In the current dispute between Sen. David Pryor and the Internal Revenue Service, both sides make some good points. The Arkansas Democrat is pushing his ''Omnibus Taxpayers' Bill of Rights.'' The IRS opposes the bill. The senator has the better case. With certain modifications his bill ought to be resoundingly approved.
Pryor is outraged, with good reason, at the zealotry, rapaciousness and unfairness of a few IRS agents. His Senate hearings have abundantly documented his charges against the agency. The horror stories spelled out before the Finance Committee might have been written by Franz Kafka.
Consider, for example, what the IRS did to Thomas L. Treadway of Pipersville, Pa. The agency destroyed him. Until the summer of 1982, Treadway had a successful trash management business. Then the IRS sent him assessment notices for $247,000. Not content with striking at Treadway, the IRS -- without a word of warning -- also seized $22,000 from the bank account of his longtime companion, Shirley Lojeski. The theory was that he was diverting assets to her.
The charge was never proved. Lojeski couldn't maintain her horse farm because she could not buy feed. She was threatened with foreclosure for inability to make mortgage payments -- and she was an innocent bystander.
For one solid year, the IRS put Treadway and Lojeski through a nightmare. Then, on Sept. 23, 1983, an IRS appeals officer found the entire $247,000 assessment unwarranted. Four months later Lojeski finally got her money back, but by that time she and Treadway had run up $75,000 in legal and accounting fees. They sued the IRS agents for violation of their Fourth and Fifth Amendment rights. They won in a U.S. District Court but lost on appeal through a bizarre legalism: they had ''failed to show any detrimental reliance on the requirement that IRS regional counsel approve the filing of notices of lien and levy.'' Whatever that means.
Treadway's case is one of dozens that Pryor has put on the record. Since his hearings began in April, corroborating evidence of IRS abuses has piled up. Just last month the IRS seized the $10.35 bank account of a 12-year-old boy because his parents had missed a payment on an overdue tax bill. How can such arrogant nonsense be defended?
The Arkansas senator now has 26 cosponsors of his bipartisan ''bill of rights.'' His measure would require the IRS to give every taxpayer, at the time an audit begins, a ''simple, comprehensive and non-technical statement'' of the taxpayer's rights and obligations. What's wrong with that? The bill would give taxpayers a right to make recordings of such interviews. Why not? Pryor would give the General Accounting Office new authority to review ''the accuracy and consistency'' of any advice the IRS offers to taxpayers. His bill would require the IRS to make installment-payment plans available to small taxpayers who are found to owe the government money. Surely this is reasonable.
Pryor has one other provision the IRS opposes. He learned that in some field offices of the service, agents are evaluated by the number of seizures, liens and deficiency assessments they have ordered. IRS Commissioner Lawrence Gibbs says such evaluations are in violation of longstanding policy. Then why not write the policy into law? Gibbs contends that he can correct abuses internally, and to his credit -- as Pryor has emphasized -- Gibbs has done much toward enforcing policies of courtesy and fairness.
In opposing Pryor's bill, Gibbs does not deny the horror stories. He makes the point that when 100 million tax returns have to be processed every year, some mistakes are bound to be made. Not all taxpayers are honest; a dismaying number cheat the government whenever they feel they can get away with it. Some of the small-business men who complain so pathetically of IRS harassment are garden-variety crooks: they have withheld income taxes and Social Security taxes from their employees and have used the money for their own business purposes. It is easy to scorn the IRS agents who confiscated Shirley Lojeski's bank account, but we ought to have equal contempt for bums who break the law.
One aspect of Pryor's bill is troublesome. He would shift the burden of proof in cases of tax evasion. It is now up to the taxpayer to prove the honesty of his return. The bill would require the IRS to prove something wrong. Such a change might tempt many taxpayers to stop keeping accurate records. The provision needs careful thought. Otherwise this ''bill of rights'' is sound. It should have been adopted long ago.