alpert@chovax.DEC (03/12/86)
[] Note: this article is approx. 280 lines long. ================================================================== The following is excerpted from the book "To Harass Our People" by <former> Congressman George Hansen. (c) 1984 by George V. Hansen ================================================================== Knowing the history and structure of the Internal Revenue Service and how the IRS operates is an important first step in grasping the true nature of this agency and understanding its basic, day-to-day activities. Under the burden of the Civil War, an income tax was first enacted in 1862. Although it was declared constitutional by the federal courts, and in one year produced over 24% of the country's revenue from internal sources, this tax proved unpopular, and after undergoing numerous alterations was abolished in 1872. Again in 1894 an income tax was imposed by the Wilson Tariff Act, but the Supreme Court held it unconstitutional,a nd only after a generation of agitation and effort was the 16th Amendment finally passed in 1913, stating that "the Congress shall have the power to lay and collect taxes on incomes," which was then immediately enacted as part of the Tariff Law of 1913. The pressure for the income tax to supplement or replace property tax developed as commerce became more important to the economy than land. [NOTE: we will take a closer look at the 16th amendment and related court decisions in the near future -B.A.] THE COMMISSIONER OF INTERNAL REVENUE The office of Commissioner of Internal Revenue was created by an Act of Congress on July 1, 1862. This Act had the effect of making the IRS an independent arm of the Treasury Department. Today the IRS has three distinct operating levels: 1) The National Office -- This level includes the Commisioner and Assistant Commissioners, who set procedures for the IRS and monitor all IRS activities. The Commissioner is appointed by the President. The National Office is located in Washington, DC. 2) The Regional Offices -- The IRS divides the US into seven geo- graphical regions. Each region is governed by a Regional Commissioner who reports directly to the Commissioner of Internal Revenue. Most income tax returns are examined at this level. 3) The District Offices -- The 58 IRS District offices correspond (roughly) to the 50 states (some of the more populous states have more than one district). Each district is run by a district director who reports directly to a regional commissioner. These district offices are subdivided into divisions or groups, each supervised by a group manager. The groups consist of several local IRS offices in a given area, and each local office is run by an office manager. In theory, at least, the local IRS office manager is two steps away from the district director and four steps from the Commissioner of the Internal Revenue Service. MAJOR FUNCTIONS OF THE IRS There are numerous and often complicated threads of bureaucratic order which weave their way up and down the relatively simple organization just presented. Five major strands crossing the levels of the IRS bureaucracy are of particular importance to the individual taxpayer, since these are the lines of authority that the citizen is most likely to labor under in his or her encounters with the IRS. A sixth area of primary concern is the Tax Court, which is not a regular division within the IRS. [The organization of the Tax Court is discussed in a different chapter]. Although the IRS makes specific internal distinctions to define the lines of authority of the basic functions of its tax collection procedures, the results are often very complex, with overlapping functions that are confusing to the taxpayer. 1) Taxpayer Service and Returns Processing -- This is the part of the IRS most familiar to the average citizen. Service personnel are, generally speaking, the front-office staff members in every local IRS office. They provide answers to basic tax questions and distribute IRS manuals, forms, etc. Returns Processing is a function generally performed at a regional service center. For many citizens, this is their only contact with the IRS. 2) Examination -- This is the area of the IRS charged with auditing taxpayers. The number of returns audited has been rising steadily for the last 20 years. Nearly 80% of these examinations will be either full-scale audits by IRS tax auditors, or examinations of tax records at homes and businesses by revenue agents. The reason for these audits, according to the Commissioner of Internal Revenue, is to "help insure a high degree of voluntary compliance." 3) Collection -- The 1979 Annual Report of the Commissioner of Internal Revenue states: "The IRS collects taxes that are due but not paid, securing delinquent tax returns and payments, and preventing delinquency in the filing and payment of taxes." The IRS collects these taxes, some of which are unquestionably delinquent and some of which have been arbitrarily determined to be delinquent, by seizing the property and wealth of the taxpayer or by harassing the taxpayer until he succumbs and makes the payment. Over 5700 revenue officers, endowed with incredible police-state powers, enforce the often arbitrary indictments of the IRS. 4) Criminal investigation -- The IRS has created its own highly trained "hit team" composed of over 3000 armed agents to deal with those taxpayers engaged in apparent illegal activities and other citizens who have the courage to stand up for their rights against arbitrary assessments and unacceptable collection practices. It should be noted that some of these special agents are involved in the IRS Special Enforcement Program, which works with other federal agencies in federal strike forces against organized crime, drug traffickers, etc.; but a majority of IRS special agents work in the area of General Enforcement, which means an assignment to a local IRS office to work in conjunction with revenue officers and revenue agents. In many cases, unfortunately, special agents do nothing more than intimidate innocent citizens into paying up on arbitrary assessments for the sake of "voluntary compliance." 5) Data Services -- Perhaps the most ominous, and pervasive, element of the IRS is its gigantic computer and data-collection system. IRS uses not one, but *eight* complete computer systems and three microfilm systems to process the "master files" on over 115 million people in the United States. The IRS also has extensive master files on almost 25 million business accounts. In addition, the IRS keeps voluminous document files on millions of US citizens. These files often include newspaper clippings, police reports, court proceedings, personal correspondance, and tapes or transcripts of conversations obtained through various forms of electronic surveillance; much of this material other agencies such as the FBI are now prohibited by law from collecting. In short, the IRS is an extrememely complex, carefully organized agency for tax collection, and perhaps the most sophisticated and least understood internal police force in the world. RIGGING ELECTIONS The IRS works diligently to insure that public officials toe the IRS line. Political leaders are quickly taught that complaints about the IRS are not allowed. The FBI, CIA, and other agencies of government have been searchingly investigated from time to time, sometimes to damaging excess. But not the IRS. The IRS has never been thoroughly reviewed by any other agency of government, or even by the Congress for that matter. And it has never been exposed by the press. The reason is simple. Everyone pays taxes. They are so complicated that even the use of the simplest return form is no guarantee that you won't be harassed, a fact demonstrated in cases to be presented later on. Blackmail and extortion are ugly words. But they are the only fair words to describe why the IRS is alone among government agencies in not being subject to scrutiny. Anyone who complains -- *anyone* -- is a candidate for destruction. In 1968, afte Senator Ed Long's U.S. Senate subcommittee had completed its three-year examination of IRS tactics, his tax returns were leaked to "LIFE" magazine. The information illegally released during an election year by the IRS indicated terrible irregularities in Long's returns. Even though Senator Long was later cleared by exhaustive investigation, and even though he had apparently paid all his taxes, his political career of some 38 years was in shambles. His home state of Missouri rejected him for Thomas Eagleton. According to "Saturday Review" of May 1980, Bernard Fensterwald, chief counsel of Senator Long's committee, was also audited and harassed by the IRS. Fensterwald stated "Congressmen and Senators not scared of looking into the IRS have to be crazy, because the IRS will just ruin your career." Several years later, Senator Joseph Montoya took on the IRS in another subcommitte investigation. Sure enough, shortly befor Mr. Montoya began his bid for reelection the IRS leaked erroneous information about his income tax returns and he went down in defeat. As in the case of Senator Long, no tax irregularities were ever found in Senator Montoya's audit. In fact, according to Montoya aide Doris Ulman, "the IRS discovered that they owed him money." These examples represent the extremes that the IRS will go to in order to prevent close scrutiny of its operations. Usually such extreme measures are unneccessary. An administrative aide of a prominent Congressman tells how the Congressman, because of an extraordinarily large number of complaints about the IRS in his district, set up a series of hearings in his state about IRS abuses. After the Congressman held the first meeting he was informed by the IRS that his income tax returns for the previous five years were going to be audited. He cancelled the remainder of the hearings. Having been an outspoken opponent of government, I have also been given a thorough education in the school of hard knocks by vengeful bureaucrats. Any agency has the power to retaliate, but the scorpionlike IRS is unique in the breadth and depth of its ability to sting its victims. And the examples I have used, in addition to my own case, demonstrate that it is not a matter of partisan politics. It is a matter of whether the the people will govern or the IRS will rule. Three weeks before the general election of 1976, a friend of mine called me to report that the Lewiston, Idaho "Morning Tribune" had printed a long and detailed article alleging certain irregularities in my income tax history. I had always paid my taxes. I knew it and the IRS knew it. There was only one logical explanation for this disclosure -- someone in the IRS was out to damage or even destroy my political career. The IRS had apparently had enough of my annoying complaints and pointed questions on behalf of my constituents; they decided that Idaho's 2nd District needed a new Congressman. An IRS official put it to me this way: "In your case, Congressman, this thing was all planned way back and they probably never even intended to develop a case on you. All they wanted to do was to have the special agents involved so they could leak it to the press. You know, just the fact that you're under investigation, that hurts your reputation, and, of course, with a few innuendoes and leaks here and there, they can convict you without ever doing anything." Besides rigging elections, I learned that the IRS has two other purposes for engaging in this kind of activity. First, the keep "the fear of the Lord" in the people by dramatically showing that the IRS can and will get anybody; second, they instill enough dread into public officials that they won't tackle the IRS for getting out of line. An IRS agent told me: "It still goes back to the fact that your were the most prominent person in the area and this is their philosophy -- to make a case on someone who's prominent. They don't have to convict you, they don't have to prove anything. If they go around to your friends, pretty soon your minister is embarressed to be talking to you -- everybody is afraid to be associated with you because they're afraid your bad reputation will rub off onto them. And well, they just try and convict you without a court or without any evidence, really." [Hansen describes in detail the media blitz that ensued regarding his tax returns during the next several days] We fought back in the only way left to us -- by telling the people the truth. If it had not been for offsetting weaknesses in the opponent's campaign and the last-minute efforts of my friends and supporters. Thanks to these people, I won -- by less than 1% of the vote. The IRS had rigged the election, and almost got away with it. All the finger-pointing by my adversaries, prompted by the illegal disclosures of the IRS itself, apparently gave the IRS the license it wanted to open a full review of my tax records. One of my sources in the IRS later told me: "I can tell you as anxious as they [IRS officials] were to cause you trouble, if it had been anything they'd have nailed you to the wall before now. They wouldn't have gone through the back door if they'd thought they had anything concrete." Eighteen months later, the "investigation" was over, my taxes were audited, and I received a nice refund for overpayment; but not nearly enough to pay for the lawyers and accountants I had to hire. An IRS official who took part in the disclosure but who in seeing his mistake stepped forward to apologize and to try to help bring the perpetrators of the scheme to justice was transferred out of the area and demoted. The FBI adn CIA and other agencies had their confidential files on public officials and other prominent and active citizens outlawed, but not the IRS. The IRS can maintain an extensive clipping file on your activities -- one that will cost you a substantial sum for copies if you wish to satisfy your curiosity. Why does the IRS do this? The IRS likes to watch your activities, your trips, and your acquaintences to be sure you and your family and associates are not getting away with anything under out great "voluntary compliance" tax system. ================================================================== [POSTSCRIPT: The IRS was finally successful in running Congressman Hansen out of office. He remains active as a private citizen in exposing the agency's abuses through the work of his organization V.O.G.U.E., PO Box 3776, Washington, DC 2007. Toll-free number: 1-800-453-9000). Bob Alpert ...decwrl!dec-rhea!dec-chovax!alpert STANDARD DISCLAIMER: The opinions expressed herein are my own (and those of the original author).