Review Finds Little Evidence of Taxpayer Abuse by IRS

The Internal Revenue Service’s criminal division has drifted from its proper focus on tax enforcement but is not guilty of widespread violation of taxpayer rights, according to an independent review released Tuesday.

A task force of federal law enforcement officials headed by William H. Webster, a former federal judge and former director of the FBI and the CIA, said instances in which taxpayer rights are violated are “isolated and individual” despite some high-profile horror stories.

“No evidence was found of systemic abuses,” Webster wrote. But he cautioned that agents must be aware “that even isolated instances of abuse of authority can create impressions that undermine the public’s confidence.”

The report also found that the 3,000-agent IRS Criminal Investigation Division properly uses search warrants, grand juries and raids, and that deadly force was extremely limited. In fact, since 1995 only one case involved use of a firearm: the shooting of a pit bull that charged an agent during a search.

Of 87 claims of rights violations filed against IRS agents from 1996 through 1998, none was successful. And 93% of lawsuits against IRS enforcement agents during that period involved motor vehicle accidents. Only three cases involved IRS use of search warrants.

But the division, Webster wrote, has “drifted from its primary mission,” which is to “investigate criminal violations of the internal revenue code.” This has happened mainly because the division possesses “sophisticated financial expertise” needed by other law enforcement agencies.

In fact, 25% of agents’ time is spent on drug investigations, and they are often under the control of a local U.S. attorney as part of a wider-ranging criminal inquiry. This does little to help collect an estimated $195 billion in annual unpaid taxes, Webster found.

Webster urged the division to rededicate itself to enforcing tax laws and not get sidetracked on the tax aspects of such crimes as money laundering and drug trafficking.

In a letter to Webster, IRS Commissioner Charles Rossotti agreed with Webster’s conclusions and promised “more considered decisions” regarding use of criminal investigation agents for matters other than tax compliance.