The IRS I Know and Love

Bruce Bialosky

6/2/2013 12:01:00 AM - Bruce Bialosky

The mess the IRS has gotten itself in has been fascinating. Having all these commentators writing about the Service from high above the earth offers great entertainment. I have been working with the Service since 1979. Let me offer you some first-hand perspective.

Let me say, first of all, despite the IRS’s horrible reputation there are worse. At least in California, the Franchise Tax Board (income tax) and State Board of Equalization (sales tax) are eons worse in demeanor or concern for the taxpayer. The IRS has vastly improved its attitude in phone conversations over the past ten years, even regarding how they use basic language, such as referring to taxpayers as customers. They are much friendlier in that way. But there still remains an outsized challenge dealing with their revenue agents and higher in their structure.

I could convey hundreds of war stories, but here is one that is typical. I started an audit with a revenue agent in March. It was clear that she had a long way to go. She made a request for additional documents that caused me to speak to her about another appointment at my office. She indicated she was going on vacation and would be back April 16th. I told her I was leaving on vacation the next day. We agreed I would contact her when I got back and we agreed on a date in May. I called her before I left and verified this plan with her.

As soon as I left on my trip she developed another document request and went over to my client’s home to deliver the document. My client went nuts and emailed me. I had to call my client from Amsterdam and then the supervisor of the revenue agent. I made clear that I had a Power of Attorney and no direct contact should have been made to the taxpayer. After going round and round the supervisor refused to acknowledge the highly improper behavior, the supervisor put the matter on hold until I got back.

When I got back the client and I had a discussion with the revenue agent. She did not relent. I asked to have her removed from the case and the supervisor did not. We then appealed to the regional office to have her removed for her errant behavior and lying. The regional office turned us down. When I spoke to the Regional Administrator, he would not remove her. I asked what justification would be needed to remove her if breaking the Power of Attorney, lying to the tax professional and creating a total atmosphere of mistrust were not good reason enough. He refused to answer. I asked him what would be justification for removing the agent. He refused to answer. I asked him if axe murdering my client would be justification for removal. He refused to answer. The IRS has a problem saying they are wrong or saying “I am sorry.”

After two years and taking the case to appeals, the case landed back with the revenue agent and her supervisor. My client received a bill for an amount in the high six figures prior to the meeting. At the meeting, the supervisor finally came to the realization the revenue agent was a dunce and we came out of the meeting with my client being owed $50,000. The process inflicted a lot of pain and agony because the IRS was errant.

Was this revenue agent the only over-eager IRS employee? Absolutely not. Recently one agent’s voice went up an octave every time she thought she found something against my client. I asked if she was there to get revenue or to find a fair result for the taxpayer. You can answer that question yourself.

How does this reflect on the current scandal? There are only two possible situations here. Either there were overly-eager IRS staffers applying unjust requests against certain applicants or there was political direction from the top. There could be a mixture of the two, but nothing else.

We do know that IRS employees can be overly aggressive and anti-taxpayer. It happens all the time. Let us remember they are career government employees who think government is good. For people in the IRS nonprofit department to have hostility against groups that are formed to stifle government growth would not be a stretch.

Yet we know from the Inspector General’s report that there was supervision from Washington and intervention from Washington. What we do not know is how or why. We also know that the former IRS Commissioner Douglas Shulman visited the White House 118 times… correct that 157 times. Other than the Easter egg hunt he alluded to, why in God’s name would he be there at all? His predecessor who served for the same length of time was at the White House once. The entire matter stinks of manipulation.

Our President appointed a government bureaucrat (political appointee) to take over as IRS Commissioner and gave him 30 days to do a “top-to-bottom review” of the IRS. Please; that is as silly as when Lois Lerner stated the Tea Party problem was centered in Cincinnati and was not politically motivated. These people really think we are stupid.

Nothing will do here except a Special Counsel who has subpoena power to dig in to communications (the Inspector General did not), interrogate witnesses, threaten criminal action if appropriate and get to the truth. Some people think a special counsel will delay results, but without the threat of criminal prosecution against protected government employees we will not get to the truth.

This is bigger than we know now and every American should be livid. If the IRS gets away with this now, what will be next?