Report Chastises IRS Inspection Service for Lacking Independence

Inside guardians at the Internal Revenue Service lack independence and do less than an adequate job reviewing employee complaints, a report to the IRS commissioner says.

The author of the report, former government auditor Charles Bowsher, said current practices and procedures at the IRS Inspection Service “have given rise to serious questions about its independence.”

IRS Commissioner Charles O. Rossotti, who had asked for the report, agreed with it. “I welcome this report and concur with virtually all its findings,” he said in a statement.

Among his recommendations, Bowsher said inspectors should candidly report their findings without prior discussion or negotiation with IRS management.

And he called on a new panel of non-IRS employees to evaluate the performance of inspection service executives to create greater independence from the IRS. Under the current arrangement, Bowsher said, the performance of employees in the inspection service could be rated by people being audited.

“We don’t think that the auditees should be serving on the performance review board,” Bowsher said in an interview.

The report also found the IRS isn’t coordinating investigations of mismanagement complaints, since several different offices have responsibility for those cases.

The report described how the inspection service was told of “numerous allegations” that IRS management had been improperly using enforcement statistics. The complaints were merely forwarded to management.

It is illegal for IRS management to rate workers’ performance based on collection quotas.