[Congressional Record Volume 144, Number 54 (Tuesday, May 5, 1998)]
[Senate]
[Pages S4223-S4225]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    INTERNAL REVENUE SERVICE REFORM

  Mr. LOTT. Mr. President, today we begin our second day of floor 
debate on legislation to rein in the Internal Revenue Service. As 
hearings demonstrated last week, once again, the IRS is an agency with 
real problems. I should note, again, it has a job to do. It is not an 
easy job. We acknowledge that. We also have to give credit to those IRS 
employees who work hard, do an honest job, and don't target people for 
unnecessary audits or try to set up laundering schemes, things of that 
nature. A lot of IRS employees have put their own jobs on the line and 
have endured a lot of harassment because they have said there are 
problems here.
  We heard from a number of them last week who came in. In fact, one 
lady came in, she is chief of a division, and complained about the 
slowness or inaction by the Deputy Commissioner of IRS where there has 
been misconduct within the IRS. It seems when complaints or problems 
develop and recommendations are made, they are put in a desk somewhere, 
or on a desk, and they seem to just disappear. It was an IRS agent who 
came and said the Deputy Commissioner is not following up on things.
  We had a panel of IRS agents who came in and talked about the 
problems they had found. IRS agents are the ones who pointed out there 
had been targeted audits of people like Senator Howard Baker. It was 
three IRS agents who were, in effect, punished or moved because they 
said there is a rogue agent here out of control doing something that is 
wrong and illegal. So a lot of IRS workers are the ones who have 
brought these matters to our attention.
  The most compelling testimony, though, last week, for me, involved 
small businessmen who had been raided unfairly. Some of them still, 
obviously, are emotionally distraught over what

[[Page S4224]]

they had to endure. One of them was a man by the name of John 
Colaprete. Mr. Colaprete is a small businessman, a restaurant owner, in 
Virginia Beach, VA. He told the Senate Finance Committee how the IRS 
almost destroyed his business. This morning you will get a chance to 
hear his story in his own words. I am going to read his testimony 
because it was so compelling. I fear a lot of Senators did not hear his 
testimony, and a lot of the American people didn't hear it, but this is 
just one of the three. I know there are many others in the country.
  This is the type of thing that is being done by the Criminal 
Investigation Unit at IRS that has to be reined in.

       My name is John Colaprete. I'm from Virginia Beach, and I'm 
     in the restaurant business.
       I'm also a husband, a father, and veteran, having served my 
     country proudly as a U.S. Marine Corps captain from 1965 to 
     1969.
       I have never been in any sort of trouble with the law, and 
     I believe that every American has an obligation to pay their 
     fair share of income taxes.
       I have never failed to meet that obligation.
       I have always considered myself both patriotic and a law-
     abiding citizen.
       I will always be a law-abiding citizen. However, I feel I 
     have literally been punished for upholding the laws of the 
     nation I swore an allegiance to honor and defend.
       Four years ago, I employed a bookkeeper in my restaurant 
     who eventually embezzled approximately $40,000.00 from the 
     business. She went to prison for her crimes, but not before 
     turning my life, and the lives of countless others, upside 
     down. With the full cooperation of the Internal Revenue 
     Service, this woman, a multiple felon, who already had an 
     outstanding warrant for her arrest, managed not once but 
     twice, to victimize me, my family, partners, employees, 
     patrons and others in the business community who depended 
     upon me and my business.
       This dance with the Devil began in March of 1994, when my 
     partner and I became aware that we were being swindled by our 
     bookkeeper. When we discovered substantial shortages in our 
     accounts, we confronted her, and she admitted to stealing 
     from our business. She told us she would make restitution. 
     Unfortunately, rather than make restitution, she sought 
     shelter with the IRS and told them a fantastic tale of money 
     laundering, gun running and drug dealing by my partner and 
     me.
       Little did I know that the IRS would spend less than 48 
     hours investigating my bookkeeper's allegations before 
     conducting raids on my business, my home, and the home of my 
     manager.
       Little did I know that the government I had so proudly 
     served would accept these allegations to be true, despite the 
     alarming lack of substantiation, probable cause, or proof of 
     any sort whatsoever.
       Little did I know that the IRS, when faced with the 
     outrageous claim that I had thousands of pounds of cocaine 
     stored like cordwood in my office, would subscribe to a 
     policy of Guilty Until Proven Innocent. Unfortunately, in the 
     case of the IRS, I now know this is standard operating 
     procedure when dealing with law-abiding taxpayers.
       This wasn't a matter of an honest mistake; in fact, a 
     recently retired FBI agent divulged in a deposition taken for 
     the case that I have pending against the IRS, that he had 
     advised all involved to be skeptical about the claims of my 
     accuser. The FBI specifically declined to become involved, 
     and in the words of one of its agents, the whole story 
     sounded like a ``Grade B'' movie.
       On the morning that both my home and business were raided--
     raids executed solely on the word of my ex-bookkeeper--I was 
     in a church for the occasion of my son's first holy 
     communion. Armed agents, accompanied by drug-sniffing dogs, 
     stormed my restaurant during breakfast, ordered patrons out 
     of the restaurant and interrogated my employees. The IRS 
     impounded my records, my cash registers, and my computers. 
     Since the raids, we managed to get up and running, despite 
     what can easily be perceived as our own government's best 
     attempts to put us out of business.
       Today, I still wonder how such a thing can happen, but I 
     know it does. And I'd like you to know that for every 
     taxpayer like me--those who have survived armed assaults on 
     our businesses and our homes--there are perhaps several 
     thousands of taxpayers who, in fear, lick their wounds, tally 
     their losses, and consider themselves lucky that the IRS has 
     finally left them alone, their innocence notwithstanding. I 
     have nothing to hide, and I will never consider myself lucky 
     when I ponder the events of the last four years. As for the 
     taxpayers who have suffered similar injustices at the hands 
     of the IRS, I hear from these people every week. They seek me 
     out and relate horror stories that, at one time, would have 
     evoked from me nothing more than simple skepticism. I used to 
     believe that such things could only happen in a Communist 
     bloc country, or a police state. I don't believe that 
     anymore.
       When the raid occurred at my home, the front foor was torn 
     from the hinges. My dogs were impounded, along with my safe 
     and 12 years of my personal income tax returns and supporting 
     documents. When that safe was finally returned, an heirloom 
     watch that I had received as a gift from my father was 
     missing. In the aftermath of the raid, I returned to find my 
     home in shambles. It was as if I had been burglarized, both 
     in appearance and in the sense of having been grossly 
     violated.
       While my restaurant and my home were being raided by armed 
     agents of the Internal Revenue Service, a raid was also being 
     conducted on the home of my manager.
       In that raid, my manager was pulled at gunpoint from the 
     shower and forcibly restrained while he attempted to call an 
     attorney. His teenage son was forced to the floor at 
     gunpoint. His daughter, 14 years old at the time, had several 
     friends over for a slumber party the night before. These 
     young girls had to get dressed under the watchful eyes of 
     male agents, despite the presence of female agents. The IRS 
     agents stood in the doorway to the bedroom, refusing these 
     young girls even a semblance of privacy.
       We were never charged with any crimes. After scrutinizing 
     our records for four months, the IRS returned most of them. A 
     rental truck pulled up in front of my business one day, and 
     the items that were returned were basically dumped in a pile 
     on the street for us to sort through. I never received an 
     apology.
       Following the raids, I could get no answers as to why all 
     of this occurred. I was met with ``No comment, Mr. 
     Colaprete,'' at every turn. Freedom of information requests 
     were ignored, ostensibly due to a backlog of such requests, 
     and despite legally mandated time limits on such requests. 
     Two newspapers in Virginia Beach made repeated requests under 
     the Freedom of Information Act, only to have the Justice 
     Department thumb its nose at those requests. When an 
     investigative journalist began to get to the bottom of 
     things, he was also subjected to the harassment of the IRS. 
     He had an opportunity to interview Special Agent Carol 
     Willman from the IRS office in Norfolk, Virginia. During that 
     interview, Ms. Willman interrupted the reporter's inquiries 
     with a demand for his Social Security number. Within the 
     year, he was notified that the IRS wanted to audit his 
     return. When a local publication reported this, the audit was 
     abruptly canceled. An IRS agent stated at the time that the 
     agency does not retaliate against citizens through the use of 
     audits, but the facts would seem to indicate otherwise.
       The ex-bookkeeper, meanwhile, was kept in protective 
     custody by the IRS in a motel up until the time of the raids. 
     It is almost unimaginable that there could be such a level of 
     incompetence at the IRS that they would not only take the 
     word of this woman and begin any sort of investigation, but 
     they would shield her from the authorities who were trying to 
     arrest her. The woman who the IRS was protecting and on whom 
     they had relied had already been convicted numerous times. In 
     fact, the outstanding criminal charge pending against her at 
     the time she approached the IRS was for a crime involving 
     lying and stealing. Ironically, just a week before this woman 
     approached the IRS, I had specifically gone to the police and 
     filed a complaint against her, alleging that she had lied, 
     stolen and embezzled from me. In the face of all of that, how 
     could anyone, let alone a supposedly trained, professional 
     inspector with the IRS, accept at face value what this woman 
     was saying? Based on her word, she--Carol Willman--not only 
     commenced an investigation, but completely shut down a 
     business and turned the lives of innocent people upside down 
     less than 48 hours after first being introduced to the woman. 
     Is there such a competitive atmosphere within the IRS to add 
     another feather in their cap that they would ignore not only 
     basic investigative techniques, but the obvious flaws in this 
     woman's character and simply accept her at face value? It is 
     frightening that such a woman could have conned the IRS into 
     believing that her employer, despite all appearances to the 
     contrary, was a high-level gangster and then shield her from 
     the law in the belief that she would lead them to a bigger 
     fish--like me.
       To compound the Keystone Cop mistakes that had already been 
     made, the IRS then allowed her to leave the jurisdiction of 
     Virginia to go to North Carolina where she was only later 
     sent to jail for embezzling from three other employers in 
     that state. On the surface, it might appear that she acted 
     alone, but that just isn't so. The IRS was her partner in 
     crime--first, acting in concert to destroy my life, and then 
     allowing her to flee the state and victimize others.
       I looked for answers and was rebuffed at every turn. I 
     suffered a deep depression that lasted a year. I was 
     immobilized and could not get out of bed some days. My 
     neighbors shunned me. My wife, who is an artist, has not been 
     able to pick up a paint brush in four years. My children were 
     taunted at school and told that their father was a gangster 
     and a drug dealer--a Mafioso. I raised my children with a 
     zero tolerance for dishonesty, and now they must hear 
     allegations that I am a tax cheat. I am here to tell you that 
     I am none of those things.
       Relatively speaking, the trauma that has befallen me is 
     mild, compared to what has happened to my manager. He has 
     suffered severe depression, sought counseling from his 
     pastor, literally been shunned by friends and acquaintances, 
     and has yet to get his life back in order. He has been ruined 
     financially and emotionally, with little or no hope of ever 
     getting his life back to where it was prior to the raids.
       I'm also here to tell you that we cannot treat our citizens 
     this way--not in America. I have been repeatedly victimized 
     over the

[[Page S4225]]

     past four years, primarily by a government tax agency that is 
     funded with my tax dollars. If Americans have a perception of 
     the IRS as the Boogey Man, it is because the IRS itself has 
     promoted that perception through policies that are 
     fundamentally unconstitutional and illegal.
       This is not a partisan issue--it is a people issue and a 
     freedom issue.
       I have a lawsuit pending against the IRS, and I will not 
     rest until I have had my day in court. The IRS response to 
     the lawsuit has been to cast doubt on my character by 
     insinuating that they did, in fact, find evidence of 
     wrongdoing, but they chose not to prosecute if. If I was 
     guilty of anything, why would they ``choose'' not to 
     prosecute? While any ``allegations'' will eventually be 
     shown in court to be what they are, i.e., a smoke screen, 
     until I can get into court to prove my case, these 
     ``allegations'' linger in the community where I live and 
     work and continue to compound my frustration.
       The system does not work for the American taxpayer. The 
     total sense of violation that we have experienced has had a 
     devastating effect on us all. In the wake of all of this, I 
     find there is no system in place to defend me, or others like 
     me. I'd like to believe that someone takes responsibility for 
     what has happened--for what continues to happen every day in 
     this country. If the example we are to set for our citizens 
     is one of no accountability and no remorse, then our form of 
     government--the oldest surviving democracy on the planet--
     cannot survive much longer.
       A day doesn't go by that I don't wonder what harassment 
     will occur next. I would like to know why this dark entity 
     known as the IRS has come into my life and refused to leave. 
     So who protects me in the system? Who cares about my 
     constitutional rights? Not the courts. Not the IRS. I am 
     hoping that the buck stops here--with you, Senator Roth and 
     this Committee.
       I leave you with just three questions, Senators:
       (1) Why did this happen?
       (2) What will you do to see that it never happens again to 
     innocent taxpaying Americans? We cannot employ inexperienced 
     and immature people to play God with the lives of our 
     taxpayers--IRS agents who decide that it's a beautiful day to 
     go out and destroy someone's life; and finally,
       (3) Once this ordeal has ended and I have obtained a 
     verdict in a court of law and a judgment against the IRS, 
     what will you do to assure me that the IRS pays the judgment, 
     rather than continue to beat me into submission through 
     endless appeals and an outright refusal to pay the judgment 
     that I obtain?
       In this great democracy, we have created this entity to 
     collect taxes which we all agree must exist. However, we have 
     empowered this agency to be subject to no one, to no laws, to 
     no checks and balances, and all of us--including each and 
     every one of you--are afraid of them! Why should we fear the 
     very people we employ?
       When these hearings began last September, I was told that 
     Senator Roth would conduct these hearings because he has no 
     fear. After my ordeal, I have no fear any longer, but when 
     Americans receive that letter with the logo of the IRS in the 
     upper left hand corner, their pulse rate, heart beat and 
     blood pressure rise. There is a genuine fear. This fear must 
     stop.

  Mr. President, I want to open today's debate by sending messages to 
two groups of people.
  To Mr. Colaprete, to his family, to his manager, to the employees of 
his restaurant, and to the residents of Virginia Beach whose lives were 
harmed by the IRS, I want to say that I'm sorry. Since the IRS 
apparently thinks they do not need to apologize to you, I will. On 
behalf of myself and the United States Senate, I apologize for the harm 
that your government has done to you.
  I also want to say to Mr. Colaprete that it is our intent that this 
never happens again. The legislation we have before us is specifically 
designed to stop the kind of abuse you suffered, and we will continue 
to maintain a vigilant watch over this agency.
  To the agents at the IRS, who have been out of control, and to the 
management who is protecting those agents, I want to say watch out. We 
are on to you, and we will not let you do this sort of thing to the 
American people.
  That is our goal here, to provide some protections, some oversight 
that is free and separate from the IRS, a private citizen entity to 
look into their procedures and their conduct. It also is to give some 
relief to the taxpayers who now find quite often that the penalties and 
the interest far surpass the basic amount that was owed.
  This action is overdue. I want us to have a strong bill because I 
don't want us to come back 2 years from now and find out what we did, 
in fact, did not change the culture at IRS. I do believe that the new 
Commissioner, Mr. Rossotti, is trying hard to turn things around, but 
it is not all the agency's fault. The laws that we have on the books 
have been inadequate. In fact, I am not sure we can fix these laws. We 
may have to just scrap what we have and start over again.
  For now, until that is done, we must build in protections against 
this type of abuse of ordinary citizens and taxpayers.
  I yield the floor.

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