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Internal Revenue Service Commissioner Charles O. Rossotti rubs his eye before appearing before the Senate Finance Committee Friday May 1,1998 on Capitol Hill. Associated Press

IRS chief testifies at hearings

Web posted May 2, 1998

By Rob Wells
Associated Press

WASHINGTON -- Internal Revenue Commissioner Charles O. Rossotti said Friday the latest allegations of cover-ups and misconduct by criminal investigators support his own pursuit of fundamental change at the IRS.

``I think every American who heard the testimony would be just as disturbed as I was, and we simply must change the conditions that lead to the kind of situations described by your witnesses,'' Rossotti told the Senate Finance Committee on the fourth and final day of oversight hearings into the IRS.

But he reminded the panel that overhauling a far-flung Internal Revenue Service and its work force of 102,000 people won't happen easily, or overnight.

``Change of this magnitude will take time, and there is no magic formula or easy solution that will quickly solve the IRS' problems and transform it into a quality-service organization,'' Rossotti said. ``We will make progress, Mr. Chairman, but it will be step by step, over a period of years.''

The Senate will take a step next week toward strengthening oversight when it debates IRS restructuring legislation. The bill, which passed the House in November, also would grant taxpayers a range of new rights.

Rossotti received a warm welcome from the committee chairman, Sen. William V. Roth Jr., R-Del., after Roth and his staff orchestrated three days of damaging testimony about the tax agency.

The committee heard tales of armed IRS criminal inspectors raiding businesses whose owners didn't pose a violent threat, and then failing to bring criminal charges. Several IRS agents testified they faced retaliation from managers after attempting to blow the whistle on misconduct.

Charges of racial discrimination and sexual harassment were aired, as were allegations that corporations received multimillion-dollar breaks in tax disputes. And, most surprising, three witnesses described an aborted plot by a renegade agent in Tennessee to bring phony money-laundering and bribery charges against former Sen. Howard Baker, R-Tenn., in order to enhance the agent's career.

Rossotti accepted Roth's proposal to have the General Accounting Office investigate the allegations. ``And I promise you that when we get the results of those investigations, we will act accordingly and take disciplinary action where the allegations are substantiated.''

Rossotti's efforts to overhaul and modernize the IRS include:

--Independent review of the criminal investigations division by former FBI and CIA Director William Webster and a review of the inspection service, which researches employee misconduct, by former Comptroller General Charles Bowsher.

--Several customer service improvements, such as closely monitoring taxpayer complaints, increasing IRS' problem resolution staff and clarifying letters the IRS sends to taxpayers.

--An investigation of managers and agents who may have been responsible for abuses described in last September's IRS hearings.

--A proposed major reorganization of the IRS into four new divisions in order to improve customer service and streamline management toward a customer's point of view.

Roth said the primary message of the hearings ``is that there has been a very serious failure by managers in this agency.'' He promised to work in partnership with the Clinton administration and the IRS to change ``a bureaucracy, in my judgment, that has been too long outside the control of any IRS commissioner.''

Sen. Phil Gramm, R-Texas, and others pressed Rossotti about how many IRS workers have been fired as a result of alleged abuses publicized in last fall's hearings. ``I think that firing about 50 of these people who clearly abuse the system would be a good thing'' for worker morale, Gramm said.

Rossotti didn't respond directly, but instead explained how difficult it is to fire federal workers. In most cases, employees resign or retire when faced with allegations of misconduct.

``The most important thing is can we move aside people that are not performing and not performing correctly and can we bring in people that we need?'' Rossotti said.

Gramm persisted, ``I'm not saying let's have a hanging just for display purposes.''

Roth interjected: ``You're from Texas, aren't you?''