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Wednesday, January 14, 1998 - Page updated at 12:00 AM

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IRS Admits Violating Taxpayers' Rights -- Agency Illegally Employed Quotas In Collecting Delinquent Taxes And Seizing Property

Los Angeles Times

WASHINGTON - The Internal Revenue Service has admitted it ranked employees on their aggressiveness in collecting delinquent taxes and conducting seizures of property, violating laws intended to protect Americans from overzealous tax enforcement.

In releasing an internal investigation, IRS Commissioner Charles Rossotti said the agency "has failed to strike the proper balance between providing customer service and fair enforcement of the tax law." Rossotti pledged to end the practices.

Treasury Secretary Robert Rubin, in a separate statement, said he was "deeply troubled" by the report's findings.

"This is an unacceptable situation that must and will change," Rubin said.

The use of quotas and statistics to evaluate IRS employees is banned by federal law, based on concerns that such measures would foster abusive tax-collection practices. But the investigation found that the IRS has used statistics to evaluate the performance of employees and supervisors. It also ranked the tax collections of its district offices.

The probe is the first time the IRS has examined its district operations across the United States on the issue of statistical rankings, and it confirms the findings of a preliminary audit disclosed last month that uncovered serious problems in its district office in Oklahoma.

Allegations that the IRS was violating the law and its own internal policies were first raised last year at Senate Finance Committee hearings held by Sen. William Roth, R-Del.

Anonymous IRS agents, testifying behind a screen, said at the hearing that they were coming under increasing pressure to browbeat and abuse taxpayers to inflate their office's national rankings. IRS officials said they were not previously aware of such allegations.

The IRS report released yesterday corroborated those allegations, finding that the IRS has erected a system that focused on capturing delinquent tax dollars with scant regard to whether taxpayers are treated fairly or their rights are protected.

In a misguided push to increase the agency's productivity, the IRS "has created an environment that has placed some taxpayers at risk of abridgment of their rights," according to the investigation, which was conducted by the IRS' inspection division.

Indeed, one group of aggressive IRS employees was lauded by management for its high number of property seizures, the investigation found. In another instance, a calendar was distributed within the IRS that detailed the daily intake of delinquent tax dollars by a group of revenue officers.

In 1997, the IRS collected nearly $4 billion in delinquent taxes, issuing 370,000 liens, 690,000 levies and 10,000 property seizures. The collection activities were identified in the Senate hearings as one of the principal areas of taxpayer abuse.

The issue of the IRS' sweeping powers has raised particular concerns about overzealous enforcement, and Congress specifically outlawed the use of statistical rankings to evaluate employees in the Taxpayer Bill of Rights in 1988.

The investigation focused on 12 of the IRS' 33 district offices, finding that improper - and in some cases illegal - use of statistics rankings were used in every office.

The report did not break down where the legal violations occurred.

Information from The Washington Post is included in this report.

Copyright (c) 1998 Seattle Times Company, All Rights Reserved.

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