Tax Policy Special Report
Navigation Bar
Navigation Bar

 Key Stories
 Links &

  blue line
Tax Policy Graphic


On Our Site
Key Post Stories About the IRS
Breaking News From the AP

On the Web
Testimony and News Releases from the Senate Finance Committee Hearings


IRS Official Reports Agency Double Standard

By Albert B. Crenshaw and Stephen Barr
Washington Post Staff Writers
Wednesday, April 29, 1998; Page A04

Top executives at the Internal Revenue Service routinely go unpunished for fraud, abuse and other serious misconduct, even though investigators substantiate the charges, a senior IRS personnel official told Congress yesterday.

Even cases of "egregious misconduct" often result in little or no disciplinary action because IRS Deputy Commissioner Michael Dolan either dismisses the matter as minor or sits on the case until the executive in question has time to resign or retire, the official said.

"Higher-graded employees in the organization are not held to the same standards as employees of lesser grades, particularly when misconduct occurs," Yvonne D. DesJardins, chief of the employee and labor relations section of the agency's personnel branch, said in testimony before the Senate Finance Committee.

DesJardins's examples involved internal agency violations, rather than abuse of taxpayers. But her statements echoed testimony of other IRS employees who at earlier hearings described a closed culture in which senior executives protect one another.

"The executives of the IRS are close to each other, frequently socializing with each other and often developing lifelong friendships," DesJardins said. "Because of this, it is extremely difficult, if not impossible, for one executive to recommend and take an action against another."

Her testimony came in the first of four days of hearings by the Finance Committee into management of the IRS. The panel caused a sensation last fall when taxpayers described a variety of abuses by the agency. Finance Committee Chairman William V. Roth Jr. (R-Del.) said yesterday he wants to make sure the agency doesn't return "to business as usual."

Last year's hearings -- and the firestorm that resulted -- caught the agency and the Clinton administration flatfooted, prompting bipartisan support for IRS overhaul legislation. But there were signs yesterday the IRS will respond more quickly to this week's hearings.

In a statement, the IRS said Commissioner Charles O. Rossotti would create a task force, headed by an outside expert, "to review disciplinary actions" across the entire agency, including Dolan's role in disciplinary decisions. "Mr. Dolan believes the review of the cases that he has presided over in his capacity as deputy commissioner will show the allegations to be unfounded," IRS spokesman Frank Keith said.

Rossotti also announced he will ask DesJardins "to meet with him personally to review the matters she raised in her testimony," the IRS said.

DesJardins, who testified in a low, calm voice, described herself as a whistle-blower who had complained about high-level misconduct in October 1994. "I have suffered retaliation and continue to suffer retaliation," she said, and alleged that the IRS has tried to undermine her chances for jobs in the private sector "through false and misleading statements."

The IRS has been under scrutiny for several years, first for its inability to modernize its computer systems after spending billions of dollars, and more recently for abuse of taxpayers. Rossotti, who has promised to change the agency's culture and operations, is a business executive and computer expert rather than a tax specialist.

Roth acknowledged that many of the agency's -- and taxpayers' -- problems arise from the complexity of the tax code, but he said many result from poor agency management.

Democrats agreed that the agency must be improved, but several cautioned that merely bashing the IRS for political gain will do the nation more harm than good. They urged that more attention be given to tax cheats who beat the government out of more than $100 billion in revenue every year.

"I do not believe these hearings are balanced," said Sen. Max Baucus (D-Mont.). "I believe they fail to rise above partisan politics. And I do not believe they will ultimately benefit the American people."

The committee heard testimony about a variety of abuses by agency managers. Among the cases described by DesJardins and Harry G. Patsalides, Treasury deputy assistant inspector general:

An official was promoted to IRS national director of equal employment opportunity and diversity while he had several sexual harassment complaints outstanding against him. He then was the subject of more complaints while in the top anti-discrimination job and was ultimately given a letter of reprimand and reassigned without demotion.

A criminal investigation manager kept one car that had been used in undercover work -- and perhaps other vehicles -- after he retired in 1992. He also misused government credit cards. He was given a "deferred prosecution," under which he paid $20,000 restitution and was put on two years' probation.

A revenue officer, stopped for drunken driving, threatened the arresting trooper with an audit. He agreed to go through an alcohol-abuse treatment program and is still with the IRS and dealing with taxpayers.

Another group of witnesses -- lawyers and accountants who represent taxpayers before the IRS -- told of clients who had been raided by gun-toting revenue agents and harassed despite ill health. One practitioner said he was threatened with an audit himself -- and then audited -- after aggressively defending a client.

The IRS has promised a thorough probe of its criminal investigation division, and yesterday Rossotti named former FBI and CIA chief William Webster to head the probe. William E. Shaheen Jr., former head of the Office of Professional Responsibility at the Justice Department, will assist Webster, Rossotti said.

Yesterday's hearing had its theatrical moments. Roth's staff seated IRS employee Jennifer Long of Houston, a star witness of last September's hearings, on the first row in the hearing room, evidently to signal support for her.

At those hearings, Long testified that IRS managers fabricated evidence to show taxpayers owed more taxes than they reported and that IRS managers harassed their employees. But a Treasury Department inspector general's probe of Long's allegations said they could not be substantiated.

Patsalides sidestepped the IG report on Long and whether its findings challenged her credibility, saying that the investigation into Long led the IG to open "possibly six new cases" in Houston.

© Copyright 1998 The Washington Post Company

Back to Top

Navigation Bar
Navigation Bar
yellow pages