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Taxpayers Tell of Mistreatment; IRS Issues an Apology

Inquiry: Citizens recount experiences of being trapped in a confused bureaucracy. In landmark move, acting agency chief says he regrets 'any anguish we have caused.'

September 25, 1997|RALPH VARTABEDIAN | TIMES STAFF WRITER

WASHINGTON — Taxpayers from across the nation Wednesday related sagas of incompetence, laziness and hostility by the Internal Revenue Service that, they told a Senate hearing, had shattered their lives.

Leaving little doubt about the veracity of the allegations, acting IRS Commissioner Michael P. Dolan issued a landmark apology, saying: "No one should have endured what these citizens describe as their experience at the hand of the tax system. At this point, I offer my sincere apology to these taxpayers for any mistakes we have made and for any anguish we have caused."

In the unprecedented hearing into abuse and mistreatment of taxpayers, the Senate Finance Committee turned a harsh spotlight on the cases of Americans who became trapped in a confused bureaucracy incapable of correcting its errors for years.

Msgr. Lawrence Ballweg, an 82-year-old priest from Florida, told of "devious" IRS agents who erroneously tried to grab $18,000 from a trust fund for the poor set up by his late mother.

Nancy Jacobs, a Bakersfield optometrist's wife, broke down in tears as she explained how aggressive IRS agents hounded her husband for 17 years because they mixed him up with another taxpayer.

Tom Savage, a Delaware small businessman, said that the IRS concocted an imaginary company that he co-owned with another taxpayer and then illegally seized $50,000 to pay for the other taxpayer's debts.

Katherine Lund, an Apple Valley, Calif., woman, described how the IRS could not keep track of its own records, repeatedly threatening to seize her home if she did not pay a tax debt left over from a former marriage. Although on three occasions she sought to clear the debt, another branch of the agency continued to pester her.

The testimony was met by profuse apologies from committee members themselves, who struggled to grasp how a tax system that they had helped put in place had fallen into such a sorry state.

"We can't help but feel shame that our government has carried on this way," offered Sen. Charles E. Grassley (R-Iowa).

A number of experts testified that much of the blame for the IRS' problems lies with Congress' lax oversight. Indeed, the Senate Finance Committee, the panel that has direct responsibility for the IRS, had never in its history conducted an oversight hearing of the agency.

The three-day hearing is to conclude today when IRS agents, their faces hidden by hoods, are to testify that the agency routinely violates the law and the rights of taxpayers in its efforts to boost its collections.

The hearings come with the IRS at a crossroads, with political reformers demanding that control of the agency be transferred from the Treasury Department to a special independent agency. More-radical solutions, such as those endorsed by House Ways and Means Committee Chairman Bill Archer (R-Texas), would eliminate the income tax, as well as the IRS, and create a new national sales tax.

IRS officials have been politically battered for more than a year, since the first disclosures that the agency's $4-billion effort to bring its antiquated computer system up to date had become a boondoggle.

But the problems described Wednesday go far beyond technology. Darren Larsen, a Southern California tax attorney and a former IRS official, said that she has been "appalled by the lack of knowledge on the part of front-line managers" at the agency. Such ignorance has led to managers that "blatantly disregarded the law" in putting liens on individual's homes, for example, she said.

Robert S. Schriebman, a tax attorney from Rolling Hills Estates, testified that in many instances IRS power is too great, citing the authority of the agency to seize homes with only the signature of a district director.

Schriebman said that taxpayers should have the right to a court hearing before any lien, levy or seizure is executed by the IRS. According to Congress' General Accounting Office, the agency issued more than 750,000 liens against taxpayer property last year alone.

The IRS has shielded itself effectively from the U.S. public, using its extraordinary authority under the so-called 6103 provision of the federal tax code that was intended to safeguard taxpayer privacy, said Sen. Daniel Patrick Moynihan (D-N.Y.).

Under 6103, the IRS essentially has kept the history of its activities unwritten, said former IRS historian Shelley Davis. "The IRS is the best secret-keeping agency in government, better than the FBI and the CIA," she said.

IRS officials have strongly denied allegations by the committee that the agency condones illegal tax practices and pressures its revenue agents to breach the law.

But late in the hearing Wednesday, Jennifer Long, an IRS agent, testified that the IRS has fabricated evidence in tax cases and targeted individuals who are vulnerable because of low income or modest education.

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