Pressed about the move Wednesday, the White House danced around the question of whether the government was giving a "tax break" to the bank, which already benefited from a government bailout.
White House Press Secretary Robert Gibbs also would not answer whether President Obama was comfortable with the move.
"The IRS made that decision, and it allows Citigroup to pay back the United States the money that it was owed," Gibbs said.
As the Washington Post reported, the IRS tweaked a tax rule on Friday which prevented private, profitable companies from buying money-losing companies to avoid paying taxes.
The rule change enabled Citigroup to repay the government, officials said, arguing that the ruling benefited taxpayers since it would make Citigroup shares more valuable.
"Is the president comfortable with Citigroup and perhaps others getting massive tax breaks, as they pay back their bailout fund?" CBS News White House Correspondent Chip Reid asked.
Gibbs said the change in the law was appropriate because the law was never intended to apply to transfers of ownership between the government and a private company.
"This was a law that wasn't written as the United States being a member of the private sector," Gibbs said.
Reid pressed back, "But there are lots of ordinary Americans who would say, 'Hey, this tax law isn't fair, that's not the way it was intended,' and they don't get the IRS go in there and say, 'Oh, well, we'll change it for you.'"
Gibbs simply restated the argument that the government allowed Citigroup to keep billions of dollars "because it doesn't fit what the law says."
"So you disagree with all the reports that this is a tax break for Citigroup?" Reid asked.
"I disagree with the fact that this was somehow changed in a way -- in the way in which you're characterizing it, yes," Gibbs responded.
When pressed further, however, the press secretary said, "Citigroup's losing money. They can use that against their taxes. That is -- that's always been the case."