Armed Auditors: More IRS Abuses Told

As the Internal Revenue Service has expanded its role in the federal war on drugs, it has begun subjecting ordinary American taxpayers to the same heavy-handed enforcement techniques used on drug lords and money launderers, a Senate committee was told Wednesday.

Several taxpayers described how they became the targets of surprise raids conducted by dozens of armed IRS agents on their homes and businesses--searches that ultimately failed to result in prosecutions for tax fraud but did manage to financially devastate the taxpayers.

IRS Commissioner Charles O. Rossotti acknowledged that the allegations, if true, would amount to misconduct. But he said that privacy laws prevent him from confirming or denying the detailed accounts related to the Senate Finance Committee.

“Should even one of these allegations be true, that’s one too many, and I won’t tolerate it,” Rossotti told reporters at a hastily called news conference at IRS national headquarters.

The Senate hearing put a particularly harsh spotlight on the IRS Criminal Investigation Division, a 4,500-employee operation that has sweeping law enforcement powers often described as greater than any other federal agency.

In the last several years, the division has become more involved in the fight against illegal drugs, a major diversion from its traditional emphasis on conventional tax fraud. About 34% of the organization’s cases involve drugs, and additional cases concern money laundering.

Experts said that the focus on drugs is changing the personality of the agency. The IRS has been systematically turning up the heat on taxpayers over the last two decades, according to Robert Edwin Davis, a Dallas tax attorney for 40 years who testified Tuesday at the Senate hearings.

Davis, a deputy assistant attorney general for taxes during the Reagan administration, said that undercover investigations were unheard of in the 1980s, and search warrants were used only about a dozen times each year. Today, Davis said, search warrant use is up twentyfold.

“There is a migration of these SWAT team techniques in our government, and we have to be careful about it,” said Sen. Daniel Patrick Moynihan (D-N.Y.) at the hearing.

Added Sen. Frank H. Murkowski (R-Alaska): “Such Gestapo-like actions are uncalled for.” Sen. Don Nickles (R-Okla.) said: “The CID is out of control.” Sen. Kent Conrad (D-N.D.), a former state tax director, said: “It sounds like police state tactics. It’s preposterous.”

None of the taxpayers who testified Wednesday about IRS raids against them was ever convicted of drug or tax violations. The witnesses said that they were never informed of any tax audit or criminal investigation before the IRS teams walked through their front doors.

John Colaprete, a Virginia restaurant owner, said that his home and two of his restaurants were raided by dozens of armed IRS agents because of phony allegations from a bookkeeper who was later convicted of cheating his business.

W.A. “Tex” Moncrief Jr., a Texas oil millionaire, testified that 64 armed IRS agents--two for each of his employees--stormed through the door of his Fort Worth oil firm shouting “IRS! This business is under criminal investigation. Remove your hands from the keyboard and back away from the computers!”

Moncrief said that he eventually paid the IRS $23 million to end the harassment of his family, despite the fact that the IRS never established that he owed back taxes.