Recent U.S. Senate hearings have again spotlighted a disturbing pattern of heavy-handed bureaucracy and abuse of taxpayers by the Internal Revenue Service.
These actions--including a bogus IRS action against former U.S. Sen. Howard Baker by a rogue IRS agent--were shocking but unfortunately were no surprise. They reminded me of some of the abuses I saw in field hearings I conducted earlier this year in the Antelope and Santa Clarita valleys.
In one case, a family whose refund check was stolen in the mail was interrogated, accused and threatened for hours because they were suspected of forging it. Their ordeal went on for months before our office intervened. (No charges were ever brought.)
A woman whose deceased husband's limited partnership had been audited more than a decade earlier (she was unaware of the audit) first became aware of tax problems when her entire checking account was levied by the IRS. This is a woman who lived in the same house for 30 years. The IRS claimed it couldn't find her to give her the required notice of the levy--but they apparently had no problem finding her bank account.
I heard other stories in which there was no dispute that some taxes were owed, but IRS enforcement procedures were so heavy-handed that they forced small businesses to close their doors rather than stay open and produce revenue that would allow the tax to be paid.
Last year, the U.S. House of Representatives passed IRS reform legislation that created a civilian review board and changed the presumption of guilt in tax court cases.
It was a good first step but more needs to be done.
I have introduced a bill based on a suggestion made by accountants and agents who testified at my field hearings as expert witnesses.
It would require the IRS to get the permission of a newly created citizen panel before seizing any property or garnisheeing a taxpayer's wages. The panel would reject any proposed seizure if the IRS had violated the law or its own rules or if an alternative method of enforcement, such as an installment payment agreement, would be more appropriate.
The panel would be unpaid and consist of attorneys, accountants and possibly agents chosen jointly by the IRS, the state bar and enrolled agents groups in each IRS district.
Making sure the IRS obeys the law (including the requirement of giving notice) before it can seize property is simple due process. But for the IRS, it would be a revolutionary step.
The burden would be on the IRS to justify what it does. There are many good, reasonable IRS agents who go out of their way to protect taxpayers' rights. But there are others who fall victim to the IRS culture of maximizing revenue seizure to the exclusion of taxpayer rights. Requiring such agents to get permission from a third party in advance would discourage many of the abuses we have seen.
If you are sued in civil court, the other side cannot simply take your property before trial. Before a prejudgment seizure or lien is permitted, the other side must first schedule a hearing before a neutral judge, where the litigant must explain why the seizure is necessary.
That is not the situation for the taxpayer and the IRS. As we enter the 21st century, it's about time the IRS adopts procedures that ensure the principles of justice and due process that have been in the Constitution since the 18th century.