September 24, 1997
The Senate Finance Committee has been examining charges that the Internal Revenue Service (IRS) has become to aggressive in auditing and collecting back taxes from the American public. Today, the committee heard from a panel of people who said they were harassed by agents. Is the IRS a bad agency or is it just a few "bad apples?" Margaret Warner gives a background report and then leads a discussion.
A RealAudio version of this NewsHour segment is available.
April 11, 1997
A panel discussion on the embattled IRS.
March 7, 1996: Paul Solman reports on the history of taxes--and anti-tax sentiments.
The NewsHour Economy Page.
MARGARET WARNER: The Internal Revenue Service processes more than 200 million tax returns each year, making it a presence in the life of almost every American. Its 106,000 employees make it the second largest federal agency after the Pentagon. But the IRS has been dogged by criticism of everything from its customer service to the methods it uses to pursue those suspected of underpaying their taxes.
For the past six years the General Accounting Office has put the IRS on its list of agencies at high risk for waste, fraud, or mismanagement. And this year GAO investigators faulted the agency for not cracking down on electronic snooping by its employees in confidential taxpayer files.
Last summer a congressionally appointed commission proposed reforms of the agency, including the creation of a new board of directors composed largely of private sector business people. Congress has yet to consider those recommendations, but following a seven-month investigation the Senate Finance Committee this week is holding hearings on alleged abuses by the agency. Republican Committee Chairman William Roth opened the hearing yesterday.
SEN. WILLIAM ROTH, Chairman, Finance Committee: (Yesterday) There is no other agency in this country that directly touch the lives of more Americans. Nor is there any agency which strikes more fear into their hearts. A threat of an audit, the awesome power of the IRS looms like the sword of Damocles over the heads of taxpayers. And as chairman of the Senate Finance Committee, I want to know why, I wanted to understand where this fear came from.
MARGARET WARNER: Today the committee heard from taxpayers who said they'd been harassed and wrongly accused by the IRS. One witness spoke of her 17-year fight.
NANCY JACOBS: In 1981, out of the blue, without any warning, the IRS placed a lien against us for $11,000, for unpaid payroll taxes. We couldn't find anyone at the IRS that would us the courtesy of checking into the lien and to find out who the lien was for. After attempting to deal with the IRS, my husband and I were so intimidated by the tactics used by the IRS that we agreed to pay $250 a week until the balance was paid. Both my husband and I were met with indifference when dealing with the IRS offices. IRS employees were not interested in listening to us, much less investigating our assertions. They assumed we were guilty; that we did owe the money.
SEN. WILLIAM ROTH: Would you explain what those tactics--why would you pay something you don't owe.
NANCY JACOBS: Well, when you have someone come to you from the IRS and tell you they're going to take your home, your vehicles, whatever you own, close your business so you have no way of making a living, you do what they tell you to do.
MARGARET WARNER: Later, a current IRS employee told of how managers push agency workers to pursue taxpayers who not fight back.
SEN. PHIL GRAMM, (R) Texas: Tell me, Ms. Long, more about this singling out low income people. Do we do it based on somebody buying a Cadillac or something? How are these people singled out?
JENNIFER LONG: Well, Sen. Gramm, the last I would say six months to a year--and you're from around Houston--I've been going out to people's homes that don't have air conditioning. And in my opinion you're going to get air conditioning before you get the Rolls Royce in a city like Houston. And I cannot see any signs of wealth. I cannot find any sign of wealth. I cannot find any research that would indicate that these people had assets that they would be hiding from me.
In the past I would audit people that would hire like someone from a large accounting firm downtown or a well known attorney to defend them. And that's the type of people I would deal with. I don't see that anymore. I don't know how the cases are being chosen, but the quality of the cases, I mean, like I said, I feel like there are a lot of poor people that are being chosen, or lower income people.
MARGARET WARNER: Hearings will continue tomorrow with the acting IRS commissioner expected to testify.