FOR IMMEDIATE RELEASE Press Release #105-376

July 10, 1998

ROTH SAYS IRS REPORTS VALIDATE COMMITTEE FINDINGS

Calls Reports a "Stunning Confession of the Sins of the IRS"

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) today said two reports prepared by the Internal Revenue Service and released today validated his findings about problems at the agency and called them a "stunning confession of the sins of the IRS". The investigative reports were prepared by the agency's Chief Inspector's office and had been requested by Roth in December 1997 following the Finance Committee's fall hearings.

The reports looked at the Examination Division's use of performance measures and statistics and the use of seizure authority in collections, two areas that the Finance Committee's hearings found to be especially troublesome.

"These two reports validate the findings of the Finance Committee's investigation of the IRS. In spite of the fact that I heard about problems in the Committee's hearings and in thousands of letters from taxpayers, these reports are still astonishing in the scope of the taxpayer abuse they confirm and in the fact that the reports are from the agency itself," Roth stated.

"In these pages, American taxpayers will find a stunning confession of the sins of the IRS. If some taxpayers are wondering why they have received unfair and uncivil treatment at the hands of the IRS, they need look no further than these accounts.

"Our IRS reform legislation, which I expect to 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

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process protections in collections activities. We are prohibiting the IRS from using enforcement statistics. We are changing the way business is done at the agency.

"There is one positive aspect of these reports, and that is their very nature and existence. The fact that the agency is owning up to these problems is a refreshing change -- and a positive reflection on the new Commissioner. I am confident that our legislation and Commissioner Rossotti's leadership will bring about changes at the agency that will help prevent these types of abuses."

The reports, which combined are more than 300 pages long:

• Confirm that the Examination Division violates IRS policy by setting production goals and evaluating group managers and employees using enforcement statistics. According to the report, "this led to an environment at the group manager and employee levels that put emphasis on revenue and other statistical goals...The Examination Division's corporate measures focused primarily on enforcement statistics rather than quality and treatment of taxpayers."

• Confirm that the IRS did not always properly exercise its seizure authority. The report found a correlation between the pressure put on by the use of enforcement statistics and the inappropriate use of seizure authority. The report found that this led to cases in which the IRS went after taxpayers who were experiencing financial or medical difficulties or where the taxpayer was in the process of obtaining funds to hep satisfy the liability. In 130 of 467 cases, the following issues existed:

- Seizures were conducted despite information that indicated a potential hardship on the taxpayer or third parties, demonstrated a lack of adequate concern for the taxpayer's financial or medical status or countermanded previous IRS commitments;

- The value of assets seized was not commensurate with the resources required to execute the seizure, and the seizure resulted in little or no compliance;

- Reasonable attempts to contact the taxpayer or representative prior to seizure were not made;

- Alternatives to seizure were either available and not pursued, or were not investigated;

- Seizures were conducted even though the taxpayer questioned or may not have understood the tax assessment;

- The legal requirements for notification, waiting periods for conducting seizures or sales of property, exempting tools of a trade, approval of a principal residence seizures, or statute expiration were not met.

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