IRS Records Faulted in Misconduct Audit

Citing inadequate records, congressional auditors said they were unable to substantiate claims made in high-profile Senate hearings of IRS misconduct, including retaliation against employee whistle-blowers and taxpayers viewed as uncooperative.

The Republican senator who chaired last year’s Finance Committee hearings, William V. Roth Jr. of Delaware, said the General Accounting Office report released Friday raises serious concern because the Internal Revenue Service did not keep adequate records in any of these areas.

“A lack of necessary information and systemic breakdowns in record-keeping and reporting procedures make it all but impossible to track and verify most of the cases” referred by the committee, Roth said in a statement.

But IRS Commissioner Charles Rossotti said the agency is already instituting more accountability, new employee performance measures based on taxpayer satisfaction and a better system of tracking misconduct allegations. Most of these actions were required by a 1998 reform law.

“We certainly cannot undo what happened in the past, but we can take concrete actions today and in the future to ensure that it is not repeated,” Rossotti said. “In the end, we will have a tax agency that does a far better job of serving taxpayers.”

Roth requested the audit after witnesses appearing before the committee he chairs made several allegations against the IRS, including:

* The agency retaliated against employee whistle-blowers and taxpayers who were considered uncooperative.

* Agency executives got preferential treatment in disciplinary cases, such as being allowed to retire before action was taken.

* IRS agents reduced or eliminated some tax bills and increased others for reasons other than the merit of the cases.

* Racial discrimination occurred at the IRS Midwest District Office in Milwaukee.

GAO auditors repeatedly cited “limited and incomplete data” for their inability to substantiate most of the allegations and found insufficient evidence to support most cases specifically referred by the Finance Committee.

On the whistle-blower claims, the audit did find that IRS employees brought 108 reprisal claims from 1995 through 1997 with two independent agencies--the Office of Special Counsel and the Merit Systems Protection Board. The former found in favor of the employees in four of 63 cases, while the latter dismissed most of its 45 claims and settled many of the rest.

The audit could not determine the extent of alleged abuse of taxpayers or retaliation by IRS agents. The agency’s systems, GAO found, could not distinguish between those claims and allegations not involving taxpayers.

Roth, however, noted that previous internal IRS reports have found “significant problems concerning abuses in the collections process and problems with illegal use of enforcement statistics” in measuring employee performance.

“A majority of IRS employees share the perception that allegations like these have merit,” Roth said.

Regarding the Midwest District Office discrimination claims, the GAO said the IRS acknowledged past “problems in hiring and promotion” and that a new district director appears committed to resolving those problems.