

Nathan Richman: Getting back to your work with John Doe summonses, there's also been a lot of discussion recently about private placement life insurance [PPLI]. These are the so-called insurance wrappers in which a taxpayer can put a direct investment behind the screen of an insurance policy. This subject seems like the sort that might have shown up in your prior work. Also, the sort that could be ripe for its own sort of John Doe summons. Do you have any thoughts on the idea of John Doe summonses for PPLI?

Carolyn Schenck: Well, as far as the PPLI topic to begin with, the IRS has previously said publicly that this is an area of concern, and an area that they're looking at, and an area that they've offered and implemented training as far as issue spotting and overall investigation processes to its agents. So I know that at the time that I left the IRS, that was on the IRS's radar.

As far as being ripe for a John Doe summons, just as a general matter, there's some basic concepts surrounding how to select if a compliance problem or an entity is ripe for a John Doe summons. Some of that relates to the actual statute itself, being able to establish that there's a reasonable likelihood of nontax compliance on the part of the John Doe summons class members. And so in a situation like when we've done, let's say, for example, on offshore banking, the John Doe class was U.S. taxpayers who had an account at X entity during X years. That was the actual class. And then the support for it was hundreds of pages of examples of other U.S. taxpayers who have not been compliant, and then other potential industry norms and that sort of evidence that was presented.

So when you're evaluating whether or not to proceed with a John Doe summons, first there has to be a pretty close look at whether or not there's a reasonable likelihood of tax noncompliance. And then second, where that entity is located. We have done a handful of John Doe summonses in connection with offshore services providers who actually operate and have an address outside of the United States. So we couldn't get to them directly, but the IRS and the government could get to any of the entities that they did business with onshore. So an example of that would've been the John Doe summons in 2015 with respect to sovereign management and legal, where the IRS looked at a handful of banks and courier services like UPS, DHL, that sort of thing, FedEx, that the government believes sovereign management and legal worked with. Because the whole purpose of a John Doe summons is to identify the U.S. persons who are carrying out this type of noncompliant activity, or potentially carrying out this type of noncompliant activity.

Nathan Richman: OK. Onto the more fun stuff: 20 years at the IRS. Are there any accomplishments —I know you already mentioned 60 John Doe summonses — that hold a special place in your heart?

Carolyn Schenck: I think probably first and foremost is the experiences I've had working with the IRS's people, not only on the Office of Chief Counsel side, but also on the IRS side, both civil and criminal. I know I've said this a few times already today, but there are some phenomenally gifted and wonderful people that work for that organization.

And starting off as a baby lawyer in the L.A. office, I can't tell you how many times I had situations where seasoned revenue agents would pull me aside and say, "No, Schenck, this loan argument actually does mean something. We need to look into this." It's very much a collaborative environment, and it's a place I think where there's a lot of trust among employees. So that's something that I'm going to hold very close to my heart, just the overall interactions with colleagues.

The other thing is in terms of experiences that I will never forget, there's of course certain cases that will be with me forever, either because it was a win or it was a loss. I just think as an attorney or as anyone who's worked in an area for a long period of time, where there's passion, sometimes it's hard to let some of those things go. So I'm going to carry those memories with me forever.

As far as accomplishments, I think probably one of the biggest ones is strengthening our offshore program. In connection, like I said earlier, in connection with the work I was doing at the national fraud program, I was also running our offshore evasion program, and making sure that agents had the resources they need, not only in the Office of Chief Counsel, but also that there was a continuous flow of information and training to those agents is something that I focused on, not only with fraud, but also with offshore, especially when we saw such a huge onslaught through the stand-up of OVDP [Offshore Voluntary Disclosure Program] and the series of compliance initiatives that came down with respect to that.

Working on the John Doe summonses has been also something that I will carry with me, because those investigations are very complicated, they are time-consuming, they're delicate, and they're something that, in my experience, the government takes very seriously, because it is a very powerful tool, and not every John Doe summons ends up getting filed for a reason. So I think those are just some of the things that come to mind immediately when you ask the question.

Nathan Richman: You've been at Caplin & Drysdale for a few weeks now. How's it going so far?

Carolyn Schenck: It's great. I chose Caplin & Drysdale because not only is it comprised of a very deep bench of really excellent lawyers, but really because their advocacy has been, from an ethical perspective, top-notch. I've encountered that firm in a wide variety of postures, from cases that are queued up for trial in a criminal case, to cases that are in appeals, to cases that are in examination, to cases that are in tax court. And I've interacted directly and indirectly with a number of their attorneys, and I've just found it to be a really top-notch place. And that hasn't changed since I've gotten there. I think it's just fully confirmed for me that I made the right decision.

Nathan Richman: What's been the biggest change or challenge now that you find yourself on the client side?

Carolyn Schenck: Well, not saying "we," that's probably one of the biggest ones. I have a Post-it on my computer with "we" and a cross through it. I think that's probably been a big change. Obviously, differences in technology, and also just the overall approach. I mean, clients coming into the firm with problems and they're trying to figure out how to actually solve them, and especially doing it in this environment. I think I've always had a pretty solid appreciation for what it's like to go through an IRS litigation, or an IRS examination, but I'm now gaining a deeper appreciation for taxpayers who are trying to comply even on the most basic levels in terms of wondering where their refund is, or staying on hold with the IRS. So that's been an eye-opening experience for me since being at the firm.

I also think that it's something that is being very much overlooked, which is the impact on, not only the rhetoric, but also the budget cuts, and the rest of the issues that have faced the IRS, and its impact on the compliant U.S. taxpayer. I mean, there are tens of millions of Americans who keep their receipts, who meet regularly with their preparers, who pay their preparers, who keep their books on QuickBooks and other programs, Excel, and who make an honest effort to comply.

So in looking at those types of people and the understaffing that's been going on at the IRS, it sends a message that, first of all, that compliance is optional, but also it makes the landscape very difficult, I think, for those compliant taxpayers.

Nathan Richman: You mentioned earlier work on the Offshore Voluntary Disclosure Program. I believe you also worked on the successor version, just straight Voluntary Disclosure Program. Now that you're on the client side, do you have any different viewpoint [or] perspective on any of the things, especially some of the recent controversies that have sprung up based on some of the IRS's communications about the Voluntary Disclosure Program?

Carolyn Schenck: I mean, probably first and foremost, I would very much support and recommend that the IRS keep a voluntary disclosure practice in place. I think that there are a lot of different ways to deal with a compliance problem, but auditing every one of them is not an option for the United States government, or really for any government. So there has to be a system in place, I believe, where people can come forward and get back into compliance. And that is the overall goal of the voluntary disclosure practice.

I've been on the outside so far for a month. I haven't seen anything that would suggest to me that the voluntary disclosure practice is going to be eliminated. I think the government can always have open lines of communication, and that's been a cornerstone of the program. In fact, there have been changes that have been made to the voluntary disclosure practice over the years, as well as to the Offshore Voluntary Disclosure Program and those iterations, that very much came from practitioner feedback. Practitioners are, in a way it's almost a public-private partnership with practitioners and the government to get people into compliance. I mean, we live in a voluntary compliance environment. So when there are taxpayers who are not in that posture, and they have criminal exposure, it's in everyone's best interest to have a way for those taxpayers to come into compliance. I do not think that there has been a lot of controversy as of late. I think that some things were just misunderstood. The concept of full payment and that sort of thing is what I think you might be alluding to.

Nathan Richman: That and the willfulness checkbox.

Carolyn Schenck: Right. The checkbox I know was removed from the form, but the issues of full payment have always been. First and foremost, there has to be full payment. So the willfulness checkbox, I think the government did remove that from the form. It was added on the forum I believe in the last year and then removed. So I think the only thing that is important as a reminder with respect to the voluntary disclosure practice is that this is for taxpayers who have criminal exposure, or potential criminal exposure. This is not an avenue for taxpayers who made a mistake, or an oopsie, because the terms of the program are significant, not only in the number of years that are relevant and necessary in the disclosure, but also the 75 percent fraud penalty that's placed on the year with the highest amount of noncompliance. That can translate to a significant penalty given the amount of the understatement.

Nathan Richman: What do you look forward to while you continue your career on the private practice side, and any thoughts on potentially returning to the government?

Carolyn Schenck: I mean, on the first part of that question, I look forward to being a contributing member of the ecosystem, not only from the white collar bar perspective, but also from the tax perspective. I look forward to using what I've learned in the government to help people come into compliance, to resolving their problems with respect to DOJ matters, and SEC and IRS matters as well. Whether or not I would ultimately return to the government, I'm pretty happy where I am at this point. I absolutely cherish my time with the government, and so far things have been fantastic in private practice.

Nathan Richman: Well, thank you so much for sharing some of your time with us.

Carolyn Schenck: Thank you for having me.