Feature

The IRS Mess

By From the June 1998 issue

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At last September's hearings IRS officials denied that employees could earn bonus points by seizing private property. Subsequent IRS audit reports have shredded that denial. An audit released in December on the IRS's Oklahoma-Arkansas district found that a third of the property seizures carried out violated federal law or IRS regulations. The report concluded: “District management's goals and performance expectations are focused heavily on specific statistical targets, including dollar targets" per employee. IRS revenue officers ignored regulalions and guidelines before seizing property; in one case, the only effort an IRS agent made before confiscating two cars "consisted of driving to the taxpayer's house, honking his car horn, and noting that no one came out of the house in response." The confidential history of the IRS's Criminal Investigations Division bluntly states that the division has "concentrated on investigating high impact, high visibility cases, to achieve greater media attention, maximize deterrent effect and generate support" for the Internal Revenue Service.

Another IRS audit report in mid-January provided similarly damning results for IRS regions around the country. Though the Taxpayer Bill of Rights "prohibits setting of enforcement goals such as dollars collected at the group levels...group enforcement goals were set by upper management in 33 of 77 groups reviewed." The April hearings provided new details about how the screws are put to taxpayers. One IRS revenue officer testified, "It appears to many of us that aggression, coupled with an accumulation of high, arbitrary tax adjustments, is the gateway to promotion." Former Tennessee Rep. James Quillen described how, after he introduced a bill to require the government to cover the legal fees of taxpayers whom the IRS had wrongfully sued, he was himself targeted for an audit by a team of IRS agents—one of whom would frequent the bars of Quillen's district to announce, "We're going to get that crook, Congressman Quillen."

There are practically no limits to the scams that the IRS can use to jack up the amount of taxes citizens supposedly owe. IRS agents use Bureau of Labor Statistics data for the average income in a certain geographical area. Then, if not satisfied with the additional taxes they have been able to gin up for someone they are auditing, they announce that the person is hiding his income and thus owes thousands of dollars of additional taxes and penalties and interest. Bruce Strauss, a private tax preparer who worked for the IRS for more than thirty years, argues that "the IRS now has the authority to assign additional income to a taxpayer at its discretion, without any basis in fact." He calls the practice "frightening and absolutely unacceptable."

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