The Internal Revenue Service, apparently making good on promises last week to the Senate Finance Committee, has suspended a number of mid-level managers while it investigates allegations that field agents were rated by the number of seizures, levies and liens they imposed on taxpayers.
Meanwhile, Republican congressional leaders Sunday promised quick action to change the way the IRS works and perhaps the tax law itself.
The developments followed three days of explosive hearings last week in which several taxpayers detailed how they were pursued by the agency for taxes they did not owe or had paid or tried to pay.
At the close of the hearings Thursday, acting IRS Commissioner Michael Dolan apologized and promised prompt action on any allegations the committee had received.
Finance Chairman William V. Roth Jr., R-Del., said Thursday that the panel had received more than 1,500 letters, phone calls and faxes, and messages were still pouring in.
The IRS would not comment Sunday on the suspensions, first reported by Newsweek magazine, but a spokesman noted that Dolan had promised the Finance Committee prompt action, and that “in some cases, it may be appropriate to suspend the employee pending the outcome of the investigation.”
Newsweek also reported that it had obtained a copy of an internal IRS memo from the agency’s Arkansas-Oklahoma collections office that gave details of how agency managers use collections data to evaluate workers, an apparent violation of the Taxpayer Bill of Rights.
House Majority Leader Dick Armey, R-Tex., promised legislation by year-end to restructure the IRS and curb abuses. House Ways and Means Committee Chairman Bill Archer, R-Tex., had made a similar promise earlier and said he had a commitment from the House leadership to bring a measure to the floor this year.
Armey, in a Fox television interview, said the bill would likely be based on recommendations of the National Commission on Restructuring the Internal Revenue Service, a congressionally appointed panel that spent more than a year studying the agency.
The group, which is headed by Rep. Rob Portman, R-Ohio, and Sen. Bob Kerrey, D-Neb., has recommended revamped oversight of the agency by Congress. The panel also has recommended a different governance system that would include private-sector experts and others who would be “accountable to the president and the people.”
Kerrey, appearing Sunday on CBS’s “Face the Nation,” said of the bill: “I think we can pass it this year. … And I think there’s an urgency to do so.”
The commission’s year of study turned up little evidence of the kinds of abuses that surfaced last week. Its report focused on better use of technology, better training of workers, and simplification of the tax laws as the keys to a more “user-friendly” IRS.
Because the commission’s call for tax simplification was followed almost immediately by enactment of one of the most complex pieces of tax legislation in history, it was not clear how seriously it would be taken.
The Finance Committee hearings have not only given the recommendations new life, but, Armey made clear, added impetus to a favorite goal of many Republicans, a flat income tax or a national sales tax.
The Treasury Department called for a meeting Sunday with the IRS’s senior managers for “a candid conversation” about the testimony and “what other actions may be necessary,” according to a letter to Dolan from Deputy Treasury Secretary Lawrence H. Summers.