[Congressional Record Volume 144, Number 50 (Wednesday, April 29, 1998)]
[Senate]
[Page S3791]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COVERDELL (for himself, Mr. Ashcroft, Mr. Shelby, Mr. 
        Frist, Mr. Hagel, Mr. Inhofe, and Mr. McCain):
  S. 2008. A bill to amend the Internal Revenue Code of 1986 to 
prohibit the use of random audits, and for other purposes; to the 
Committee on Finance.


       the internal revenue service random audit prohibition act

  Mr. COVERDELL. Mr. President, I rise today to introduce the Internal 
Revenue Service Random Audit Prohibition Act. I wanted to take this 
opportunity to alert my colleagues of the Senate that the IRS has 
identified a new enemy: innocent taxpayers.
  Over the past several years, all of us have seen news accounts of 
regular, average citizens who have become the targets of grueling IRS 
audits. These individuals were neither wealthy nor powerful; in fact, 
they were most often ordinary, law-abiding taxpayers who earned a 
modest wage, ran a small business, or operated a family farm. Some 
struggled just to make ends meet, and many were understandably confused 
about what they had committed to justify the scrutiny of the IRS.
  The truth is they committed no wrong. They were simply unfortunate 
victims of an IRS practice called ``random audits,'' where the IRS 
simply picks people out of a hat in the hope it can uncover some 
wrongdoing.
  A recent report produced by the General Accounting Office (GAO) at my 
request confirms that the IRS has been targeting thousands of poor 
taxpayers and small businesses for random audits. In fact, almost 95 
percent of all random audits of individual taxpayers performed between 
1994 and 1996 were conducted on taxpayers who earned less than $25,000 
each year.
  Last Fall, hearings held by the Senate Finance Committee brought the 
IRS's abuse of taxpayers to the attention of the entire Nation. One 
witness, Jennifer Long, who is a current field agent with the IRS, 
remarked, ``As of late, we seem to be auditing only the poor people. 
The current IRS Management does not believe anyone in this country can 
possibly live on less than $20,000 per year, insisting anyone below 
that level must be cheating by understating their true income.'' The 
IRS' belief that low-income families are more likely to cheat than 
others services as a disturbing sign of how far it has strayed from the 
principles of American justice.
  The GAO report also indicates that the IRS has been specifically 
targeting my home state of Georgia for random audits. Nearly twice as 
many random audits took place in Georgia between 1994 and 1996 than in 
all the New England states combined and Georgians are three-times more 
likely to be randomly audited than their California counterparts. 
Furthermore, the GAO warns that we can expect that number of rise 
dramatically in Georgia over the next several years because the IRS 
believes small businesses in Georgia are more likely than other so-
called ``subpopulations'' to engage in tax fraud. I do not understand 
why the IRS believes that Georgia small business are more likely to 
cheat than their counterparts elsewhere in the Nation. I still have not 
received an adequate reply from the IRS regarding any of these 
developments.
  Most of us understand the need to ensure tax code compliance through 
reasonable mechanisms. Where there is some indication that wrongdoing 
has occurred, an audit may be appropriate. But Americans will not 
accept the IRS's assertion that enforcement requires them to go after 
innocent, low-income taxpayers by using random audits that make no 
distinction between the guilty and the innocent. Honest citizens 
deserve better.
  The legislation I introduce today, along with a number of my 
colleagues, would remove random audits as a tool available to the IRS 
in its examination process. Victims of random audits would be entitled 
to damages of $5,000 after filing civil action, and the cost of 
litigation would also be recoverable. In addition, my proposal would 
require the IRS to identify the basis for audit in any notice to the 
affected taxpayer of such an examination. Finally, the effective date 
for these changes are set to the date of introduction. This puts the 
IRS on notice that Congress is deadly serious about the need to end 
random audits.
  I hope my colleagues will support my effort to stop the IRS from 
targeting innocent taxpayers. With passage of the IRS Random Audit 
Prohibition Act, honest, hardworking taxpayers can be assured they will 
be protected from unwarranted audits. They deserve no less.

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