[Congressional Record Volume 143, Number 84 (Tuesday, June 17, 1997)]
[Extensions of Remarks]
[Page E1224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     ON THE NEED FOR IRS OVERSIGHT

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                          HON. CHRISTOPHER COX

                             of california

                    in the house of representatives

                         Tuesday, June 17, 1997

  Mr. COX of California. Mr. Speaker, the Internal Revenue Service has 
too much power in Americans' lives. This recent example, from the 
Associated Press, shows why greater congressional oversight of IRS 
mismanagement and taxpayer abuse is so vitally necessary.

             IRS Is Found To Have Retaliated Over an Insult

                           (By Margaret Katz)

       Denver (AP).--In hindsight, insulting the IRS agent during 
     an audit was probably not a good idea.
       But Carole Ward, who this week moved to Albuquerque from 
     Colorado Springs, let fly with this gem: ``Honey, from what I 
     can see of your accounting skills, the country would be 
     better served if you were dishing up chicken-fried steak on 
     some interstate in west Texas, with all the clunky jewelry 
     and big hair.''
       A short time later, federal agents raided Ward's business 
     and then released confidential information about her taxes to 
     the media in what Ward called ``character assassination.''
       This week, a federal judge reprimanded the IRS for its 
     actions and awarded the woman about $325,000 in damages and 
     attorney's fees.
       ``By this award, this court gives notice to the IRS that 
     reprehensible abuse of authority by one of its employees 
     cannot and will not be tolerated,'' U.S. District Judge 
     William Downes said after the non-jury trial. ``Part of that 
     responsibility requires that you accept criticism, however 
     inaccurate and/or unjustified, in silence.''
       Ward, 49, said she is not proud of what she said to auditor 
     Paula Dzierzanowski during the 1993 audit. The meeting was 
     one of several regarding income taxes owed by the children's 
     clothing stores owned by her son, Tristan, then 20.
       Two weeks later, IRS agents seized and padlocked the stores 
     with a so-called jeopardy assessment demanding $325,000 in 
     back taxes from Ward. Such an order is considered extreme and 
     is normally used when the IRS fears it is in danger of never 
     collecting the taxes, said Ward's attorney, William C. 
     Waller.
       Ward's family depended on the stores as their sole source 
     of income, and the seizure put them in desperate straits. She 
     said her family even lost their electricity because they were 
     unable to pay bills.
       Why the IRS targeted Ward rather than her son is unclear, 
     said Dennis Mark, another of Ward's attorneys.
       ``They took the position that Carole Ward owned the 
     stores,'' Mark said.
       By July, Ward had hired a tax attorney and the parties had 
     agreed that the actual amount owed by Ward was about $3,500.
       ``It was over and done,'' Waller said. But then the IRS 
     went public with information about Ward that was the crux of 
     her lawsuit.
       IRS District Director Gerald Swanson and his assistant 
     Patricia Callahan appeared on a Colorado Springs talk show 
     and disclosed tax return information. They also discussed the 
     original $325,000 dispute and allegations against Ward even 
     though the case had been settled, Waller said.
       The IRS also disclosed information to TV's ``Inside 
     Edition'' in the form of a fact sheet about the dispute.
       The IRS agents said that since Ward had already gone public 
     with information about the dispute, they were within their 
     rights. However, the judge found their behavior negligent.
       Another IRS agent, James Scholan, further disclosed 
     information about the dispute in a letter published in a 
     local newspaper. Scholan said he had obtained that 
     information from newspaper accounts, but the judge ruled that 
     he had obtained it as an IRS employee, committing a ``blatant 
     violation.''
       Ward was also upset about notices posted in the windows of 
     the stores during the seizure that she said implied she was a 
     drug smuggler.
       The judge found that the IRS had caused mental distress, 
     emotional damage and humiliation to Ward.
       ``Public servants cannot be arbitrarily selective in their 
     treatment of citizens, dispensing equity to those who please 
     them and withholding it from those who do not,'' the judge 
     said.
       The IRS had no comment on the case. Nor did the Justice 
     Department's tax division.
       Ward said she is glad to be vindicated. But her son's 
     stores are still struggling, she said, and the fight took a 
     huge toll on her personally.
       ``When you take on these people  . . . it would be 
     wonderful if I felt like dancing on graves, but by the time 
     you get the victory, it doesn't feel like a victory,'' Ward 
     said. ``They take out the joy.''

     

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