RERUN–Be Afraid

(Originally posted in July 2009. I’m re-running it now for obvious reasons)

Many Unhappy Returns, by Charles Rossotti, is the story of Rossotti’s experiences as IRS Commissioner, which position he held from 1997-2002having previously spent his career in the private sector and been cofounder & chairman of American Management Systems Inc. I picked the book up for a dollar at a library book sale, thinking it might offer an interesting case study on the challenges of managing and improving a very large bureaucratic organization.

And I’m sure it does. On the very first pages of the book, though, are some stories which are very relevant to our current political situation.

During the 1990s, public dissatisfaction with the IRS reached new levels, resulting in a series of Congressional hearings beginning in 1996. Rossotti excerpts some of the stories told by taxpayers (and IRS agents) at these hearings, and grim reading they are indeed.

For example, a woman from California told of her 14 year struggle to pay off a tax debt incurred by her first husband prior to their 1983 divorce. “Kafka himself could not have invented this real-life tale of an ordinary person caught in a maddening bureaucratic maze with no maps, no exits, and no explanation,” says Rossotti. Her ex-husband had gotten all the notices, but she alone had gotten the bill for interest on the unpaid balance. When she tried to pay it, the IRS repeatedly refused to accept payment, telling her she didn’t owe anything and even sending her refunds. But years later, the IRS threatened to put a lien on her new husband’s home because of her prior “debt.” She paid it but five years later, her second husband’s salary was levied for payment on the same “debt,” leaving the couple with only $18 a week to live on.

“The IRS is judge, jury, and executioneranswerable to none” said the woman in her Congressional testimony.

An IRS agentthe only one willing to testify without concealing her identityclaimed that it was an intentional policy of IRS management to pick on weak taxpayers to make the IRS’s statistics look better. She said that “to the IRS, vulnerabilities can be based on a perception that the taxpayer has limited formal education, has suffered a personal tragedy, is having a financial crisis, or may not necessarily have a solid grasp of their legal rights”…that “if the taxpayer does object or complain, every effort will be made by the IRS to run up their tax assessment, deplete their financial resources, and force them to capitulate to IRS demands.”

A Newsweek story said that “According to more than a dozen agents…(management) pushed for ever more property seizures from delinquent tapayers, even though the IRS manual says such moves should be a final resort, riding roughshod in some cases over their rights to appeal. They closed cases an sometimes slapped on levies and liens prematurelywhich boosted the enforcement stats that the IRS rewards with cash awards for top officers.” There’s lots more of this stuff in Rossotti’s book.

Government is inherently dangerous. As a Delaware construction contractor said during the hearings, “believe me, when the resources of the government are unleashed on you, you are in trouble, no matter how good your case.” And this point is not specific to the IRS.