Does The IRS Mistreat Taxpayers?

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Alan Daley Writer, American Consumer Institute
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Between 2010 and 2014, the IRS budget was reduced, resulting in a hiring freeze and a net loss of 13,000 staffers. The demographic mix of IRS workers has tilted toward older workers and expected retirements will further deplete the IRS’s capabilities. The current staffing may be too thin and in some functions and it may be too inexperienced. The IRS Commissioner observed that “more than 6 out of every 10 people who call can’t reach a customer service representative,” a level of level of customer service he regards as “truly abysmal.” The IRS Commissioner claims it will focus its efforts on collections of taxes lawfully owed. To the contrary, IRS employees feel free to commit illegal actions in pursuit of partisan goals. This shows a failure of leadership.

Somehow the IRS had enough staff to wage an intentional campaign that slow-rolled applications by non-profit organizations seeking tax exempt status. The IRS mistreated applicants who had the audacity to mention a Tea Party theme somewhere in their application. That much has been documented. The director in charge of processing these applications asserted her Fifth Amendment right to avoid self-incrimination in a Senate investigation of the IRS’s illegal actions. The employees and taxpayers note that the IRS Commissioner failed to impose disciplinary action.

The IRS Director then reported she had a catastrophic loss of 24,000 emails. A loss of that magnitude must be reported promptly but it was not. The “erased emails gambit” was so successful it was adopted at the State Department. The refusal by the Director to testify, her sudden retirement, and the suspicious loss of her correspondence files are elements in the IRS’s successful cover up. Again, neither the Commissioner nor his superior called for disciplinary action for the cover ups.

Federal law allows a duration of up to 3 years for a tax audit. The IRS ignored that limit and extended an audit of Microsoft’s overseas income for another 6 years. The IRS’s goal is clearly to tax the company’s foreign earnings even when they have already been taxed in the countries where they were earned. That is a second layer of tax that is not yet lawful, but it is partisan dogma carrying the same weight as IRS’s belief that Tea Party admirers cannot deserve tax exempt status.

The IRS hired a purportedly left-leaning law firm to continue its 9-years of tax audit and to take sworn testimony from the taxpayer company’s employees. Those are functions that cannot lawfully be done by non-IRS employees – another IRS breach of the law. The political bias of the law firm does matter because it further taints the one-time non-partisan reputation of the IRS. But evidently the IRS Commissioner no longer cares.

In lieu of new staff to bolster tax collections, the IRS has been investing in cell-site simulators (aka “Stingrays”). Chasing the communications of taxpayers with Stingrays requires the IRS to establish that there is probable cause of criminal activity and to obtain a court order. The IRS claims that their Stingrays are used only for criminal cases, not for civil cases. But, the lure of results that please other partisans has previously overpowered the IRS’s respect for law. Funds spent on Stingrays was money unavailable to beef up taxpayer privacy. As a result of flimsy security, about 50 percent of hacker attempts were able to invade the IRS’s tax returns database.

The “shadow of the leader” is the imprint of a leader’s behaviors and values that signal the limits to acceptable employee behaviors. The IRS Commissioner recently allowed partisan treatment of taxpayers, hiding evidence, ignoring statutory limits on aggressive procedures, and acquiring police equipment of dubious relevance. IRS employees are being encouraged to abuse taxpayers. The IRS will not refocus to its core mission and halt its mistreatment of taxpayers unless a new leader casts a new shadow that is loud, ethical, impartial, and industrious.

Alan Daley writes for The American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. For more information about the Institute, visit www.theamericanconsumer.org.