[Congressional Record Volume 144, Number 91 (Friday, July 10, 1998)]
[Senate]
[Pages S8016-S8017]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          IRS INTERNAL AUDITS

  Mr. ROTH. Mr. President, yesterday's 96 to 2 vote to reform the 
Internal Revenue Service was a victory for the American people. I am 
grateful for the cooperation we received from our colleagues. I am 
grateful for the support that came from our constituents. And I very 
much appreciate the willing participation that came from individuals 
within the Internal Revenue Service itself.
  From the beginning of our intensive investigation, and throughout our 
hearings, I made it clear that the IRS is filled with hard-working, 
honorable men and women.
  We depend on these individuals, on their integrity and expertise to 
carry out a complex and often thankless task--yet a task that is 
fundamentally important to the welfare and future of America. Had it 
not been for those within the IRS who were concerned about the abuses 
they witnessed--had they not come forward to speak with us--there would 
have been no hearing. There would have been no reform effort--no 
change. And the abuses would have continued.
  What our investigation focused on was the culture of the agency. It 
focused on an environment that had been allowed to establish itself 
because of rules that granted excessive license to those inclined to 
abuse power--an environment that lacked sufficient oversight. This was 
the culprit. And I am grateful that after an attempt early on in our 
investigation to circle the wagons concerning the Finance Committee's 
efforts, the IRS--under the fine leadership of Commissioner Charles 
Rossotti--determined to work with us, not against us.
  Two reports issued today speak volumes about the spirit of 
cooperation Commissioner Rossotti demonstrated. They validate each of 
the concerns raised in our investigation. They are filled with examples 
that support those that we heard from the courageous witnesses who 
addressed our committee. They remove any question concerning the 
appropriateness or necessity of the extensive investigation we 
undertook. And they make it clear that our conclusions, and 
consequently our legislative outcome, were right on target.
  I appreciate the honesty and candor that is contained in these two 
internal audits. Prepared by the agency's Chief Inspector's office at 
my request, they offer a thorough and objective analysis

[[Page S8017]]

of serious problems within the agency's culture. Among other things, 
these reports paint a vivid picture of how the IRS' Examination 
Division used performance measures and statistics, compelling auditors 
and examination personnel to inflate taxpayer liabilities. They show 
how the Collection Division abused seizure authority, in one case 
turning a taxpayer's life upside down for the grand sum of four dollars 
and seventeen cents!
  The reports even documented the most troubling issue of how the 
Internal Revenue Service would often go after taxpayers who were most 
vulnerable--those suffering from medical problems or severe financial 
setbacks. According to the internal audits, ``the seizure[s] 
demonstrated insensitivity to the taxpayer's current situation or 
[were] conducted to enhance statistical measures.''
  These reports are astonishing in the scope of the taxpayer abuse they 
confirm and in the fact that they come from the agency itself. In the 
case of the man whose business was seized and sold to net the IRS four 
dollars and seventeen cents, the report states clearly that, ``The 
revenue officer did not use sound * * * judgment when conducting this 
low dollar seizure.''
  And this is only one of many such cases documented, Mr. President. In 
these two reports, Americans will find a stunning array of similar 
abuses.
  The reports make it clear that the agency's focus on goals and 
statistics come at the expense of quality service and fair treatment of 
taxpayers. They came at the expense of fairness to IRS employees. One 
report admits that a full 74 percent of group manager evaluations 
contained references to enforcement statistics. The evaluations cited 
dollars per hour, hours per return, and dollars recommended for 
collection.
  The reports make it clear that districts routinely communicated goals 
and enforcement statistics to group managers and employees.
  In fact, the agency admits that such statistics were ``communicated 
in all 12 districts through newsletters, monthly reports of Examination 
activity, group meetings, and similar methods. Enforcement 
statistics,'' the report continues, ``were often in referenced to how 
group managers and employees were doing in relation to district or 
group goals.''
  Cast after case is cited in these reports to illustrate how these 
activities within the agency adversely influenced the lives of 
taxpayers. In one example, collections officers did not even attempt to 
contact the taxpayer prior to seizing his property. The revenue officer 
confirmed the taxpayer's address and ownership of assets two days 
before seizing them. And what did the IRS seize? The tools the taxpayer 
needed to provide for his family. Even the taxpayer's 11-year-old 
daughter pleaded with the collections officer to halt the action, but 
the activity proceeded--the seizure producing a measly net proceed of 
$20!
  Again, Mr. President, these stories are not coming from witnesses 
whose credibility might be challenged. They are admissions made by the 
Internal Revenue Service itself.
  Nearly half of the seizures examined in these reports indicate that 
improper or abusive tactics were used against the taxpayer. Not only 
does this validate our findings, but the very existence of these 
internal audits demonstrate that a new era is drawing on an agency that 
for far too long has been operating in darkness. It looks to be an era 
of openness--of cooperation--and accountability. I laud the current 
leadership, Commissioner Rossotti, and those who support him in what 
will be an historic turning point in the life of the agency. What a 
legacy they will leave!
  And again, I express my gratitude to colleagues who stood firm in our 
effort to change the way the IRS does business. Our reform legislation, 
which I expect will be signed by the President in the very near future, 
will go a long way toward preventing the types of abuses chronicled in 
these reports. We are increasing oversight of the agency and holding 
employees accountable for their actions. We are ensuring that taxpayers 
have due process protections in collections activities. We are 
prohibiting the IRS from using enforcement statistics.
  This is a moment in which we can all be proud. The successful passage 
of reform legislation yesterday, the bipartisan spirit that marked our 
investigation and subsequent debate, the willingness of the agency, 
itself, to cooperate--all of these are to be credited.

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