Cover image for The power to destroy
The power to destroy
Roth, William V., Jr. (William Victor), 1921-2003.
First edition.
Publication Information:
New York : Atlantic Monthly Press, [1999]

Physical Description:
xiv, 290 pages ; 24 cm
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HJ2361 .R67 1999 Adult Non-Fiction Non-Fiction Area

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In this startling expose' of America's most feared government agency, a U.S. Senator and his assistant show how the IRS plays police, judge, jury, and executioner, depriving countless taxpayers of their civil rights. National TV and radio coverage.

Reviews 2

Publisher's Weekly Review

One has to admire Roth's dogged investigation of the government agency Americans' love to hate: the IRS. The result of Senate hearings that began in September 1997, this book packs the choicest cases of IRS abuse into one digestible but occasionally repetitious volume. Roth, senior U.S. senator from Delaware, is chairman of the Senate Finance Committee; Nixon is his executive assistant. They claim that Roth's investigation uncovered "an agency in crisis, caused by a breakdown in management, a lack of accountability... and a tax code so confusing that even the foremost tax experts are left angry, bewildered, and prone to mistakes." Identifying quotas that, they say, encourage overzealous collection efforts, inequities that render innocent spouses liable for tax-cheating mates and an agency "that is shrouded in more secrecy than the CIA," the authors diagnose the problem. They argue that the growth of what they see as an arrogant, arbitrary and, at times, malicious agency proved possible because it "had largely been left alone by Congress." Their informed analysisÄfilled with selected quotations from IRS employees and victimsÄhighlights the need for checks and balances, legislative oversight of administrative agencies and controls over unchecked power at every level of government. (Apr.) (c) Copyright PWxyz, LLC. All rights reserved

Library Journal Review

Death and taxes may be life's only true immutables, but nearly as certain is Lord Acton's aphorism, "Power corrupts, and absolute power corrupts absolutely." Roth (R-DE), chair of the U.S. Senate Finance Committee, and Nixon, his executive assistant, summarize the findings of the recent Senate investigation and hearings on the abuses of the Internal Revenue Service. Their work is intended as a shocking expos‚ of a government agency that has abused its considerable power, but the story is really just another illustration of how all large organizations ultimately become bureaucracies that spawn a culture of indifference to the very citizens they ostensibly serve. There is unintended irony here: this was a Republican-led investigation of an agency that perverted America's entrepreneurial spirit into bureaucratic autonomy and created nightmares for many private citizens who were unjustly treated. Easy reading that may have broad interest for the general public.ÄWilliam D. Pederson, Louisiana State Univ., Shreveport (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.



Chapter One Anatomy of an Investigation "For far too long the IRS, with its incredible power, has operated with anonymity and total immunity from oversight." --Senator William V. Roth, Jr. If my career is remembered for any one thing it will more than likely be my penchant for tax cuts. This is how I would want it. The most fitting epitaph for my headstone--the one I would choose, as Jefferson chose the accomplishments etched in marble above his grave--would be simple: "Here lies Bill Roth ... the taxpayer's best friend."     For more than thirty years on Capitol Hill I have fought against overbearing taxation and runaway federal spending, believing, like Cicero, that there are those who, "greedy for renown and glory, steal from one group the very money that they lavish on another." In order to be liberal to some, they harm others, and "fall into the same injustice as if they had converted someone else's possessions to their own account."     This is dangerous and counterproductive. Giving too much money and power to government, we're reminded, is like giving whiskey and car keys to teenage boys. Whether the transfer of wealth is done out of genuine altruism, or out of a sincere belief that government has not only the right but the responsibility to balance the fortunes of Americans, or whether it results from the desire of a politician to consolidate power by serving one constituency over another, makes little difference. Either way, excessive taxation harms the very individuals it is meant to help.     And Americans are excessively taxed.     Congress's inability to curb spending has resulted in a condition where taxes have steadily eaten away at family income, and the unchecked growth of government--with burdensome regulations to compound excessive taxation--has diminished economic vitality, cutting away even more of the family's buying power.     The adverse economic consequences associated with overbearing taxation give us reason enough to declare--as 70 percent of Americans do--that taxes are too high, and the complexities of the tax code give us additional reason to demand a change in the status quo, as the vast majority of us are now demanding.     But these reasons do not stand alone.     In his best-selling book, Values Matter Most , Ben Wattenberg explains how the real problem with taxes is that they bite not once but several times. "Taxes are not a single-bullet theory of politics," he writes. "Taxes are important, but they are seen by voters in a context of other issues, very much including the social ones, and particularly in the context of how the tax money is spent . When government programs are seen to be not only expensive, not only wasteful, but also harmful , then taxes hit voters several times: once when their dollar leaves their pocket to go to Washington and once again when it comes back home in a way that hurts."     In other words, not only are taxes too high, not only is the tax code too complex, but Americans are incensed by how their money is being spent.     So the question: How bad can things get?     We have an income tax, something Americans aren't too fond of in the first place. Seventy percent believe it's excessive. It's applied by a code so complex that on April 15 most folks don't know whether they're cheats or martyrs. And then it's too often spent on things they don't want.     Could the equation get any worse?     As a matter of fact, it could.     Add to these valid concerns a tax collection agency where even just a few of the employees resemble the kind of characters vividly described in the old vaudeville routine--"The income tax people are very nice. They're letting me keep my own mother"--and you have a combustible mix crying out for wholesale reform.     To be fair, tax collectors have never been popular. Scripture lumps them in with heathens and sinners. Yet, in society, they have always been necessary. We must "render unto Caesar that which is Caesar's," Christ taught, and he chose Matthew, a tax collector, or publican, as one of his apostles.     Why the unpopularity? Became at its heart, the income tax itself is a dichotomy. While the power to tax is the power to destroy, it is equally true that taxes are what we pay for a civilized society. Given this, it stands to reason that the feelings Americans have toward the people assigned to collect the taxes--to extract from their wallets the money they earned--would be as ambivalent as they are volatile.     And yet value cannot be measured by popularity. The fact that tax collectors and the agency responsible for gathering the revenue are less than esteemed in the realm of public opinion means little in the context of their critical role in the function of government, and in government's ability to meet the legitimate needs and demands of the people. The truth is, the same can be said of Congress, the President, or any other institution, organization, or individual put in place to create, maintain, and enforce conditions that balance the rights and responsibilities of citizens in any social order. They are seldom popular, but most often necessary.     It is my belief that the Internal Revenue Service and the vast majority of its employees are doing an extremely good job under very difficult conditions. When I made the decision in early 1996 to use the authority of the Senate Finance Committee to conduct oversight of the IRS, I made it clear to our chief investigator that above all else our investigation would be fair. This didn't mean that we couldn't be the taxpayer's advocate. I find that just like H. L. Mencken, "in any dispute between a citizen and the government, it is my instinct to side with the citizen." It is also my firm belief that the interests of the individual--the taxpayer--come before the interests of Washington. This conviction is borne by the fact that anything serving the taxpayer's best interest also serves the government, as the latter derives its strength and very survival from the former. Balanced against my philosophy that the taxpayer comes first, however, is my belief that outside of those who serve in our armed services and law enforcement agencies no other federal employee has a job as difficult, and certainly no job as thankless, as those who work for the IRS.     One unforgettable moment that occurred early in our investigation was a conversation I had with one of the agency's group managers, a man visibly shaken by the revelations that were being disclosed to our investigators. "You have no idea how difficult it is for us to perform our jobs," he told me. "You have no idea how demoralizing it can be, how we hesitate to tell people we meet what we do for a living. When I'm at a party with doctors and lawyers--educated people who should know better--I hear their caustic remarks. I'm offended by their critical asides. Anymore, I won't even tell people what I do. The most I'll say is that I work for the Treasury Department."     That night, following our conversation, I tried to imagine dedicating my professional life to a job that could have such a dispiriting influence. I realized that the vast majority of IRS employees, like this man, are concerned about the welfare of the taxpayers whom they serve. However, I wondered how the self-conscious malaise and pessimism he described affected his family, his colleagues, and the taxpayers. How pervasive were these feelings? One former IRS commissioner actually admitted similar emotions, stating that he, too, would not tell people where he worked.     What would it be like to face each morning with the prospect of confronting such a job? What would the consequences be in the lives of others? Our attitudes, choices, and actions cannot be separated. More than anything, they influence the way we work, how we feel about ourselves and those around us. In the end, they determine the outcome of our lives. Yet, here was a man with a very important job who was uncomfortable--even unable--to tell others what he did for a living.     At the time this conversation took place, I was receiving almost daily reports concerning what our investigation was uncovering. Story after story described horrible abuses by IRS personnel and disturbing trends within the agency's culture. We heard tales of despair, loss, and abandonment from taxpayers who had run up against irresponsible, uninformed, or even malicious employees--taxpayers who had been stymied by incomprehensible regulations and bureaucracies, or who had found their once-quiet lives hopelessly entangled in a system weighted heavily against them. I wondered how the negative feelings of this fine group manager reflected the feelings of others who worked within the Internal Revenue Service, and how those feelings collectively influenced the clients of the agency: the taxpayers.     What struck me most is that of all those who contacted our investigators--taxpayers, IRS employees, academics, and authors--the group most desirous to report and correct abuses and mismanagement were the employees themselves.     Nobody knows the weaknesses of a family better than its members, those who live each day intimately acquainted with, and influenced by, its shortcomings. Like most employees with whom we talked, this group manager felt a need to share his perspective concerning the troubles that, in his words, "plague the agency." His criticisms were thoughtful, yet gushed out with such force that I found him at times struggling for words that he believed might make his case sound more persuasive.     As he spoke, I was reminded of Razumihin's observation in Crime and Punishment, "In wine there is truth, and the truth had all come out." Inebriated with emotion, this manager from the trenches had given me not only insight into the agency, but an understanding of how the culture of the IRS affected him and his colleagues, and how their attitudes influenced their interaction with the taxpayer. The Decision My decision to conduct oversight of the Internal Revenue Service was not easy in coming. Since its inception in 1862, the agency assigned to collect federal taxes has largely avoided serious examination by Congress. The reasons why are as varied as they are numerous, and some even have a legitimate ring to them. For its part, the IRS insists that investigations into its activities, and public disclosure of those investigations, give heart to tax protesters and could result in violence against its employees. The agency tries to attach a patriotic rationale to its desire to be left alone, maintaining that compliance with tax laws will decline if the veil of secrecy is torn away and light is allowed to illuminate the inner workings of the Service.     Another argument is that mystery and confusion are actually useful to the agency's enforcement efforts. This line of reasoning holds that people are frightened by what they don't know, by what they can't see and understand. Fear leads to submission. Frightened Americans will more readily pay their taxes. Tell us too much and we may actually begin to believe that the IRS is run by mortals who have feelings and are prone to mercy as well as mistakes. This, in turn, may embolden us in our opposition to their tax collecting efforts.     As adamant as I am in my fight against excessive taxation and my belief that government has a responsibility to control spending, I am equally emphatic about the responsibility all citizens have to provide for the common defense and general welfare of the United States. There's no excuse for those who refuse to pay their fair share of taxes, and it's contemptible that anyone would seek to harm or harass a government servant charged with the stewardship of collecting revenue--or performing any other duty, for that matter.     Taxation is a responsibility shared by everyone who enjoys the blessings of America. Those who refuse to contribute only place a greater burden on the rest of us as they minimize their ability to function constructively within the law. And this is where change, if it is to be lasting, must take place: within the inspired constitutional framework given us by the Founders.     It did concern me that an investigation of the Internal Revenue Service might send a signal to the 17 percent of Americans who refuse to comply with the law that they are somehow justified in their illegal behavior. For several weeks, I weighed this concern against the responsibility I had as Chairman of the Senate Finance Committee to conduct oversight of the agency. As I contemplated the possible repercussions in this area, I was taken aback by a startling statistic: the 83 percent compliance rate today is the lowest in recent history.     In 1962, when the IRS had only 60,000 employees, a full 97 percent of Americans paid their taxes. Today, even though the agency has roughly 102,000 employees (a 70 percent increase) and our population has grown just over 40 percent, compliance has dropped to where almost two out often Americans refuse or fail to pay. In other words, as the size, power, and reach of the agency has increased at a rate far outpacing the growth of our population in general, and as the advent of information technologies has given those employees exponentially more capability to perform their duties, the rate of taxpayer compliance has dropped sharply. This, despite the fact that Congress has: (1) vastly strengthened the agency's enforcement power; (2) increased its budget every year except two over the last four decades; and (3) never conducted full and consistent oversight.     There are statistical and demographic reasons to explain a portion of the decline in compliance. Current data are more accurate, reflecting taxpaying individuals, families, and businesses that may have been overlooked in 1962, and a larger portion of Americans are taxpayers today as the baby boomers have come of age. However, these reasons are insufficient to warrant such a steep drop. I began to wonder whether the IRS' defense that oversight results in noncompliance was little more than a convenient theory to ward off congressional attention. Until our current oversight efforts began, the most far-reaching congressional investigation into the heart of the agency had taken place in the early 1950s, when Senator John Williams of Delaware and Congressman Cecil King of California exposed widespread misconduct, including bribery, embezzlement, influence peddling, and rampant conflict of interest. Their efforts led to public outcry and sweeping reform, but compliance rates remained high.     Between the King hearings and the beginning of our investigation, Congress had undertaken only a few smaller attempts to look at anecdotal concerns, and even these didn't get too far as senators, representatives, and their committees were limited in authority by Section 6103 of the Internal Revenue Code. Originally intended to safeguard privacy, 6103 prohibits the IRS from disclosing information about taxpayers to anyone other than agency employees who are essential to process returns and conduct audits, oversight, and collections. While protecting taxpayer privacy has long been part of the code, 6103 was dramatically tightened after Watergate, in response to public perception that the IRS had shared information with the White House concerning the names listed on President Nixon's "enemies list."     In the aftermath of Watergate, Congress railed against the Internal Revenue Service, promising, as Senator Lloyd Bentsen declared, to stop the agency from being used as a "lending library" for the White House. Unfortunately, in strengthening the privacy laws, Congress inadvertently gave the Service a formidable weapon in its ongoing war against congressional oversight. Former Georgia Congressman Douglas Barnard, who attempted to look into alleged abuses in the late '80s and early '90s, complained that "6103 was used as a moat to hide information." Unable to see the IRS' side of reported cases of taxpayer mistreatment, Barnard could not get to the root of actual wrongdoing, which, he said, "typically did not involve taxpayer information at all." The IRS used Section 6103 to cut off the flow of information it perceived to be damaging to the agency or its top-level managers, a practice that continues today.     More recently, William A. Dobrovir, a lawyer for Tax Analysts, the publisher of Tax Notes, told The New York Times that the agency has long abused the law to "deny the public access to information it rightfully needs." The strident use of 6103, he said, leads to "intransigence" and the lack of appropriate oversight. Senators Charles Grassley and Bob Kerrey, both instrumental to the success of the National IRS Restructuring Commission, explained to the Finance Committee how the agency used Section 6103 to keep the commission in the dark on issues that were critically important in their effort to draft restructuring legislation. "We just do not get a sufficient amount of information across the board to know what is going on over there," Senator Kerrey told us. Senator Grassley described how their efforts were often "derailed" by "a cloak of secrecy more potent than even the most elaborate secrecy arrangements at Langley," headquarters of the CIA. The IRS, he explained, even uses 6103 protection to "mislead Congress."     The evidence simply did not support the agency's argument that sunshine wilts compliance. When Senator Williams and Congressman King disclosed the crimes rocking the agency in the '50s, compliance increased. On the other hand, once Congress strengthened Section 6103, inadvertently giving the IRS a shield against effective oversight, compliance declined.     With that argument gone, my next concern was one best expressed the way I heard it from a Montana cowboy when I was a boy growing up in the Big Sky country. "Never shoot the horse you're riding." Tax collecting is an essential requirement for any government. It's understandable that Congress, which has come to depend on the ability of the IRS to raise ever-increasing revenue for the programs that come out of Washington, would be averse to careful scrutiny. It's understandable that when it comes to holding the agency accountable for its actions, any Congress possessing a genuine tax-and-spend mentality would be more inclined to focus on weaknesses in the areas of collections and enforcement rather than weaknesses in service and taxpayer satisfaction.     I was disturbed to discover that in the last quarter century the vast majority of studies conducted by the General Accounting Office, Congress' investigative agency, focused on shortcomings and inefficiencies in raising revenue rather than on meeting taxpayer needs and correcting abuses. "What seemed to matter most was that the taxes were getting collected," explained my good friend Senator Daniel Patrick Moynihan, my predecessor as chairman of the Finance Committee and its current ranking member. "We have never paid attention either to the organization or to the job we were giving it."     For the last thirty years, whether or not the IRS was succeeding in its mission was based almost exclusively on its annual revenue figures: had the agency raised sufficiently more money in the current year than it had the year before? If it had, then Congress appeared to be satisfied. Congratulations and agency bonuses abounded. If it hadn't, then Capitol Hill would throw still more money at the agency and pass stiffer enforcement laws, strengthening its ability to--as I recently heard one revenue officer cheerfully tell his colleagues--"bring the taxpayer to his knees."     When the occasional congressional investigation was launched, outrage and formal inquiry focused more on specific cases and relied almost exclusively on anecdotal evidence. As far as I could determine, there had been no thorough oversight, no examination of systemic abuses and cultural pathologies. This concerned me.     The years I had served as Chairman of the Senate Governmental Affairs Committee, as well as Chairman of the Permanent Subcommittee on Investigations, taught me that constant oversight is necessary for all government agencies. Power not only corrupts but can become menacing when it's allowed to consolidate its strength in darkness. I had overseen many investigations into the Department of Defense, particularly its procurement practices. Now, as Chairman of the Finance Committee, possessing the authority necessary for thorough oversight of the IRS, there didn't seem to be any question concerning my responsibility.     My only other hesitation in launching the investigation was one that I really should not have taken seriously. Yet I wouldn't be honest if I didn't say that it lodged itself in the back of my mind, often finding its way into dinner table conversations with my wife, Jane. This centered on the fates of the few senators and congressmen in history who had dared look at the agency. One of the countless political cartoons that appeared during the course of our first series of hearings crystallized this concern. It showed an IRS bureaucrat sitting at the witness table, facing our Finance Committee panel, his eyebrows peaked, his mouth stern. "The IRS is not mean and vindictive, Senator," he responds into the microphone, "and you'll be sorry you asked that!"     In the mid-1920s, James Couzens, U.S. senator from Michigan, was one of the first legislators in this century to investigate charges of graft within the Bureau of Internal Revenue. As author David Burnham describes in his seminal investigative book about the agency, A Law Unto Itself: Power, Politics, and the IRS, Couzens believed that "widespread corruption and secret deal making in the federal tax agency were destroying its ability to collect taxes." His concern led to the creation of a select committee to look into allegations that had come to his attention, and he was appointed its chairman.     A year later--with his investigation in full swing--the tenacious Senator Couzens was summoned off the Senate floor by Internal Revenue Commissioner David Blair and one of Blair's assistants. In a crowd of legislators, lobbyists, and reporters, the commissioner had the audacity to hand Senator Couzens a letter demanding that he immediately pay $11 million in back taxes. It was a direct act of retaliation. The truth, which emerged only after a long, bitter, and costly fight, was that the Bureau actually owed the senator a million-dollar refund. It was an attempt, according to Burnham, "to bully the senator into abandoning his investigation of the agency and the corrupt deals it was cutting."     In the late '60s, Senator Edward Long of Missouri held hearings to look at specific allegations of abuse, particularly an accusation that the agency had been used by the Kennedy administration to carry out a political agenda. In retaliation to Long's efforts, individuals within the IRS leaked false information to Life magazine linking the senator to Teamsters president Jimmy Hoffa. Unable to contain the damaging rumors, Senator Long lost his seat the following year.     In 1972, Senator Joe Montoya of New Mexico announced to the media that he would be looking into charges that many of his constituents were making against the agency. Before he even had the chance to begin his investigation, the IRS launched a counteroffensive with an investigation of its own. Within days, the Service leaked information concerning the senator's tax status to the Washington Post . Like Senator Long, Joe Montoya went down to defeat after an opponent used the illegally disclosed information to campaign against him.     The list goes on, and as I listened to each story, I wondered whether this was another reason why the agency had been largely left alone by Congress. No one is beyond the influence of the IRS. Presidents and vice presidents have been audited. Senators and congressmen have been threatened and intimidated. The agency has even retaliated against its own commissioners and employees, "This is one area that makes the IRS distinct from every other agency in our government," Shelley Davis, the IRS' first and only historian, told me. "It has the power not only to reach out and touch us, but to grab us around the throat, and nobody is beyond its reach." According to Davis, anyone who has studied the history of the agency in the twentieth century realizes there's far more to lose on a personal basis than there is to gain by trying to make the Internal Revenue Service better for the American people. "Even the media tend to ignore the IRS," she told me. "Either they're frightened, or they don't believe taxpayers are all that interested. I think they're frightened." Honest John Williams One senator, however, was able to break through the redoubt of secrecy and retaliation that kept others at bay. It was his courage and dedication to public integrity that led to the King Hearings and the most thorough reorganization of the agency so far in this century. His name was John Williams, a tenacious defender of the truth whom I was honored to call my mentor and friend.     On December 19, 1947, less than a year after taking office, the man Delawareans came to call Honest John went to the floor of the Senate with a startling accusation: an Internal Revenue employee in Wilmington had been embezzling money from tax payments. Approximately 2,000 transactions from Delaware taxpayers had been manipulated in an effort to cover up stolen or misappropriated tax payments, including payments the senator and his wife had posted to their own account.     None then listening would have guessed that Senator Williams' report of illegalities in the agency's Delaware operation would eventually rattle the walls of the Oval Office. In the beginning, National Headquarters lobbied furiously against the senator, Bureau Commissioner George Schoeneman insisting that pursing an investigation "would serve the interests neither of the government nor the taxpayers of Delaware." It was an isolated incident, Schoeneman claimed. The senator's information led to the embezzler's suspension and admission of guilt. Now, according to the bureau, there was no need to dig any deeper. But Williams disagreed. He wanted to know why disciplinary action had not been taken against other employees and managers who had known of the illegal activities but had refused to respond. He angrily pointed out the bureau's disturbing habit of trying to ignore and then hide mistakes rather than resolve them--a habit that remains stubbornly to this day.     National Headquarters' attempt to stonewall was too little, too late. Williams had gained the confidence of Internal Revenue employees everywhere. At last, they believed, someone was listening. Letters documenting similar abuses poured in, as did reports of official cover-ups taking place in offices throughout America. At first, the senator had no intention of expanding his investigation beyond Delaware, but in March 1949, a bureau employee shared the sordid account of an organized tax-fixing scheme, implicating managers at the highest levels of government. Judiciously, Williams pondered his course of action. He gathered evidence for more than a year. Then, in June 1950, he went to the floor again. This time the bureau would not be able to dismiss the charges as being isolated or unusual occurrences.     While Commissioner Schoeneman protested that it takes more than idle rumors and the unverified mumblings of disgruntled former employees to produce indictments, John's intuition and evidence were dead on. There was a cancer in the Bureau of Internal Revenue, and before the scandal was over, hundreds of careers ended in disgrace, including lengthy prison terms for bureau collectors in Boston, San Francisco, New York, and St. Louis. Schoeneman himself resigned. His predecessor, Joseph Nunan, was convicted of tax evasion.     I've heard it said that civilizations can only revive when there comes into being a number of individuals with a new tone of mind, a mind independent of the one prevalent among the crowd and in opposition to it, a tone of mind that will gradually win influence over the collective one, and in the end determine its character. The same can be said of governments and, for that matter, any organization. John Williams had an independent mind. In the many years that I had the opportunity to work with him, he made it clear to me that the most important trust we have as the people's elected representatives is to know what must be done, to be able to articulate it, to love our country, and to be incorruptible.     John was incorruptible, and I must say that I pondered his example as I made my decision to move forward with our investigation. Just as a concerned clerk in the Wilmington Collector's Office had reported lawless behavior to Senator Williams, I received several letters from agency employees following my appointment as Chairman of the Senate Finance Committee in September of 1995.     Responsible for 97 percent of all federal income and 70 percent of the outlays, the Finance Committee spends the majority of its time on tax-related issues, international trade, Social Security, Medicare, and welfare policy. An important part of its stewardship is to oversee the Internal Revenue Service. For this reason, the Chairman of the Committee is given the authority to examine all taxpayer-related records necessary to monitor the agency. Unfortunately, it had never been used. John Williams, James Couzens, and Edward Long never had the authority. In the House of Representatives, Cecil King went as far as he could, but still ran into obstacles, and when Doug Barnard sought 6103 authority from Dan Rostenkowski for an investigation in 1988, the powerful chairman of the House Ways and Means Committee refused to cooperate. Another senator who attempted to investigate the agency without 6103 authority lamented that "we probably know more about the KGB in the Soviet Union than we do about our own Internal Revenue Service."     There are only a few times in life when the fates line up so concisely that they dictate our course of action. The more I considered my responsibility, the more I realized that all arguments against proceeding were vacuous against the powerful forces demanding that I move forward: the thousands of letters I had received from constituents and agency employees, over the years, sharing everything from minor complaints to outrageous horror stories; the commitment I made at the beginning of my career to be an advocate of the taxpayer; my experiences on the Governmental Affairs Committee and the Permanent Subcommittee on Investigations, teaching me not only that bureaucracy requires oversight, but also helping me understand that to be effective you must first be constructive, prudent, tempered, and fair; the legacy left to me by John Williams; and finally, the authority necessary to move beyond the otherwise impenetrable veil hiding the IRS. The Investigation Begins Lack of consistent congressional oversight concerning the Internal Revenue Service the last half century had a profound and unexpected influence on our initiative. First, it made our decision to launch an investigation newsworthy. Second, seeing Congress as their last hope and believing that the Finance Committee was willing to undertake a sincere examination of an agency that for too long had engendered feelings of helplessness, frustration, and anger, countless Americans rushed forward with their harrowing stories. After the Wall Street Journal ran a page-one notice announcing that the Senate Finance Committee was going to look into "recurring complaints of harassment and intimidation by the IRS," our office was inundated with letters, faxes, and telephone calls. Several people drove to Washington, D.C., from hundreds of miles away to hand-deliver their messages. Each case was compelling; many were decades old.     Maryland State Senator John J. Hafer wrote to remind me of how the IRS had destroyed his father's life and harassed his family in the 1960s. From California, I received a letter that began: "My loving husband left me last November, the day after Thanksgiving, when I received a notice of intent to levy from the IRS. It was, given the history of this particular tax assessment, an understandable response. My husband concluded, probably rightly, that my tax problems were too severe to allow us to remain husband and wife." From Arkansas came a letter written by a small businessman whose company was seized after his bank failed to pay the employment and withholding taxes he had been depositing for payment. A single mother from Connecticut wrote to tell me how she was shackled with excessive penalties and interest because of a mistake she had made after following the advice of an IRS service representative. From Texas came the humble petition from a 62-year-old man who had served in the military for 22 years. For more than a decade, and despite repeated correspondence and reassurances from the IRS stating he owed no taxes, the agency continued to file liens against his property, his paychecks, and his military retirement.     And this was only the beginning.     From Muskogee, Oklahoma, I received a troubling letter from a small businessman who after being audited seven years in a row, and discovering that for every year in question the IRS actually owed him refunds for overpayment, was informed that the agency wanted to audit him yet again. Allowing him only eight days to prepare for an examination that would require dozens of ledgers, journals, and documents, the taxpayer was told that the IRS was concerned about records related to the contract labor he used to conduct his business.     Despite consistent rulings in the seven previous audits that the businessman had always abided by the law in his treatment of independent contractors, a new examiner determined that the laborers should be treated as employees. He dismissed the businessman with a vague statement about being notified later concerning the assessment.     When the bill finally arrived after what the taxpayer described as "the longest four months of my life," it totaled $18,959.02. "I was told that this figure was calculated with about $6,000 in penalties dropped, which would only be done if I immediately agreed to sign the assessment."     Frightened, intimidated, and unable to afford a CPA or tax attorney to represent him, the businessman agreed to pay $1,500 down and $700 a month, an agreement he kept until, once again, the IRS changed its mind. "I received four different sets of instructions on ways to make these payments," he wrote. "I believe this was done to make my payments more difficult on me than they already were. I was notified after [making the first four payments] that they would not accept any more, that I had to pay up in full, because there was a new supervisor who did not like the credit business."     According to his letter, paying such a debt in full was impossible. He wrote that in an honest effort to remain faithful to the original agreement, he continued to send the IRS $700 a month. While the agency accepted the payments, the taxpayer explained that his attempts to be faithful to the original installment agreement angered the supervisor. A few months later, the case was sent to collections. A lien was filed. "They got one of their better collecting agents after me," he continued. "She put a levy on my bank account for $17,474.95." In response, the bank surrendered everything he had: $56.09.     Undeterred, the revenue officer showed up at the taxpayer's home with a summons, demanding that he meet her in her office with all of his records or risk going to jail. "It didn't take me long to convince her that I was broke and, thanks to the IRS, had absolutely no credit anywhere. All I had was my Social Security check in the amount of $750 a month."     What was the result of this nightmare? The revenue officer demanded that the taxpayer sign a new installment agreement, this time in the amount of $19,123.88. Where would he get the money? The IRS put him on an installment plan. How much would his payments be? Seven hundred dollars a month!     "I hope," he wrote, "that this new payment plan doesn't make the new supervisor any madder."     As I read the letter, I felt the frustration of this hardworking taxpayer, a small businessman whose future had been mortgaged by a seemingly arbitrary decision made by one auditor concerning the status of the laborers the taxpayer had used in the conduct of his business. I had heard on many occasions that the agency had long before declared war on contract labor, pushing to have as many taxpayers as possible listed as employees rather than contractors, thereby making tax collection easier. Here was a tragic example of that strategy.     I grew angry as I read about what had been done to this man and his family. "The IRS has audited, levied, summoned, liened, and threatened me with jail for the last 15 years," he wrote. "They have destroyed my credit, harassed me, and severely damaged my health because of an increased blood pressure problem. They have greatly weakened my belief in the American free enterprise system. My health and my credit will never recover, no matter what happens from this point on. I only hope that there is a way to get some form of justice for myself and others in my situation."     Letter upon letter contained similar stories of taxpayers--often trying to work with the IRS without professional assistance--coming up against bureaucrats whose absolute authority in pronouncing judgment was not mitigated by the possibility that they might be wrong, misinformed, having a bad day, or even willfully and wantonly abusive. The sheer volume of complaints we were receiving confirmed to me that shortcomings within the IRS were more than anecdotal, and they were occurring not in one or two recreant districts, but throughout America.     I realized the authority that came with the chairmanship of the Finance Committee also came with responsibility. I wanted to know if these stories had merit. Without 6103, it would be impossible. With the authority it was paramount that I do something. Case by case, I began to make my requests for the agency's documents.     The other indication I had that the troubles reported by the taxpayers were more than just random stories, that they reflected deficiencies in IRS management and culture, was the number of telephone calls our investigation received from employees within the agency, and the troubling experiences they related.     I found it interesting that while the taxpayers--generally desperate in the position they had been placed in--were careful in their correspondence to document their cases and share information about themselves rather freely, the IRS agents and officers who contacted us--especially in the beginning--were hesitant to put anything down on paper. Some would not even share their names with our investigators.     This hesitancy, I came to realize, resulted from several factors.     First, there was a "wait and see" attitude. Many had heard of well-intentioned investigations that were never carried out, or, when they were, fell far short of mandating change. As a consequence, there was a genuine and even warranted suspicion about congressional intervention.     Second, there was concern about retaliation. Without exception, every employee expressed fear of reprisals. Many even made it known in the course of their conversation that they were calling from a pay telephone, fearing that their offices and home phones might be tapped or that their calls would be traced.     Third, agency employees were worried about "disclosure," a word repeated like a mantra within the IRS, and possessing more definitions than the Oxford English Dictionary . One veteran employee, who did eventually dare put her concerns on paper, began her letter explaining that when she joined the Service and went through early orientation meetings the trainers made it clear to her class that "if we discussed procedures or the workplace with anyone outside the Service that Internal Security would view it as a disclosure violation as serious as revealing taxpayer information and that we would be prosecuted.     "They were dead serious," she wrote. "They told us how much they hate publicity and told us that under no circumstances were we ever to create any publicity surrounding ourselves as IRS employees or the Service as an entity. They said that the last thing they needed was publicity to bring them under scrutiny of Congress or the Executive Branch. They made it plain that if we focused attention on them in any way other than those approved by the Disclosure Office we would be the ones to suffer."     In the beginning, few letters arrived from employees, but the phone calls were overwhelming. Nights, weekends, and holidays, the calls came in, each validating the complaints filed by the taxpayers, building a case that here was an agency, perhaps the most powerful agency in America, in dire need of reform and oversight.     One revenue agent crystallized the concerns: "I have been horrified at the situations I have seen," she wrote. "Some IRS personnel seem to have forgotten we are there to enforce the law, not break the law. If we destroy someone's life it defeats our purpose. They will never again be taxpayers. You cannot just run over someone with hope that they won't know the law and their rights. I cannot begin to imagine the amounts of taxpayer dollars that have been wasted because of derogatory behavior by the IRS. I really don't want my tax dollars going for this. Someone in charge needs to get the message across that the most efficient way to collect tax is not by treating people like dogs."     By the evidence we were collecting, it was clear: problems existed in every area of the Internal Revenue Service--Examinations, Collections, Inspections, Criminal Investigations, and Management. Copyright © 1999 William V. Roth, Jr., and William H. Nixon. All rights reserved.