President Barack Obama has picked a senior White House budget official to become the acting head of the federal tax authority.
The move came on the day another top official announced plans to leave the troubled agency amid the growing controversy over agents targeting conservative groups.
After days of inaction, the president has tried to move swiftly in response to the growing uproar over reports of inappropriate targeting by the Internal Revenue Service.
The IRS crisis is just one of several scandals that are distracting Mr Obama from his second-term agenda and giving ammunition to Republicans ahead of campaigning for next year's mid-term legislative elections.
Mr Obama dismissed the idea of a special prosecutor to investigate the federal tax agency, saying probes by Congress and the Justice Department should be able to find out who was responsible for improperly targeting the groups when they applied for tax-exempt status.
He named long-time civil servant Daniel Werfel as the acting IRS commissioner. He replaces Steven Miller, who was forced to resign on Wednesday amid the scandal, though he is still scheduled to testify today at a congressional hearing.
Also, Joseph Grant, one of Mr Miller's top deputies, announced plans to retire on June 3, according to an internal IRS memo.
Mr Grant is commissioner of the agency's tax exempt and government entities division, which includes the agents that targeted the groups for additional scrutiny. It was not immediately clear whether his retirement was related to the controversy.
Mr Werfel, 42, takes over an agency in crisis and under investigation.
The IRS apologised last week for improperly targeting conservative political groups for additional scrutiny when they applied for tax-exempt status. The practice went on more than 18 months, diminishing the ability of these groups to raise money during elections in 2010 and 2012, said an inspector general's report released this week.