IRS chief spells out steps to curb abuses Dolan apologizes to wronged taxpayers


WASHINGTON -- The acting commissioner of the Internal Revenue Service issued an extraordinary public apology yesterday to four individuals -- and, by extension, to all American taxpayers -- for severe mistreatment at the hands of the agency.

The tax official, Michael P. Dolan, also promised immediate changes to eliminate incentives for misconduct and to make the IRS more responsive to public complaints.

At the conclusion of three days of hearings on IRS abuses before the Senate Finance Committee, Dolan said he was deeply troubled by the charges leveled against his agency this week by taxpayers, current and former IRS officials and outside watchdogs.

Yesterday's session featured testimony from five current IRS agents and one former agent, their identities concealed by fabric-covered screens and their voices electronically altered.

Their testimony included the following allegations:

Agency workers browse through tax returns to snoop into the finances of celebrities, relatives and prospective dates.

IRS agents are judged by their total tax collections, no matter how poorly documented.

Managers cover up abusive behavior by collection agents.

Revenue officers consider all tax debtors "crooks or flakes" who deserve no sympathy.

Earlier in the week, in emotional testimony from four taxpayers, the panel heard from a retired priest who was wrongly assessed $18,000 in taxes from his mother's estate and from a California woman who went through a 17-year nightmare with the agency that arose from a mix-up over her husband's identify.

The hearings were the first formal oversight of the tax agency conducted by the Finance Committee, which has nominal supervisory authority over the IRS.

Dolan said the agency had programs to prevent harassment of taxpayers and abusive collection efforts, but he acknowledged that in the cases heard by the Senate, and perhaps in many others, internal controls had broken down.

"While each case was different, the end result is indisputable: We were wrong in the way that we handled many aspects of their cases," Dolan said beneath bright television lights in the cavernous Finance Committee hearing room.

"I fully appreciate that an apology is little consolation when it comes at the end of the stress and obvious frustration these men and women have experienced.

"Nevertheless, I do apologize to each of them. They deserved far better treatment from the IRS than they received," Dolan said.

He then spelled out actions he was taking to address the panel's findings.

The agency's 33 district offices will no longer be ranked on the basis of the amount of tax collected.

Penalties will no longer be counted as tax collections, to remove any incentive that may exist to pile up overdue tax penalties to raise collection totals.

Each district office will conduct monthly meetings at which taxpayers can vent their complaints against officers.

All top IRS officials will be summoned to Washington within the next 45 days to review the committee's findings and to answer the taxpayers' complaints that were raised at the Senate hearing.

The panel's chairman, Sen. William V. Roth Jr. of Delaware, said his intent was not to bash the IRS but to expose the inner workings of one of the government's most secretive bureaucracies.

He denied that the hearings were intended to advance a partisan anti-tax agenda.

Other lawmakers, however, have used the hearings' revelations to call for a total overhaul of the agency and the tax code.

Despite the changes outlined by Dolan, senators continued to call for new legislation.

Yesterday's disguised witnesses, known only by number, insisted on anonymity to avoid retaliation from their superiors, they said.

Witness No. 4 said that senior IRS managers judge the performance of their subordinates on the basis of collections and seizures. Such ratings are prohibited by law and IRS policy, but several agency officials said the rules are frequently violated.

"It's just a numbers game now," Witness No. 4 said. "It really doesn't matter how you close a case."

The six witnesses testifying yesterday said they bore no grudge against the agency and only wanted to illuminate IRS misconduct in hopes that it could be stopped.

At the outset of his testimony yesterday, Dolan spoke to the aggrieved taxpayers who preceded him at the witness table.

"I want to say right up front how troubled I am by much of what I have heard in the last three days," said Dolan, who has been with the IRS for 27 years.

Pub Date: 9/26/97

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