June 18,1999

Roth Statement on GAO Report

WASHINGTON -- The General Accounting Office today released the findings of an investigation, done at the request of Finance Committee Chairman William V. Roth, Jr., into specific allegations of IRS employee misconduct disclosed at Senate Finance Committee hearings last year. Copies of the report, GAO/GGD-99-82, are available through the GAO by calling 512-6000.

Chairman Roth released the following statement regarding the report:

"The GAO report being released today contains the findings of an investigation into specific allegations of IRS employee misconduct that were disclosed to the Senate Finance Committee in hearings last year. These allegations included:

• preferential treatment for executives charged with misconduct;

• retaliation against whistleblowers and taxpayers;

• charges that some taxpayers were assessed unfairly inflated liabilities while others had their tax assessments reduced and even eliminated; and

• discrimination against employees in the Midwest District Office.

"While the GAO was unable to confirm or contradict most of the specific allegations, its report raises issues that give us serious concern in our ongoing IRS oversight efforts. According to the GAO, 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 cases referred to the GAO by the Senate Finance Committee. For example, the GAO report describes how investigators were unable to "determine the extent of reprisals against whistleblowers" and "retaliation against taxpayers" because of "limited and incomplete IRS data." Likewise, when it comes to allegations of preferential treatment for executives, the report states, there is a "lack of detailed and accurate data in connection with IRS' disciplinary case database," with "few built-in system controls to ensure data integrity."

"The GAO notes that the IRS acknowledged discrimination problems in the Midwest District Office. The GAO also found that when it comes to documenting managers who -- for personal reasons or to curry favor with corporate taxpayers -- zeroed out or reduced proposed tax assessments made by their subordinates, the IRS does not systematically collect data sufficient to make clear determinations or recommendations regarding such allegations.

"Given the importance of these issues, and the GAO's inability to either substantiate or refute most of the specific allegations made by IRS employees, taxpayers, and practitioners who testified before the Senate Finance Committee, it would serve us well in our on-going oversight efforts to work with both documentary evidence, as well as the first-hand personal experiences of employees and taxpayers. This is particularly appropriate given internal agency-wide surveys showing that a majority of IRS employees share the perception that allegations like these have merit.

"The IRS Restructuring and Reform Act of 1998 will help us address many of these problems, and the Finance Committee will continue to work with Commissioner Rossotti and new agency management to address these serious concerns. Reforms are taking place and progress is being made, but the GAO report makes it clear that satisfactory results cannot be achieved until the IRS systematically tracks relevant data and keeps information necessary for real reform.

"After disclosures in 1997 Senate Finance Committee hearings, the IRS concluded in two separate reports that the agency has significant problems concerning abuses in the collections process and problems with the illegal use of enforcement statistics as a measure of employee performance."