Originally created 07/11/98

IRS reports on property seizures



WASHINGTON -- The Internal Revenue Service admitted on Friday that it improperly seized property from taxpayers in more than one in four cases studied, including an attempt to force a dying man, his wife and two school-age children from their home.

Two internal audits, the last of four conducted in response to sensational allegations leveled against the agency in Senate hearings last year, were labeled "a stunning confession of the sins of the IRS" by Senate Finance Committee Chairman William V. Roth Jr., R-Del.

The studies were released a day after the Senate voted 96-2 to send President Clinton an election-year bill aimed at remolding the agency. His advisers say he is eager to sign it.

Neither Treasury Secretary Robert Rubin nor IRS Commissioner Charles Rossotti offered comment. But both men have said they are committed to ridding the agency of abuses, and Roth said, "The fact that the agency is owning up to these problems is a refreshing change."

The studies looked at seizure practices in 11 of the IRS' 33 districts and at the use of enforcement statistics in evaluating IRS examiners.

The agency reviewed 467 of about 10,000 property seizures nationwide in fiscal 1997. It found seizure to be warranted in 337 of the cases. But in 130 cases IRS agents "did not use sound judgment ... or conducted seizures containing legal defects."

Even within many of the 337 cases where seizure was deemed justified, the IRS failed to follow procedural guidelines, such as establishing minimum bids in auctions of seized property.

Typical violations among the 130 cases of improper seizure included taking property without adequately pursuing alternatives, disregarding required waiting periods and failing to make reasonable attempts to contact taxpayers before taking action.

IRS agents also sometimes seized property of little value, raising the question of whether the seizure was a punitive rather than a practical act. And at other times agents "demonstrated a lack of adequate concern for the taxpayer's financial or medical status."

One such case involved a man suffering from extreme obesity, ulcers and blood clots. The first revenue officer working on the family's case encouraged them to refinance their mortgage but recommended against the agency going after the family home because of the husband's poor health and the presence of children in the home.

However, a second revenue officer made plans to seize the home after noting that the children had reached the age of 16 and that the IRS file contained no verification of the man's health problems.

After an appeal, the IRS agreed on March 18, 1997, to let the couple sell the home by July 1. The man died July 22 and the revenue officer then agreed with a higher-level recommendation to release the home.

"Not in Govt's best interest to pursue at this time," the revenue officer wrote. "Would be bad publicity. ... Would certainly been (sic) seen as negative to sell his widow & minor children's home when he has not yet been buried."

The IRS discharged the tax debt as not collectible on July 24.

In another case, the IRS seized and sold a vehicle from an out-of-work woman whose husband was terminally ill. The woman informed the IRS on April 22, 1997, that she was out of work due to knee surgery, that she was facing other possible operations and that her husband was terminally ill and living in another city with his mother.

Nevertheless, the IRS seized the vehicle and artwork found in it and sold them for $6,100 on July 22.

In response to its own audit, the IRS noted it had already required higher-level approval for seizures. It said it would develop a comprehensive checklist to ensure agents follow proper procedures and incorporate the new procedures in training manuals.

In the second study, the IRS found that its Examination Division managers "focused primarily on enforcement statistics." This created an environment at the employee level "that put emphasis on revenue and other statistical goals" at the expense of quality casework.