The IRS intimidates taxpayers and bullies its own employees, creating a culture of mistrust and fear, a string of witnesses told the Senate Finance Committee Wednesday on the second day of hearings into problems plaguing the agency.
Through six hours of testimony, taxpayers, former IRS employees, and private sector tax practitioners said the agency's management routinely disobeys laws, encourages questionable tax collection practices and is more concerned with statistically justifying its budget than serving the American public.
In perhaps the most devastating testimony of the day, Jennifer Long, an IRS revenue agent, said agency managers fabricate evidence on delinquent taxpayers and IRS employees and prevent audits of managers' friends.
"These tactics, which appear nowhere in the IRS manual, are used to extract unfairly assessed taxes from taxpayers, literally ruining families, lives and businesses--all unnecessarily and sometimes illegally," Long said.
Long also said employees' complaints about such practices are routinely ignored, so they have become afraid to voice concerns about managers' wrongdoing.
"We are terrified by what's going on," Long said.
The three days of Senate oversight hearings, chaired by Senate Finance Committee Chairman William Roth Jr., R-Del., are a culmination of a year-long investigation by the committee into the practices of the IRS. The agency has faced severe criticism over the last year for poor computer security, wasting billions of dollars on its tax systems modernization, poor management and bad customer service.
Several taxpayers also testified at Wednesday's hearing. Kathleen Lund, of Apple Valley, Calif., said she was forced to divorce her husband and set up separate residences to avoid being financially destroyed by a series of IRS errors and incompetence.
"It is a disgrace to our nation that an arm of our democratic government is allowed to behave as if it were an extension of a police state," Lund said. "The IRS is judge, jury, and executioner--answerable to none."
Several former employees of the IRS and the Treasury Department said IRS management is so focused on statistics about the amount of revenue it collects that it tramples on justice. Bruce Strauss, a former IRS employee, said "statistical operational objectives" drive managers because that is what they are evaluated on.
Several senators and witnesses said most of the people who work for the IRS are honest, hard-working civil servants. After the hearings, Michael B. Styles, president of the Federal Managers Association, urged Roth "to be vigilant in reminding his colleagues and the media that the actions of the few should not denigrate the efforts and hard work of the many. It would indeed be disappointing if this effort to improve IRS operations, an effort FMA wholeheartedly supports, were to be allowed to undermine the effectiveness of IRS operations by drawing undeserved public scorn on an agency faced with an enormous task and producing remarkable results."
Shelley Davis, former IRS historian and author of "Unbridled Power," a book about her years at the agency, said the key to improving the IRS is holding its managers and employees responsible for their actions.
"The IRS does not hold its employees accountable and Congress does not force the IRS to hold its employees accountable," Davis said.
Two major IRS reform plans have been announced this year, one by the Clinton administration and one by a blue-ribbon commission led by Sen. Bob Kerrey, D-Neb., and Rep. Rob Portman, R-Ohio.
On the third and final day of Senate Finance Committee hearings Thursday, several IRS employees whose identities will be hidden are expected to testify and the IRS is expected to respond to the findings of Roth's investigation.