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CRS Reports on Termination of IRS Employees for Misconduct

DEC. 14, 2000

RL 30770

DATED DEC. 14, 2000
DOCUMENT ATTRIBUTES
Citations: RL 30770

                       CRS REPORT FOR CONGRESS

 

                    Received through the CRS Web

 

 

                          December 14, 2000

 

 

                         Barbara L. Schwemle

 

               Analyst in American National Government

 

                   Government and Finance Division

 

 

SUMMARY

[1] Congress authorized various personnel flexibilities for the Internal Revenue Service (IRS) in Public Law 105-206, the IRS Restructuring and Reform Act, enacted on July 22, 1998. Section 1203 of the law included provisions relating to termination of IRS employees for misconduct. A final administrative or judicial determination that an employee willfully committed any of 10 acts or omissions stated in the law could result in termination. The IRS Commissioner has the sole discretion to take a personnel action other than termination for an act or omission. The termination provision was added to the Senate version of the IRS Restructuring and Reform Act during markup by the Senate Committee on Finance. Committee Chairman William Roth stated that the provision resulted, in part, from testimony presented at the committee's 1997 and 1998 oversigh hearings. This point was reiterated by Senator Phil Gramm, who offered an amendment strengthening the provision, which was agreed to when the Senate considered the bill.

[2] The IRS published procedures for handling Section 1203 allegations in a document entitled RRA'98 Section 1203 Procedural Handbook. Each IRS employee received a copy of the handbook and various other memorandums and documents on Section 1203. The agency is conducting ongoing training of its employees on the law's requirements. Both the Commissioner's Complaint Processing and Analysis Group and the Treasury Inspector General for Tax Administration (TIGTA) have published data on Section 1203 violations and disciplinary actions. The commissioner's semiannual report states that 28 employees were removed for Section 1203 violations during the period, January 1 through June 30, 2000. Of this total, 26 of the cases related to willful untimely tax returns; one involved a threat to audit for personal gain; and one involved destruction of documents to conceal a mistake. According to TIGTA, the largest number of Section 1203 allegations have related to violations of the Internal Revenue Manual or the Internal Revenue Code to retaliate or harass; civil rights, including Equal Employment Opportunity, violations; and willful destruction of documents and understatement of federal tax liability.

[3] A General Accounting Office evaluation of five allegations made during the April 1998 Senate Committee on Finance hearings concluded that the IRS's information systems and documentation in the areas of employee discipline, retaliation against whistleblowers and taxpayers, and zeroing out of recommended taxes were inadequate, hindering "both congressional oversight and IRS management from addressing any problems in these areas." The National Treasury Employees Union, which represents IRS employees, would like to see the law modified (to allow discretion for mitigating circumstances) or repealed.

[4] Federal employees can be removed from employment based on performance or adverse action under Chapters 43 and 75 of Title 5 of the United States Code. In addition to IRS employees, who can be removed for violating Section 1203, other employees can be removed under specific circumstances, including employees of the Defense Intelligence Agency and the Central Intelligence Agency (CIA).

                              CONTENTS

 

 

Introduction

 

  Termination of Employment for Misconduct

 

 

Background and Legislative History

 

     Report of the National Commission on Restructuring the Internal

 

       Revenue Service

 

     Hearings

 

          Senate Committee on Finance, September 23, 24, and 25, 1997

 

          Senate Committee on Finance, April 28, 29, 30, and May 1,

 

          1998

 

          Senate Committee on Appropriations, April 14, 1998

 

     House of Representatives Passage

 

     Senate Passage

 

     Enactment

 

 

General Accounting Office Evaluations

 

 

Implementation of Section 1203

 

     Procedures

 

     Training

 

 

Oversight of Implementation

 

 

     House Committee on Ways and Means and Senate Committee on

 

       Finance

 

     Joint Review

 

     National Treasury Employees Union

 

     The Federal Manager Interview

 

 

Data on Violations

 

     All Disciplinary Actions

 

     Section 1203 Violations

 

          TIGTA Data

 

          IRS Data

 

 

Other Federal Employees Subject to Termination of Employment

 

     Officer or Employee of the United States

 

     Revenue Officers or Agents

 

     Defense Intelligence Employees

 

     Central Intelligence Agency Employees

 

     Law Enforcement Officers

 

 

Conclusion

 

 

Appendix

 

 

Table 1. Meaning of "Willful" and "Intent" Under Section 1203

 

 

Table 2a. Procedures for Handling Alleged Acts or Omissions Stated in

 

     Section 1203(b)(2), (b)(4), (b)(5), (b)(7), and (b)(10)

 

 

Table 2b. Procedures for Handling Alleged Acts or Omissions Stated in

 

     Section 1203(b)(1), (b)(3)(A), and (b)(6)

 

 

Table 2c. Procedures for Handling Alleged Acts or Omissions Stated in

 

     Section 1203(b)(3)(B)

 

 

Table 2d. Procedures for Handling Alleged Acts or Omissions Stated in

 

     Section 1203(b)(8) and (b)(9)

 

 

Table 3. All Disciplinary Actions, January 1 Through June 30, 2000

 

 

Table 4. All Disciplinary Actions by Grade, January 1 Through June

 

     30, 2000

 

 

Table 5. Section 1203 Allegations Received and Investigated, July

 

     1998 to May 2000

 

 

Table 6. Federal Employees' Unpaid Income Taxes, October 1999

 

 

            IRS Employees: Termination of Employment for

 

                             Misconduct

 

 

INTRODUCTION

[5] Congress authorized various personnel flexibilities for the Internal Revenue Service (IRS) in Public Law 105-206, the IRS Restructuring and Reform Act, enacted on July 22, 1998. Section 1203 of the law included provisions relating to termination of IRS employees for misconduct. A final administrative or judicial determination that an employee willfully committed any of 10 acts or omissions stated in the law could result in termination. The IRS Commissioner has the sole discretion to take a personnel action other than termination for an act or omission. Testimony presented at the Senate Committee on Finance's 1997 and 1998 oversight hearings contributed to inclusion of Section 1203 in the law. During a May 3, 2000 joint review hearing conducted by the Senate Committees on Finance, Appropriations, and Governmental Affairs and the House Committees on Ways and Means, Appropriations, and Government Reform, several members told IRS Commissioner Charles Rossotti of their interest in the implementation of the restructuring and reform act, including Section 1203.

[6] Senator Robert Kerrey, a co-chairman of the National Commission on Restructuring the IRS, expressed concern that Congress may have established a double standard by mandating that an IRS employee's tax delinquency could result in termination from employment. Two of the 10 acts or omissions in Section 1203 which may result in removal relate to tax compliance, but not all tax compliance cases are violations of the section. To be brought under Section 1203(b)(8) or (b)(9), as set out on page three below, a tax compliance case must meet the meaning of "willful"; the voluntary intentional violation of a known legal duty (timely filing of tax return or accurate reporting of tax obligation) for which there is no reasonable cause. Prior to the enactment of Section 1203, the IRS regarded the untimely payment of taxes as serious misconduct, depending on the amount and lateness of the tax due; a late tax return having a minimal balance due or a refund owed was not viewed as a serious offense. All Americans are subject to a fine, imprisonment, or both for failure to comply with the U.S. Tax Code. 1 Other federal employees are not subject to the possibility of removal from employment for substantiated allegations of untimely filing of or inaccurate tax returns.

[7] The IRS has established procedures to implement Section 1203 and is conducting ongoing training of its employees about the requirements of the law. Employees have been removed for violating Section 1203. The commissioner's semiannual report on disciplinary actions states that 28 employees were removed for Section 1203 violations during the January 1 through June 30, 2000 period. Of this total, 26 of the cases related to willful untimely tax returns; one involved a threat to audit for personal gain; and one involved destruction of documents to conceal a mistake.

[8] This report discusses Section 1203, including background and legislative history, General Accounting Office (GAO) evaluations, implementation, oversight, and data on violations covered by the section. Removal of federal employees from employment because of performance or adverse action under Chapters 43 and 75 of Title 5 of the United States Code and other federal employees subject to termination of employment for specific circumstances also are discussed.

TERMINATION OF EMPLOYMENT FOR MISCONDUCT 2

[9] Subsection (a) of Section 1203 of Public Law 105-206 authorizes the IRS Commissioner to terminate any IRS employee if there is a final administrative or judicial determination that the employee committed any act or omission in performing his/her official duties. The termination shall be a removal for cause on charges of misconduct. The acts or omissions that would result in termination are stated in subsection (b) of Section 1203 and are the following:

     (1) willful failure to obtain the required approval signatures

 

     on documents authorizing the seizure of a taxpayer's home,

 

     personal belongings, or business assets; 3

 

 

     (2) providing a false statement under oath with respect to a

 

     material matter involving a taxpayer or taxpayer representative;

 

     4

 

 

     (3) with respect to a taxpayer, taxpayer representative, or

 

     other employee of the Internal Revenue Service, the violation of

 

     -- (A) any right under the Constitution of the United States; or

 

     (B) any civil right established under -- (i) title VI or VII of

 

     the Civil Rights Act of 1964; (ii) title IX of the Education

 

     Amendments of 1972; (iii) the Age Discrimination in Employment

 

     Act of 1967; (iv) the Age Discrimination Act of 1975; (v)

 

     section 501 or 504 of the Rehabilitation Act of 1973; or (vi)

 

     title I of the Americans with Disabilities Act of 1990; 5

 

 

     (4) falsifying or destroying documents to conceal mistakes made

 

     by any employee with respect to a matter involving a taxpayer or

 

     taxpayer representative; 6

 

 

     (5) assault or battery on a taxpayer, taxpayer representative,

 

     or other employee of the Internal Revenue Service, but only if

 

     there is a criminal conviction, or a final judgment by a court

 

     in a civil case, with respect to the assault or battery; 7

 

 

     (6) violations of the Internal Revenue Code of 1986, Department

 

     of Treasury regulations, or policies of the Internal Revenue

 

     Service (including the Internal Revenue Manual) for the purpose

 

     of retaliating against, or harassing, a taxpayer, taxpayer

 

     representative, or other employee of the Internal Revenue

 

     Service; 8

 

 

     (7) willful misuse of the provisions of section 6103 of the

 

     Internal Revenue Code of 1986 for the purpose of concealing

 

     information from a congressional inquiry;

 

 

     (8) willful failure to file any return of tax required under the

 

     Internal Revenue Code of 1986 on or before the date prescribed

 

     therefor (including any extensions), unless such failure is due

 

     to reasonable cause and not to willful neglect; 9

 

 

     (9) willful understatement of federal tax liability, unless such

 

     understatement is due to reasonable cause and not to willful

 

     neglect; and

 

 

     (10) threatening to audit a taxpayer for the purpose of

 

     extracting personal gain or benefit.

 

 

[10] For purposes of Title VI or VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, and the Age Discrimination Act of 1975, references to a program or activity receiving federal financial assistance or an education program or activity receiving federal financial assistance shall include any program or activity conducted by the Internal Revenue Service for a taxpayer. 10

[11] The acts or omissions stated in Section 1203(b)(8) and (b)(9) relate to tax compliance.

[12] The IRS Commissioner may take a personnel action other than termination for an act or omission. The exercise of this authority shall be at the sole discretion of the commissioner and may not be delegated to any other officer. The commissioner, in his sole discretion, may establish a procedure that will be used to determine whether an individual should be referred to him for a determination on a personnel action. Any determination of the commissioner may not be appealed in any administrative or judicial proceeding.

BACKGROUND AND LEGISLATIVE HISTORY

[13] A commission report and hearings in the House of Representatives and the Senate preceded the enactment of Public Law 105-206.

REPORT OF THE NATIONAL COMMISSION ON RESTRUCTURING THE INTERNAL REVENUE SERVICE

[14] Congress created the National Commission on Restructuring the Internal Revenue Service in November 1995, with the enactment of Public Law 104-52, to conduct a review, lasting no longer than 15 months, of the IRS with respect to, among other issues, "changing the culture of the IRS to make the organization more efficient, productive, and customer-oriented." 11 The commission issued its report, entitled A Vision for a New IRS, in June 1997. Section 2 of the report addressed the agency's workforce and culture and recommended that "Congress should enable the IRS to recruit and train a first class workforce that is able to work with taxpayers to solve problems." The report did not include a provision on termination of employment for misconduct. It did, however, recommend a "centralize[d] cataloging and review of complaints and Board oversight." According to the report:

     The proposal would require the IRS to centralize the cataloging

 

     and review of taxpayer complaints of IRS misconduct on an

 

     individual employee basis. The proposal also would require the

 

     Commissioner and Taxpayer Advocate to establish guidelines for

 

     internal review and discipline of IRS employees, and the Board

 

     of Directors to ensure independent oversight of IRS internal

 

     review. This function would be similar to that performed by

 

     citizen's police boards that monitor internal police reviews.

 

     The proposal also would require the IRS to establish a toll-free

 

     number for taxpayers to register complaints, to be included in

 

     Publication 1. 12

 

 

HEARINGS

[15] The House Committee on Ways and Means, the Senate Committee on Finance, and the Senate Committee on Appropriations conducted oversight hearings on the IRS in 1997 and 1998. These hearings addressed a number of issues, including the findings and recommendations of the report of the commission, options for restructuring the IRS, tax rules for innocent spouses, and employee misconduct. Only testimony related to the latter issue is included in this report.

[16] Senate Committee on Finance, September 23, 24, and 25, 1997. Current and former IRS employees told the committee of various practices they claimed were used by the IRS, including the following.

     "Employees are given mandates by management to take positions

 

     known to be incorrect in order to obtain pre-ordained

 

     results." 13

 

 

     "I know of seasoned tax collectors who were well aware of the

 

     law, take actions that were out of the realm of legal tax

 

     collection. In one instance, a Revenue Officer who made up a

 

     seizure document titled Nominee Levy on the spot prior to

 

     seizing assets from someone who was not the taxpayer, was soon

 

     after made a Group Manager." 14

 

 

     "I know of numerous cases where the IRS has specifically

 

     exceeded its authority. In one of [the] most egregious examples,

 

     the IRS (Collections) predetermined that 637 taxpayers were

 

     liable for employment tax [they did not conduct legitimate

 

     investigations]; used extortion tactics to have taxpayers sign

 

     returns which the IRS prepared; did not use any IRC [Internal

 

     Revenue Code] sections which benefit the taxpayer; and

 

     disregarded established law, authorities and procedures; 630 of

 

     these taxpayers were also denied their 'Due Process

 

     Rights' . . . . [T]hat the IRS now has the authority to assign

 

     additional income to a taxpayer at its discretion, without any

 

     basis in fact, is frightening and completely unacceptable." 15

 

 

     "IRS tax collectors, Revenue Officers, but more importantly

 

     managers, are not properly trained in IRS policies and Internal

 

     Revenue Manual (IRM) procedures . . . . I have witnessed

 

     Collection Division Branch Chiefs, Assistant Division Chiefs,

 

     Division Chiefs, Problem Resolution (PRO) employees, and even an

 

     Assistant District Director, violate or ignore Internal Revenue

 

     Manual procedures and Treasury regulations simply because they

 

     wanted to punish a taxpayer." 16

 

 

     "Proven violations of criminal misconduct against an employee

 

     have been 'whitewashed' by Internal Revenue Service managers and

 

     labor relations. Serious violations such as browsing,

 

     unauthorized access to taxpayer's records, and unauthorized

 

     release of taxpayer's information have received nothing more

 

     than counseling letters. These letters are then removed from the

 

     employee's personnel file after one year. This kind of action

 

     does not serve as a deterrent for misconduct." 17

 

 

     "I have personally witnessed in the IRS workplace . . . tax data

 

     being accessed by IRS employees to check on prospective

 

     boyfriends; ex-husbands; . . . on people with whom IRS employees

 

     were having some kind of personal disagreement; on locally

 

     prominent or newsworthy individuals, public figures -- even team

 

     coaches; out of simple curiosity about a friend, a relative, or

 

     an employee's neighbor; on individuals who are perceived as

 

     critical of the IRS, such as tax protesters . . . . Another

 

     incident involved . . . a Fake Tax Lien . . . filed by the IRS

 

     when there was no assessment and therefore no legitimate lien .

 

     . . . A case that is written off as uncollectible, a Form 53, is

 

     counted as a closed case just the same as if it were fully

 

     collected . . . . I have now seen months in which over 60% of

 

     case closures were . . . closed as uncollectible." 18

 

 

     "The area that causes me significant concern is the widely

 

     varied treatment that taxpayers can and do receive. The IRS'

 

     approach toward a taxpayer can vary dramatically depending upon

 

     the IRS Group Manager whose group is assigned the case;

 

     depending on the employee working the case; and/or depending on

 

     the Collection Division policy in effect at the time the case is

 

     received . . . . Another concern I have is based on the fact

 

     that collection initiatives change regularly . . . . Recently a

 

     local Revenue Officer planned an elaborate sale to dispose of

 

     certain assets seized from a taxpayer . . . . Even though the

 

     Revenue Officer failed to achieve the minimum bid, as required

 

     by law, before selling the assets, he went ahead and sold the

 

     property at a significant loss to the taxpayer. Property which

 

     had a minimum bid of at least $40,000 was sold for roughly

 

     $7,000 . . . [T]he Revenue Officer and his manager now face

 

     possible disciplinary actions." 19

 

 

     "Many other issues have come to my attention . . . that have

 

     created a threatening environment for myself and many other

 

     employees . . . [M]anagers are targeted for termination on the

 

     basis of who their 'friends' are; statistics are manipulated to

 

     make it appear that our office is producing much higher

 

     statistics than what is factual; selected employees are

 

     encouraged to file EEO [Equal Employment Opportunity] complaints

 

     on the basis of trumped up charges with the promise that their

 

     claim will be settled so they can then be promoted -- unfairly --

 

     without having to compete for the job against more qualified

 

     employees; Revenue Officers have been directed to release seized

 

     assets because management personally feels indebted to the

 

     taxpayer's representative -- a former IRS employee and a friend

 

     of management." 20

 

 

     "[I]t has been my observation and experience that taxpayers are

 

     treated as being 'guilty until proven innocent.' Based on my

 

     experience, this attitude coupled with an arrogant and

 

     indifferent manner in which citizens are sometimes treated,

 

     directly contributes to, and in some instances instigates many

 

     of the threats, assaults, resistance to and lack of cooperation

 

     experienced by IRS employees when dealing with the public." 21

 

 

[17] JENNIFER LONG TESTIMONY AND RESULTING INVESTIGATION. During the September 24, 1997 Senate Committee on Finance hearing, an IRS revenue agent, Jennifer Long, identified various practices used by IRS employees. Among these practices were the following, quoted from her testimony.

     "[E]gregious tactics used by IRS Revenue Agents which are

 

     encouraged by members of the IRS management. These tactics --

 

     which appear nowhere in the IRS Manual -- are used to extract

 

     unfairly assessed taxes from taxpayers, literally ruining

 

     families, lives, and businesses -- all unnecessarily and

 

     sometimes illegally. As of late, we seem to be auditing only

 

     poor people . . . . Currently, in a typical case assigned for

 

     audit, there are no assets, no signs of wealth -- no evidence

 

     that would support a suspicion of higher, unreported income.

 

 

     "In other cases, IRS Management can determine that a particular

 

     taxpayer is simply someone 'to get' . . . . Management will go

 

     about fabricating evidence against that taxpayer to demonstrate

 

     that he, or she, owes more taxes than was originally claimed.

 

 

     "In certain instances, the IRS management has even employed its

 

     authority to intimidate the actual taxpayers into fabricating

 

     evidence against its own IRS employees. In return for their

 

     compliance, the taxpayer may be offered a reduction in their

 

     taxes or a 'no change case'. I also know that Management uses

 

     this same power to extort fabricated evidence from IRS employees

 

     against their own colleagues by offering cash awards,

 

     promotions, and lightened work loads as rewards for their

 

     compliance. The unfavorable information assembled by Management

 

     against its own employees is used against those whom the IRS has

 

     identified as someone who is unsupportive of its unwieldy

 

     methods of collection.

 

 

     "[C]omplaints to the IRS Inspection Division about possible

 

     Management misconduct are routinely ignored, but often result in

 

     retaliation against the IRS employee reporting the problem. This

 

     is due to the fact that employees' identities are disclosed when

 

     the Inspection Division reports the infraction to Management.

 

 

     "I have actually witnessed IRS Management manipulate income tax

 

     return figures just to increase their office or division

 

     collection statistics.

 

 

     "I know of certain IRS employees that have been instructed by

 

     IRS Management not to conduct audits of particular taxpayers who

 

     happen to be personal friends of someone in IRS Management.

 

 

     "When a taxpayer comes to the IRS to negotiate a tax payment

 

     issue in good faith, they are subjected to provocative behavior

 

     on the part of the IRS in order to 'set them off. . . . Based on

 

     this pretext, the IRS can then justify taking severe action

 

     contrary to the law in order to pursue the collection." 22

 

 

[18] At the Senate Committee on Finance's April 28, 1998 hearing, the Deputy Assistant Inspector General for Investigation at the Department of the Treasury reported on his review of the allegations made by Jennifer Long. He stated that "The OIG [Office of Inspector General] limited the scope of its investigation to Long's allegations as they pertain to the IRS Houston District." His findings are presented below.

     Long alleged that IRS managers harass and retaliate against IRS

 

     employees. Although the report does not substantiate her

 

     specific allegations of harassment, it cannot be concluded that

 

     IRS managers do not harass or retaliate against employees in the

 

     Houston District or in other Districts.

 

 

     IRS management appears to treat managers differently than

 

     employees when it pertains to disciplinary action. OIG was

 

     advised that IRS managers are allowed to 'voluntarily' step down

 

     from their management position rather than being involuntarily

 

     removed. IRS management stated this is done to save money in

 

     case of a lawsuit. An Inspection manager also stated that IRS

 

     managers are punished less severely than IRS employees. This

 

     manager was of the opinion it is based on human nature since

 

     most managers, to have attained their position, have probably

 

     worked well over a long period of time with little or no prior

 

     disciplinary action.

 

 

     Also, if an employee files a grievance, an EEO complaint, or a

 

     lawsuit against an IRS manager and the employee wins the

 

     settlement, usually no disciplinary action is taken against the

 

     manager for allegedly violating the rights of the employee. This

 

     process could allow managers the freedom to 'harass' an employee

 

     since no action is taken against them. This process could give

 

     employees the perception that they cannot take any action

 

     against a manager who harasses them or retaliates against them.

 

 

     Employees may feel they are retaliated against by management for

 

     reporting complaints to Inspection. A supervisor, Internal

 

     Security, Houston, TX, said employees may feel they are

 

     routinely ignored after providing the information to Inspection,

 

     because the office does not notify the complainant of the action

 

     taken by Inspection.

 

 

     Long alleged that Inspection advises IRS management of

 

     allegations provided to them, and who provided the information.

 

     . . . There appears to be confusion on the part of IRS

 

     Inspection managers and employees regarding the process of

 

     providing complainant's names to IRS management. Several of the

 

     Inspection employees interviewed said the complainant's names

 

     are provided to management, while others indicated the names are

 

     not provided to management. 23

 

 

[19] SENATE COMMITTEE ON FINANCE, APRIL 28, 29, 30, AND MAY 1, 1998. These hearings took further testimony on IRS practices, including the following.

     "[T]here is excessive use and misuse of intrusive and even

 

     oppressive investigative techniques within the Criminal

 

     Investigation Division . . . . The IRS does serious and needless

 

     damage to its image and relationship with the public -- and

 

     government as a whole -- when it lies to and deceives taxpayers

 

     in routine criminal tax investigations." 24

 

 

     "[I]t is also clear to me that harassment and overreaching by

 

     the Collection Division of the Internal Revenue Service is far

 

     from isolated and that, indeed, it could continue at the rate

 

     that I have seen over the years without institutional approval

 

     of these practices, whether that be an active approach or by

 

     passive approval . . . . For years a particular Collection Agent

 

     in Philadelphia lied to me repeatedly on a number of cases."

 

     25

 

 

     "IRS abuse is not a series of isolated events. It is my

 

     experience that IRS culture increasingly permits, and even

 

     encourages, taxpayer abuse . . . . I know of one IRS employee

 

     whose in-service instructor asked of the class how the IRS

 

     enforces tax compliance. After a moment of silence in the

 

     classroom, he wrote the word fear in letters that reached from

 

     the top of the blackboard to the bottom, and then left the room.

 

     26

 

 

     "I, as a tax lawyer, am concerned that it appears that the

 

     agency has in some instances directly targeted lawyers who

 

     represent taxpayer[s] in an effort to intimidate, harass, and I

 

     believe with the ultimate goal of making lawyers think twice

 

     about zealously representing taxpayers . . . . I was soon

 

     subject not only to an audit, but to an intense criminal

 

     investigation as well." 27

 

 

     "[M]y partner and I became aware that we were being swindled by

 

     our bookkeeper. When we discovered substantial shortages in our

 

     accounts, we confronted her and she admitted to stealing from

 

     our business . . . . [S]he sought shelter with the IRS and told

 

     them a fantastic tale of money laundering, gun running, and drug

 

     dealing by my partner and I . . . . When the raid occurred at my

 

     home, the front door was torn from the hinges . . . . I returned

 

     to find my home in shambles . . . . We were never charged with

 

     any crimes. After scrutinizing our records for 4 months, the IRS

 

     returned most of them. A rental truck pulled up in front of my

 

     business 1 day and the items that were returned were basically

 

     dumped in a pile for us to sort through. I never received an

 

     apology." 28

 

 

     "[A]t the time of this raid the IRS had no complaints against me

 

     that I was aware of, or any complaints from any of the over

 

     90,000 tax returns my office had prepared in the last 22 years.

 

     . . . [The IRS] tried to force some of my clients to wear hidden

 

     microphones into my tax office to record me, and when they

 

     refused, the special agent became angry and hinted . . . . that

 

     they too might experience some problems with the IRS. My

 

     employees were threatened with the loss of their jobs . . . .

 

     The IRS examined between 35,000 and 45,000 of my client tax

 

     returns for fraud, and failed . . . . [T]he Justice Department

 

     dropped two counts against me . . . . [A]ll of the other counts

 

     against me were dropped and the case was dismissed." 29

 

 

     "My family was investigated for more than 16 months. The Justice

 

     Department finally offered to drop the criminal investigation

 

     after I had spent millions of dollars in legal and accounting

 

     fees, roughly $5.5 million, to prove that we had committed no

 

     crime." 30

 

 

     "IRS management has frequently promoted marginally qualified or

 

     possibly unqualified individuals, including a few blacks, to

 

     high-level positions as a reward for supporting racism, racist

 

     policies, and/or whatever management does . . . . Many blacks

 

     with substantial education and skills are hired into the IRS at

 

     the GS-5 and/or GS-7 levels and retire, in many instances, with

 

     only one promotion over a 20- to 40-year career." 31

 

 

     "Throughout the Manhattan District, the technically weaker

 

     managers consistently ordered cases closed, no-change as they

 

     begin to age . . . . [I]t is standard practice to drop an issue

 

     that will delay the closing of the case. Large dollar amounts on

 

     major taxpayers are routinely zeroed out in this manner . . . .

 

     When people, such as these experts, commissioners, district

 

     directors, executives, and lawyers leave the service, they

 

     return as representatives of major taxpayers and ignore the

 

     ethical mandate of the service that former employees disqualify

 

     themselves for a 2-year period from representing any taxpayer

 

     whose cases were open and under their authority while they were

 

     employed by the service . . . . If an EEO complaint is brought

 

     either against an outspoken employee or by an outspoken

 

     employee, administration will get involved to the detriment of

 

     the outspoken employee. Strong efforts will be made by

 

     management to imply that the outspoken employee is the offending

 

     party." 32

 

 

     "I find it difficult if not impossible to understand how, on the

 

     one hand, the IRS will go after small taxpayers for arbitrary

 

     adjustments, while on the other hand, reduce by millions the

 

     amount of real taxes owed by extremely wealthy and powerful

 

     companies . . . . As a result of my objections to the resolution

 

     of the specific case I previously described, I became the focus

 

     of harassment by other agents . . . . [ranging from] comments on

 

     the quality of my work to comments on my Vietnamese heritage."

 

     33

 

 

     "During my 7 years on the Commissioner's staff, I witnessed a

 

     broad range of misconduct by high-level managers . . . .

 

     mistreatment of taxpayers, covering up serious revenue losses,

 

     sexual harassment, the creation of false records, improper use

 

     of enforcement statistics, covering up misconduct by executives

 

     and their high-level subordinates, and violations of prohibited

 

     civil service personnel practices . . . . In one case with which

 

     I am personally familiar, certain members of IRS management in a

 

     particular district actually forgave over $30 million of a $50

 

     million tax liability for a large, influential business concern

 

     for no apparent reason . . . . In another matter, I reported

 

     that the district improperly closed 83,621 taxpayer cases . . .

 

     . without completing the process of collecting taxes owed on any

 

     of them." 34

 

 

     "At the sole discretion of individual managers, millions, even

 

     hundreds of millions of tax revenues owed to the U.S. Treasury

 

     by some of the largest taxpayers in the country are literally

 

     forgiven, zeroed out . . . . Since many of these former senior

 

     executives and managers have only recently separated from the

 

     service, many of their former colleagues and friends are still

 

     actively employed. As a result, I believe the newly-established

 

     tax advisor can take his or her client before the former

 

     colleague with the expectation of receiving decisions favoring

 

     their clients . . . . In one particular case, a $10 million

 

     adjustment was never assessed against the taxpayer because the

 

     statute of limitations ran out while the case was languishing in

 

     the processing department." 35

 

 

     "What I had uncovered was an attempt to create an unfounded

 

     criminal investigation on two national political figures [a U.S.

 

     Congressman and a former U.S. Senator] for no reason other than

 

     to redeem the agent's own career and ingratiate himself with his

 

     superiors." 36

 

 

     "I feared [an agent] because of his constant sexual harassment

 

     and certainly due to his position as a senior special agent. . .

 

     . I later learned that he had attempted to rape another female

 

     special agent . . . . [W]hen [Tommy Henderson] made my concerns

 

     relative to this renegade agent known to management, an

 

     investigation was instituted . . . . [T]he agent was not to be

 

     the target of this investigation, Tommy Henderson and I were . .

 

     . . As a result of having to clear myself, I obtained a criminal

 

     defense attorney . . . . When I attempted to leave [a meeting

 

     with the IRS] the group manager came after me and struck me in

 

     the stomach . . . . I was now branded a self-serving whistle

 

     blower by management and colleagues." 37

 

 

     "In January 1993, I suddenly found myself . . . . caught up in a

 

     patronage scheme to protect one immoral female when she reported

 

     that her service weapon had been stolen. The truth was she had

 

     lost it, but preferred to accuse a co-worker, special agent

 

     Patricia Gernt who worked at a post of duty more than 120 miles

 

     away. Just days after the gun was reported missing, it was

 

     recovered under mysterious circumstances . . . . Patricia Gernt

 

     and I became the targets in the ensuing sham investigation . . .

 

     . It is the practice of the IRS Inspection Division to use

 

     Gestapo-type tactics to intimidate and harass the targets of

 

     their investigations. They coerce them into giving false

 

     evidence and then offer them immunity in exchange for it. These

 

     employees are forced to provide false evidence of criminal

 

     misconduct against innocent colleagues included on the IRS hit

 

     list." 38

 

 

     "The whistleblowers are ostracized and [their] careers

 

     destroyed, and those senior officials who engaged in the

 

     misconduct which was reported and substantiated are not only

 

     protected from receiving any disciplinary actions, but are

 

     oftentimes rewarded during the same year the misconduct occurs

 

     . . . I have suffered retaliation and continue to suffer

 

     retaliation as a result of my whistleblowing activities and

 

     participation in the OIG investigation . . . [I]n most instances

 

     warranting disciplinary action, more effort went into how to

 

     clear the person rather than what needed to be done to ensure

 

     the misconduct did not recur. Exceptions were made and

 

     preferential treatment was granted. Excuses were readily

 

     accepted and misconduct was often reduced to being minor." 39

 

 

[20] SENATE COMMITTEE ON APPROPRIATIONS, APRIL 14, 1998. This field hearing in Denver Colorado received testimony about such alleged IRS practices as:

     o seizing a home without granting the notice period required by

 

       law, committing perjury, and falsifying documents; 40

 

 

     o belligerent treatment of a taxpayer and abuse of the burden-

 

       of-proof concept by an IRS revenue officer conducting an

 

       audit; 41

 

 

     o IRS disregard for the tax laws and the statute of limitations

 

       when the agency reversed its position on a write-off,

 

       conducted an audit, and began collection for back taxes; 42

 

 

     o improper audit procedures used by the IRS which denied a

 

       taxpayer an amended return and access to court; 43

 

 

     o mistreatment of African-American and Hispanic taxpayers; and

 

       harassment of taxpayer representatives (which in one

 

       representative's case reportedly involved such things as

 

       "evidence of illegal snooping, forgery, falsified and

 

       fabricated documents"). 44

 

 

HOUSE OF REPRESENTATIVES PASSAGE

[21] The Internal Revenue Service Restructuring and Reform Act, H.R. 2676, passed the House of Representatives, amended, by a 426-4 vote (Roll No. 577) on November 5, 1997. 45 Earlier, the bill, which had been introduced by Representative Bill Archer, Chairman of the Ways and Means Committee, on October 21, 1997, was reported from that committee on October 31, 1997 (H. Rept. 105-364, part I). It was discharged from the Government Reform and Oversight and Rules Committees on the same day. The House-passed bill did not include the provision on termination of employment for misconduct. The provision on cataloging complaints, recommended by the National Commission on Restructuring the IRS, was Section 372 of the bill. The committee report accompanying the bill stated the reasons for the provision:

     The Committee believes that all allegations of misconduct by IRS

 

     employees must be carefully investigated. The Committee also

 

     believes that the annual report to Congress will help develop a

 

     public perception that the IRS takes such allegations of

 

     misconduct seriously. The Committee is concerned that, in the

 

     absence of records detailing taxpayer complaints of misconduct

 

     on an individual employee basis, the IRS will not be able to

 

     adequately investigate such allegations or properly prepare the

 

     required report. 46

 

 

[22] The committee report also stated that "individual records are not to be listed in the [annual] report," but are to "be used in evaluating individual employees." The provision was to be effective on the date of enactment. 47

SENATE PASSAGE

[23] The Senate passed its version of H.R. 2676, amended, by a 97 to 0 vote (Vote No. 126) on May 7, 1998. 48 This action followed Finance Committee mark-up of the bill on March 31, 1998, during which Senator William Roth's amendment in the nature of a substitute, as amended, was adopted, and reporting of the bill (S. Rept. 105-174), as amended, on April 22, 1998.

[24] The provision on cataloging complaints was Section 3701 of the bill. The committee report accompanying the bill (S. Rept. 105- 174) stated the same reasons and effective date for the provision as the House Committee on Ways and Means report. 49 The effective date of the provision was changed to January 1, 2000 in the conference agreement." 50

[25] Section 1203, entitled "Termination of Employment for Misconduct," was added to the bill during mark-up. The Committee on Finance report that accompanied the Senate's version of the legislation explained this provision.

     The bill provides non-delegable authority to the Commissioner to

 

     determine that mitigating factors exist, that, in the

 

     Commissioner's sole discretion, mitigate against terminating the

 

     employee. The bill also provides that the Commissioner, in his

 

     sole discretion, may establish a procedure which will be used to

 

     determine whether an individual should be referred for such a

 

     determination by the Commissioner. The Treasury IG is required

 

     to track employee terminations and terminations that would have

 

     occurred had the Commissioner not determined that there were

 

     mitigation factors and include such information in the IG's

 

     annual report. 51

 

 

[26] When Senate consideration of the committee amendment, in the nature of a substitute for H.R. 2676, began on May 4, 1998, Senator William Roth, Chairman of the Finance Committee, explained the need for the termination provision:

     As we have seen -- even this past week -- the Finance Committee

 

     has disclosed egregious conduct by IRS employees. We have

 

     received thousands of letters relating the same. They have come

 

     from taxpayers and agency employees, alike. The stories we have

 

     heard are outrageous, as is the fact that many of those who

 

     perpetuate these abuses do so without consequence. This will not

 

     stand. Our bill requires the IRS to terminate an employee if it

 

     is proven that the employee failed to obtain required

 

     authorization to seize a taxpayer's property, committed perjury

 

     material to a taxpayer's matter or falsified or destroyed

 

     documents to conceal the employee's mistakes with respect to a

 

     taxpayer's case. This legislation allows terminations to take

 

     place if an IRS employee engages in abuses or egregious

 

     misconduct. Conditions for which an employee can be dismissed

 

     include, but are not limited to, assaulting or battering a

 

     taxpayer or other IRS employee, violating the civil rights of a

 

     taxpayer or other IRS employee, or breaking the law,

 

     regulations, or IRS policies for the purpose of retaliating or

 

     harassing a taxpayer or other IRS employee. Our legislation also

 

     allows an employee to be fired for willfully misusing section

 

     6103 authority to conceal information from Congress. With this

 

     legislation, we show that we mean business. An environment that

 

     allows employees guilty of these kinds of behaviors to continue

 

     to work within the system is not acceptable to me, the Finance

 

     Committee, or to the American people. We have heard enough

 

     excuses. And Commissioner Rossotti agrees that enough is enough!

 

     52

 

 

[27] The acts or omissions numbered (8), (9), and (10) that would result in termination were contained in an amendment offered by Senator Phil Gramm which was agreed to by the Senate by voice vote on May 7, 1998. He stated why the amendment was offered:

     Basically, we have in the bill a list of offenses for which an

 

     employee of the Internal Revenue Service may be terminated. In

 

     light of concerns that have arisen since we had the bill before

 

     the committee, I want to add two offenses to the list. One has

 

     to do with testimony we heard where members of the Internal

 

     Revenue Service were said to be threatening to audit people for

 

     personal gain. We heard an assertion that a police officer had

 

     stopped an IRS agent and was going to write him a ticket, and

 

     the IRS agent allegedly had told the officer that if he wrote

 

     the ticket, he was going to get audited. The second provision

 

     has to do with a knowing and willful failure of an IRS agent to

 

     file a tax return or pay taxes or declare income." 53

 

 

[28] Senator Robert Kerrey, a co-chairman of the National Commission on Restructuring the IRS, in commenting on the amendment, said:

     What the Senator from Texas has done is identified some

 

     additional things that ought to be on the list and once again

 

     has carefully drawn it -- I believe the language is . . .

 

     'Willful' and 'intentionally.' This would not be a situation

 

     where an individual accidentally underpays taxes or misses a

 

     deadline or something like that. This is a much higher standard,

 

     a much more difficult standard. And I think it is a quite

 

     reasonable provision to add to the list of things that would

 

     force and require automatic termination. In general, this

 

     legislation is attempting to change the culture by saying here

 

     are some things that, if you do it, there are going to be severe

 

     penalties . . . . What we are trying to do is change the culture

 

     so that there is a new seriousness given to actions taken by the

 

     IRS. And all of us understand the penalty needs to be sufficient

 

     to meet the offense. 54

 

 

ENACTMENT

[29] The House agreed to the conference report accompanying H.R. 2676 by a 402-8 vote (Roll No. 273) on June 25, 1998, exactly one year after the National Commission on Restructuring the IRS issued its report to Congress. The Senate agreed to the conference report by a 96-2 vote (Roll No. 189) on July 9, 1998. 55 President William Clinton, when signing the bill on July 22, 1998, said it would help the IRS to build for the 21st Century. It became Public Law 105-206 on July 22, 1998 (112 Stat. 685).

GENERAL ACCOUNTING OFFICE EVALUATIONS

[30] The General Accounting Office (GAO) conducted two evaluations on allegations of IRS employee misconduct. The findings of both reviews were published in May 1999. According to GAO, one of the reports is "fully restricted" because it contains taxpayer information. 56 The second report, for which the work was done between June 1998 and March 1999 (the IRS Restructuring and Reform Act was enacted in July 1998), examined five allegations made during the April 1998 Senate Committee on Finance hearings. The allegations and GAO's findings are as follows:

     [Allegation] Senior IRS managers did not receive the same level

 

     of disciplinary action as line staff.

 

 

     [Findings] Available data showed significant differences between

 

     Senior Executive Service (SES) and line staff disciplinary cases

 

     in terms of dispositions and processing times. For example, a

 

     much higher percentage of SES cases than of lower-level cases

 

     was cleared or closed without action, and SES cases tended to

 

     take longer to complete. Also, IRS found that actions taken

 

     against lower-level employees more closely conformed to its

 

     established table of penalties than actions taken against

 

     higher-graded employees. However, there was no basis for a more

 

     direct comparison of the discipline imposed on senior managers

 

     and lower-level employees because SES and line staff offenses,

 

     as well as their associated mitigating and aggravating factors,

 

     were different. Our ability to make other comparisons between

 

     SES and line staff disciplinary cases was hindered by the lack

 

     of detailed and accurate data in connection with IRS'

 

     disciplinary case database.

 

 

     [Allegation] The Deputy Commissioner of Internal Revenue delayed

 

     action on substantiated cases of employee misconduct until

 

     senior managers were eligible to retire.

 

 

     [Findings] [W]e focused on actual retirements and did not reach

 

     general conclusions about eligibility to retire. We found no

 

     cases in which an individual who was ineligible to retire when

 

     an allegation was filed, retired while the case was pending with

 

     the Deputy Commissioner. However, cases we studied in depth were

 

     pending for 2 months to 4 years at the Deputy Commissioner's

 

     level. In addition, we estimated, on the basis of a random

 

     sample of IRS SES disciplinary files, that SES cases averaged

 

     almost a year from the time executive support staff received

 

     them until case closure, compared to a goal of 90 days.

 

 

     [Allegation] IRS retaliated against whistleblowers and against

 

     taxpayers and their representatives who were perceived to be

 

     noncooperative.

 

 

     [Findings] We could not determine the extent of reprisal against

 

     whistleblowers because IRS did not track whistleblowing reprisal

 

     cases . . . In fiscal years 1995 through 1997, OSC [Office of

 

     Special Counsel] received 63 IRS whistleblower reprisal matters

 

     and obtained action from IRS favorable to employees in 4 cases.

 

     In the same time period, MSPB [Merit Systems Protection Board]

 

     decided 45 initial appeals of whistleblowing reprisal

 

     allegations involving IRS, dismissing the majority of them but

 

     settling more than half of the remainder.

 

 

     [Allegation] IRS employees zeroed out or reduced proposed tax

 

     assessments for reasons not related to the merits of the cases.

 

 

     [Findings] [W]e found no evidence to support the allegations in

 

     the eight specific cases referred to us by the IRS employees who

 

     testified at the hearings. On the other hand, IRS did not

 

     systematically collect data on how much additional taxes

 

     recommended by auditors were zeroed out or reduced by IRS

 

     employees without a basis in law or IRS procedure . . . Although

 

     our results were not a measure of improper reductions in

 

     recommended taxes, we recently reported that the majority of

 

     additional taxes recommended during audits was not assessed.

 

 

     [Allegation] IRS discriminated against employees in the

 

     evaluation process on the basis of race or national origin in

 

     its Midwest District Office, which is headquartered in

 

     Milwaukee, WI.

 

 

     [Findings] IRS has acknowledged equal employment opportunity

 

     (EEO)-related problems, including problems in hiring and

 

     promotion, in its Midwest District Office and has begun

 

     addressing them. 57

 

 

[31] GAO concluded that, "In general, IRS' lack of adequate information systems and documentation in the areas of employee discipline, retaliation against whistleblowers and taxpayers, and zeroing out of recommended taxes prevented us from doing a more comprehensive analysis of these issues [and] hinders both congressional oversight and IRS management from addressing any problems in these areas." 58

IMPLEMENTATION OF SECTION 1203

[32] The IRS has established procedures to implement Section 1203 and is conducting ongoing training of its employees as to the requirements of the law.

PROCEDURES

[33] IRS procedures for handling Section 1203 allegations are published in a document entitled RRA '98 Section 1203 Procedural Handbook. Each IRS employee has received a copy of the handbook. Generally, the process includes the following steps --

     o Misconduct complaint is received.

 

 

     o Inquiry and analysis is conducted by management (a member of

 

       the Senior Executive Service and above the Division Chief

 

       level) and/or the Treasury Inspector General for Tax

 

       Administration (TIGTA).

 

 

     o If the complaint does not appear to be a 1203 violation, the

 

       regular disciplinary process applies. 59 If the complaint

 

       appears to be a 1203 violation, the management official

 

       proposes removal.

 

 

     o The employee responds to the proposal.

 

 

     o The deciding official (a member of the Senior Executive

 

       Service and above the division chief level) evaluates the

 

       proposal and the employee's response.

 

 

     o If the deciding official finds that the complaint is not a

 

       1203 violation, the regular disciplinary process applies. If

 

       the deciding official finds that the complaint is a 1203

 

       violation, he or she submits the case to the Review Board. The

 

       board has four members all of whom are members of the Senior

 

       Executive Service. The Deputy Commissioner of Internal Revenue

 

       chairs the board. Other members are the Assistant Deputy

 

       Commissioner, Operations; Chief, Equal Employment Opportunity

 

       and Diversity; and the Deputy Commissioner, Tax Exempt and

 

       Government Entities Division.

 

 

     o If the review board finds that the complaint is not a 1203

 

       violation, the regular disciplinary process applies. If the

 

       review board finds that the complaint is a 1203 violation, it

 

       either does or does not recommend mitigation of the penalty.

 

       Wanting to preserve discretionary authority, the IRS has not

 

       published guidelines on mitigation, but medical issues or

 

       financial hardship may enter into a decision on whether

 

       mitigation is recommended.

 

 

     o If mitigation is recommended, the Commissioner of Internal

 

       Revenue reviews the recommendation. If the commissioner

 

       mitigates the penalty, other disciplinary action applies. This

 

       might include written counseling, admonishment, reprimand, or

 

       suspension. If the commissioner does not mitigate the penalty,

 

       the employee is terminated.

 

 

     o If mitigation is not recommended by the review board, the case

 

       is not submitted to the commissioner and the employee is

 

       terminated. 60 According to the IRS, cases where mitigation

 

       is not recommended are not submitted to the commissioner for

 

       reasons of workload and not wanting to place the commissioner

 

       in the role of the deciding official for all of the cases.

 

 

[34] There are four specific procedures applying the overall process: one covering the acts or omissions in Section 1203(b)(2), (4), (5), (7) and (10), one covering those in Section 1203(b)(1), (3)(A), and (6); one covering the Section 1203(b)(3)(B) act or omission; and one covering the Section 1203(b)(8) and (9) acts or omissions. The text of each of the Section 1203(b) provisions and the meaning of "willful" and "intent" for each of them is stated in Appendix table 1. The specific procedures for handling Section 1203 allegations are described in appendix tables 2a through 2d.

TRAINING

[35] Each new IRS employee completes Form 5012, New Employee Tax Verification, on his or her first day of employment with the agency. The form verifies that new employees have filed and paid income tax for the three years prior to their employment.

[36] All IRS employees received training, conducted in late 1998 and early 1999, on Section 1203. According to the IRS, "After feedback and numerous focus group interviews indicated that employees were still uncertain about their rights, responsibilities and risks under the law, and that the initial training had created unnecessary inflated fears, the training was revised and a new round of training was conducted in May 1999." 61 IRS managers and labor relations specialists also received training on their responsibilities. IRS senior executives and the Treasury Inspector General for Tax Administration discussed Section 1203 at a March 2000 conference of front line collection managers.

[37] Each IRS employee received copies of various publications which explained the Section 1203 provisions. These included a September 1998 memorandum for all employees on the conduct provisions, a September 1998 employee guide on the conduct provisions (document 10848), an October 1998 participant guide to the training program, a February 1999 memorandum for all employees on tax compliance obligations, a March 1999 memorandum for all employees on Section 1203 training, a March 1999 publication (document 10997) on Section 1203 enclosed with paychecks, Section 1203 resource guide and procedural handbook in April and May 1999, a September 1999 memorandum for all employees on Section 1203 allegations and disciplinary actions, an April 2000 voice message on timely filing of federal tax returns, and an August 2000 pamphlet on Section 1203 tax compliance violations. 62 The IRS Intranet has a page on Section 1203 which includes frequently asked questions and sample cases illustrating application of the tax compliance provisions. An IRS Labor and Employee Relations Resource Center is available to provide guidance and assistance to employees.

[38] The Treasury Inspector General for Tax Administration (TIGTA) reported to the IRS commissioner on an audit of IRS "processes and systems for identifying and reporting to [TIGTA] information on taxpayer complaints, allegations of employee misconduct, and terminations (including terminations mitigated by the Commissioner) under the IRS Restructuring and Reform Act" in September 1999. As part of the audit, TIGTA explained that:

     To determine IRS employees' perspectives on, and knowledge of,

 

     procedures for reporting taxpayer complaints and allegations of

 

     misconduct, we sent survey letters to a random sample of IRS

 

     employees. However, an insufficient number of responses were

 

     received to allow us to project these results over the entire

 

     population of IRS employees. Based upon the responses received,

 

     the survey results indicated that additional actions are needed

 

     to ensure that all IRS employees understand the IRS complaint

 

     processing procedures and are willing to report taxpayer

 

     complaints and allegations of employee misconduct. Of the 313

 

     IRS employees responding to our survey, only 159 (51 percent)

 

     indicated that they understood how to report a taxpayer

 

     complaint or allegation of IRS employee misconduct. 63

 

 

[39] After reviewing the survey results, TIGTA recommended that "the IRS identify and provide any additional training required on the complaint processing procedures" and "re-emphasize the employee's responsibility for reporting taxpayer complaints and allegations of employee misconduct." TIGTA also recommended that "the IRS periodically survey its employees to determine the effectiveness of the training, and employees' willingness to report taxpayer complaints and allegations of employee misconduct." 64 The IRS agreed with the TIGTA findings, and has continued to develop additional training. Currently, ongoing is training which presents "real world" examples of interactions between IRS employees and the general public and focuses on how best to resolve situations without confrontations. 65

OVERSIGHT OF IMPLEMENTATION

[40] House of Representatives and Senate oversight hearings, comments of a federal employees union, and an interview of the IRS Commissioner by a professional organization have focused on the implementation of Section 1203.

HOUSE COMMITTEE ON WAYS AND MEANS AND SENATE COMMITTEE ON FINANCE

[41] The IRS Commissioner, Charles O. Rossotti, testifying before an April 14, 1999 Senate Committee on Finance hearing and a July 22, 1999 House Committee on Ways and Means Subcommittee on Oversight hearing, provided information on the implementation of Section 1203. He told the House subcommittee:

     Another one of our critical training needs is Section 1203 . . .

 

     for which all 100,000 IRS employees must be trained. The

 

     initial mandatory training that all employees received was

 

     certainly an important first step, but we found that it raised

 

     concerns among employees without answering their specific

 

     questions. In March, all employees received with their pay stub

 

     a special brochure on section 1203. It includes a plain language

 

     summary of all the provisions, how potential violations are

 

     reported, employee appeal rights and other important reminders.

 

     We are also encouraging our employees to take advantage of the

 

     IRS Labor and Employee Relations Resource Center that can help

 

     answer many of their Section 1203 questions. We will then build

 

     on this information with better training and guidance. In June,

 

     we began to provide employees with detailed instruction on the

 

     procedures to be used in handling Section 1203 cases. This

 

     instruction, including a training video, was based on a new

 

     Section 1203 Procedural Guide issued in May. It emphasizes good

 

     customer service and case management practices. Some IRS

 

     employees have been reluctant to pursue collection actions for

 

     fear they will be charged with a Section 1203 violation.

 

     However, this is only one factor that has reduced the number of

 

     collection actions. . . . We are working very hard to re-enforce

 

     the message among all IRS employees that Section 1203 provisions

 

     are intended to address serious and willful incidents of

 

     misconduct. Simple mistakes in the course of doing your job in

 

     good faith are not Section 1203 violations. 66

 

 

[42] At the Senate Committee on Finance's February 2, 2000 oversight hearing, the Treasury Inspector General for Tax Administration, David C. Williams, told the Members that "there has been much confusion and consternation surrounding Section 1203." According to him:

     For several months, baseless rumors circulated throughout the

 

     IRS that thousands of Section 1203 investigations were being

 

     conducted. Many employees voiced concerns about this section of

 

     the Act and the investigation of allegations made under it. . . .

 

     IRS management is emphasizing to its employees that disciplinary

 

     action will not be imposed on those employees who make honest

 

     mistakes. 67

 

 

JOINT REVIEW

[43] The Senate Committees on Finance, Appropriations, and Governmental Affairs and the House Committees on Ways and Means, Appropriations, and Government Reform conducted a joint review of the Internal Revenue Service on May 3, 2000. 68 Several members mentioned Section 1203 in their remarks during the hearing. Senator Byron Dorgan expressed concern "about the effect the Act has had on the morale of the agency, particularly Section 1203." He stated that information that he received from an IRS employee "allud[ed] to the fact that since the enactment of section 1203 . . . employees feel more concerned about losing their jobs and less concerned with being as thorough as they should be in their official duties for fear of having a complaint lodged against them." 69 Senator Robert Kerrey asked the IRS Commissioner to provide him with an independent evaluation because:

     I have heard a number of concerns that Congress, in trying to

 

     correct the problem with Treasury employees doing things that

 

     should obviously result in termination, we have made it

 

     difficult for you [the IRS Commissioner] to manage the agency

 

     and may have also, by the way, set a double standard in place,

 

     since one of the things was delinquent taxes could cause you to

 

     be terminated from employment. At least, there has been some

 

     published analyses that show there is more delinquency of paying

 

     taxes in Congress than there is in Treasury employees

 

     themselves. 70

 

 

[44] Senator Charles Grassley, a co-chairman of the National Commission on Restructuring the IRS, commented on news reports of a GAO evaluation of the allegations raised during the Senate Committee on Finance hearings prior to the enactment of the restructuring act, remarking --

     We have seen media headlines like the one in The Washington Post

 

     that said, "GAO Report Exonerates IRS on 1998 Accusations." I am

 

     already hearing negative comments about the witnesses that had

 

     the courage to come forward and testify. The point is, the

 

     General Accounting Office absolutely did not exonerate anybody,

 

     if you read the report and actually looked into the matter

 

     itself. Unfortunately most reporters for the papers apparently

 

     have not actually looked into the cases. At most, the report

 

     says that the General Accounting Office was not able to

 

     substantiate many of the allegations. That certainly does not

 

     mean that the allegations are not true, especially since there

 

     was not really an investigation." 71

 

 

NATIONAL TREASURY EMPLOYEES UNION

[45] The National Treasury Employees Union (NTEU), which represents IRS employees, stated emphatically that it "would never condone any of the offenses [listed in Section 1203]; they have always been outlawed, employees have always been subject to discipline and have in fact been fired." 72 However, the union views "the mandatory nature of the firing as having a chilling effect" which "leaves employees feeling exposed and vulnerable and having to live under a cloud for some 18 months of investigation." The union is concerned about unfair treatment of IRS employees. A March 31, 2000 union press release stated that NTEU president Colleen Kelly had written to Senators William Roth and Daniel Patrick Moynihan that: "the mandatory termination provisions of RRA [Restructuring and Reform Act] are especially harsh when compared to the fact that no similar penalty of any kind applies to members of Congress or congressional staff . . . who either do not file or pay their taxes on time. . . . It seems patently unfair to hold those who write the tax laws to a lesser standard than those who must enforce them." 73 In April 10, 2000 testimony before a hearing of the House Subcommittee on Government Management, Information, and Technology, she reiterated the union's views about a "double standard." 74

[46] NTEU also wants to ensure that quotas are not used to set the number of Section 1203 investigations to be conducted. In November 1999, the Treasury Inspector General for Tax Administration (TIGTA), David Williams, wrote an internal memorandum to TIGTA's field offices suggesting 5,000 investigations of IRS misconduct allegations as a goal for the year 2000. The memorandum became public when it was obtained by the New York Times. A November 19, 1999 NTEU press release announced that Colleen Kelley had obtained "the commitment of the Treasury Department's tax inspector general to avoid both the appearance and the reality of quotas in investigating allegations of misconduct against IRS employees." According to her, "Mr. Williams is acutely aware of the damage that a perception of quotas can do throughout the IRS workplace . . . and I welcome his stated commitment to work with NTEU to help monitor and keep open the lines of communication on the policies and procedures to be followed." 75

[47] Concerning whether rank and file employees are being treated the same as management for purposes of Section 1203, NTEU reported that it did not "currently have a breakdown of the grades of the employees charged with, or determined to have violated section 1203." NTEU stated:

     While implementation of section 1203 of IRS RRA may not be

 

     occurring in a purposefully discriminatory manner against rank

 

     and file employees as opposed to managers, NTEU believes that

 

     the impact of section 1203 falls disproportionately on rank and

 

     file workers. For example, the hundreds of frivolous harassment

 

     claims made against IRS employees under 1203(b)(6) most

 

     certainly are filed primarily against the frontline employees

 

     who have contact with taxpayers, not managers who review cases.

 

     In addition, if timely tax compliance by the general public is

 

     any guide, those at the lower ends of the income scale who find

 

     it most difficult to pay taxes when they are due are the most

 

     likely to file late. We believe that this trend would also be

 

     seen among IRS employees, with the impact being that more rank

 

     and file, lower paid employees would face termination for late

 

     filing under 1203(b)(8) than higher paid managers." 76

 

 

THE FEDERAL MANAGER INTERVIEW

[48] A federal professional organization interviewed Commissioner Rossotti for an article in the Fall 1999 edition of its magazine entitled The Federal Manager. In response to a question on why the compliance [of citizens in paying income taxes] statistics have gone down, the commissioner stated: "Revenue and compliance are going up by leaps and bounds. What is going down is the number of enforcement actions." He cited three reasons for this decline: fewer collectors and fewer auditors result in fewer cases; procedural requirements consume a significant number of resources in terms of personnel; and the confusion and uncertainty that accompany change. With regard to this last point, Mr. Rossotti said:

     The initial training required [in Section 1203 of the 1998 IRS

 

     Restructuring and Reform Act] probably caused more concern than

 

     clarification. Now that we've gotten some additional training,

 

     people are starting to learn a little better. It's extremely

 

     important for everyone to understand that 1203 is not aimed at

 

     people who are doing their jobs in good faith. 1203 is never

 

     going to affect people who do a reasonable job. It was

 

     specifically designed for very serious, willful, intentional

 

     cases of misconduct. There aren't a lot of those. . . . The

 

     number of people that will actually be affected by this, I

 

     think, will be very minuscule. Nothing says that you're not

 

     supposed to work with your employees to make sure that they take

 

     the right action. . . . I think it's going to take some time for

 

     people to come to comfort with this. They'll see this is not

 

     going to be used as a club to beat up on people who are doing

 

     their job. But 1 don't think it's only the fear. I think it's

 

     the sheer confusion. This is all new. What are all these rights

 

     and how do we manage in this environment?" 77

 

 

     The commissioner, emphasizing that managers would be "essential

 

     in turning around the IRS, stated the agency's need for

 

     "managers who are there on the front lines to be working with

 

     the employees and not let everybody go into a stall mode because

 

     they're so worried about what might happen with 1203, or what

 

     might happen with the reorganization." 78

 

 

DATA ON VIOLATIONS 79

ALL DISCIPLINARY ACTIONS

[49] The IRS is collecting data on disciplinary actions, including those related to violations of Section 1203, and sharing it with NTEU. In an August 23, 1999 press release, the IRS stated that the agency and NTEU had "agreed on procedures for the agency to give the union information about disciplinary actions imposed on employees." The Memorandum of Understanding provides that "the information will be in the form of charts listing employees by grade and position title, with measures taken to protect the identity of individual employees." The IRS will make the information public and available through its Web site as well. Commissioner Rossotti was quoted as stating his confidence that "those looking at this information will see that IRS managers administer disciplinary measures fairly and equitably, regardless of the position or grade of the employee." The information will be provided semi-annually and cover the first or last six months of the calendar year. 80 NTEU told CRS that the IRS is providing the data to the union.

[50] The commissioner released his semiannual disciplinary actions report, covering the period January 1 through June 30, 2000, on September 13, 2000. It shows that 2,318 disciplinary actions were taken, 1,187 of which were for employee tax compliance reasons. 81 Not all tax compliance cases are Section 1203 violations. To be brought under Section 1203(b)(8) or (b)(9), as set out on page three of this report, a tax compliance case must meet the meaning of "willful": the voluntary intentional violation of a known legal duty (timely filing of tax return or accurate reporting of tax obligation) for which there is no reasonable cause. Written counseling was the action taken most frequently for both all offenses and tax compliance. Ninety-one employees were suspended and 26 were removed for tax compliance reasons. (The 26 removals were Section 1203 violations.) Tables 3 and 4 in the appendix, below, show the number of disciplinary actions taken by type of discipline and by grade of the employees.

SECTION 1203 VIOLATIONS

[51] Both the Treasury Inspector General for Tax Administration (TIGTA) and the IRS Commissioner's Complaint Processing and Analysis Group compile data on allegations of Section 1203 violations received and investigated and on disciplinary actions taken for substantiated violations.

[52] TIGTA DATA. During the May 2000 joint review hearing, the Treasury Inspector General for Tax Administration, David C. Williams, told the Senate and House committees that since passage of the IRS Restructuring and Reform Act, TIGTA received 683 allegations, conducted 279 investigations, closed or referred 159 investigations to the IRS, and received notification from IRS that 17 employees had been removed or resigned and 10 employees received a lesser discipline as a result. 82 TIGTA has just published its semiannual report covering the period April 1, 2000 to September 30, 2000, and those findings will be included in an update of this report. According to Mr. Williams:

     The majority of Section 1203 allegations we received claimed

 

     that an IRS employee violated a provision of the Internal

 

     Revenue Manual or the Internal Revenue Code in order to

 

     retaliate or harass someone. The second largest type of

 

     allegation we received involved civil rights violations,

 

     including EEO violations. These are followed by allegations of

 

     willful destruction of documents and understatement of federal

 

     tax liability. 83

 

 

[53] IRS DATA. The commissioner's semiannual report states that 28 employees were removed for Section 1203 violations during the January 1 through June 30, 2000 period. Of this total, 26 of the cases related to willful untimely tax return (tax compliance), one involved a threat to audit for personal gain, and one involved destruction of documents to conceal a mistake. 84

[54] During the period as well, there were 57 cases coded as willful untimely tax returns. Of this total, the 26 cases stated above resulted in removal, 10 cases resulted in a mitigated penalty less than removal, and 21 cases were resolved by other actions such as resignation or retirement. 85

[55] On June 7, 2000, the IRS Commissioner's Complaint Processing and Analysis Group provided information to Congress on the implementation of Section 1203, which included data on allegations received and investigated during the period July 1998 through May 2000. Appendix table 5, below, provides the data showing that during this time period 109 substantiated Section 1203 violations occurred. Of this total, 102 related to failure to timely file federal tax return, four related to threat to audit for personal gain, and two related to understatement of federal tax liability. 86

[56] The transmittal also placed Section 1203 in context with previous practice:

     The conduct addressed in Section 1203 has always been regarded

 

     as serious misconduct. What has changed is the penalty imposed

 

     for violations. Prior to the enactment of Section 1203, the

 

     general rules for imposing discipline required a deciding

 

     official to consider a wide range of factors in arriving at the

 

     appropriate penalty. These factors include the nature and

 

     seriousness of the offense, the employee's work record, the

 

     notoriety of the offense, and the impact of the offense on

 

     confidence in the employee's ability to perform his/her duties.

 

     When these factors were applied to specific cases, a range of

 

     penalties was imposed [ranged from written counseling to

 

     suspension] . . . . [T]here is one area where Section 1203 has

 

     changed the significance of an offense. Prior to section 1203,

 

     the IRS viewed untimely payment of Federal tax liability as a

 

     more serious offense than late submission of a return. Late

 

     payment of a balance due was regarded as serious misconduct,

 

     depending on the amount due and the degree to which the payment

 

     was overdue. A return filed late with a minimal balance due, or

 

     a refund return, was not treated as a serious offense. Section

 

     1203 does not address late payment, but makes all willful late

 

     filing a removal offense. 87

 

 

[57] MANAGERS AND SUPERVISORS AND RANK AND FILE EMPLOYEES. In response to a request from CRS for data on the grades of employees disciplined for Section 1203 violations, the Commissioner's Complaint Processing and Analysis Group provided the following information on ALL DISCIPLINARY ACTIONS: data on 85 disciplinary actions for managers and supervisors at GS-15 and above for the period January 1, 1996 through June 30, 1999 88 and data on disciplinary actions (covered 566 pages with seven to 13 cases per page) for rank and file employees at GS-15 and below for the years 1996 through 2000. 89

[58] For the managers and supervisors, 30 cases were related to tax compliance during the period covered. None was specifically identified as a Section 1203 investigation.

[59] For the rank and file employees, the data for those 25 cases clearly identified as Section 1203 (all but five were Section 1203(b)(8) tax cases) showed:

     o two WG-2 wage grade laborers were removed;

 

 

     o three GS-3s (cash processing, mail and file, and

 

       miscellaneous clerk and assistant positions) were removed;

 

 

     o two GS-4s (miscellaneous clerk and assistant and mail and

 

       file positions) were removed;

 

 

     o five GS-5s (two tax examining, financial clerk and

 

       assistance, mail and file, and secretary positions) were

 

       removed; (the secretary had violated Section 1203(b)(10));

 

       one GS-5 financial clerk and assistance received written

 

       counseling for attempting access of own social security

 

       number;

 

 

     o four GS-6s (tax examining, secretary, and two accounting

 

       technician positions) were removed; (one of the accounting

 

       technicians had violated Section 1203(b)(3));

 

 

     o two GS-7s (both tax examining positions) were removed and one

 

       GS-7 (tax examining) received a 60-day suspension (although

 

       removal had been recommended for threatening to audit a

 

       taxpayer);

 

 

     o two GS-9s (internal revenue officer and contracting

 

       positions) were removed (the internal revenue officer had

 

       violated the Section 1203 provision on falsifying documents);

 

 

     o two GS-12s (internal revenue officers) were removed;

 

 

     o a GS-13 internal revenue agent was removed.

 

 

OTHER FEDERAL EMPLOYEES SUBJECT TO TERMINATION OF EMPLOYMENT

[60] Federal employees can be removed from employment based on performance or adverse action under Title 5 of the United States Code. Chapter 43 of Title 5 covers removal based on performance. Generally, an employee can be removed for unacceptable performance: failure to meet established performance standards in one or more critical elements of his or her position. The employee is entitled to advance written notice of the proposed action, to be represented by an attorney or other individual, a reasonable time to answer orally and in writing, and a written decision. An appeal to the Merit Systems Protection Board is provided. 90 A member of the Senior Executive Service (SES) receiving an unsatisfactory rating may be removed from the SES. Any senior executive who receives two unsatisfactory ratings in any period of five consecutive years must be removed from the SES. Any senior executive who twice in any period of three consecutive years receives less than fully successful ratings also must be removed from the SES. Recommendations relating to the performance of senior executives are made by performance review boards. 91

[61] Chapter 75 of Title 5 covers removal based on adverse action. Generally, an employee can be removed for such cause as will promote the efficiency of the service. A member of the SES may be removed from the SES for misconduct, neglect of duty, malfeasance, or failure to accept a directed reassignment or to accompany a position in a transfer of function. Employees and senior executives are entitled to advance written notice of the proposed action, to be represented by an attorney or other individual, a reasonable time (not less than seven days) to answer orally and in writing, and a written decision. An agency may provide for a hearing. An appeal to the Merit Systems Protection Board is provided. 92

[62] In addition to IRS employees, who can be removed for violating Section 1203 of the IRS Restructuring and Reform Act, other employees, including those discussed below, can be removed under specific circumstances. 93

OFFICER OR EMPLOYEE OF THE UNITED STATES

[63] Willful disclosure of any income tax return or return information by any officer or employee of the United States to any person, except as authorized by Title 26 of the United States Code, is a felony punishable, upon conviction, by a fine of up to $5,000 or imprisonment for up to five years, or both, together with the costs of prosecution. In addition to any other punishment, the officer or employee is to be dismissed from office or discharged from employment upon conviction. 94

[64] The head of an agency may remove an employee who has been suspended under 5 U.S.C. 7532(a) when, after such investigation and review as he considers necessary, he determines that removal is necessary or advisable in the interests of national security. The agency head's determination is final. 95 Removal does not affect the right of the individual to seek or accept employment in a federal government agency, other than the agency from which he or she was removed. The appointment of the individual may be made only after the agency head concerned has consulted with the Office of Personnel Management (OPM). On written request of the agency or the individual, OPM may determine whether the individual is eligible for employment in an agency other than the agency from which he or she was removed. 96

[65] Executive Order 10450 issued on April 27, 1953, as amended, which prescribes security requirements for government employees, authorizes the termination of any officer or employee for reasons of national security. Section 6 of the order provides:

     Should there develop at any stage of investigation information

 

     indicating that the employment of any officer or employees of

 

     the Government may not be clearly consistent with the interests

 

     of the national security, the head of the department or agency

 

     concerned or his representative shall immediately suspend the

 

     employment of the person involved if he deems such suspension

 

     necessary in the interests of the national security and,

 

     following such investigation and review as he deems necessary[,]

 

     the head of the department or agency concerned shall terminate

 

     the employment of such suspended officer in the interests of the

 

     national security, or employee whenever he shall determine such

 

     termination necessary or advisable in accordance with the said

 

     act of August 26, 1950. 97

 

 

[66] An employee or individual who violates 5 U.S.C. 7323 or 5 U.S.C. 7324, related to prohibited political activity, shall be removed from his position, and funds appropriated for the position thereafter may not be used to pay the employee or individual. If the Merit Systems Protection Board finds by unanimous vote that the violation does not warrant removal, the board is to impose suspension without pay for not less than 30 days. 98

REVENUE OFFICERS OR AGENTS

[67] The following unlawful acts of revenue officers or agents shall result in dismissal from office or discharge from employment. Upon conviction of these offenses, any officer or employee of the United States shall be fined up to $10,000 or imprisoned for up to five years, or both. The penalties apply to:

     Any officer or employee of the United States acting in

 

     connection with any revenue law of the United States --

 

 

     (1) who is guilty of any extortion or willful oppression under

 

     color of law; or

 

 

     (2) who knowingly demands other or greater sums than are

 

     authorized by law, or receives any fee, compensation, or reward,

 

     except as by law prescribed, for the performance of any duty; or

 

 

     (3) who with intent to defeat the application of any provision

 

     of this title fails to perform any of the duties of his office

 

     or employment; or

 

 

     (4) who conspires or colludes with any other person to defraud

 

     the United States; or

 

 

     (5) who knowingly makes opportunity for any person to defraud

 

     the United States; or

 

 

     (6) who does or omits to do any act with intent to enable any

 

     other person to defraud the United States; or

 

 

     (7) who makes or signs any fraudulent entry in any book, or

 

     makes or signs any fraudulent certificate, return, or statement;

 

     or

 

 

     (8) who, having knowledge or information of the violation of any

 

     revenue law by any person, or of fraud committed by any person

 

     against the United States under any revenue law, fails to

 

     report, in writing, such knowledge or information to the

 

     Secretary [of the Treasury]; or

 

 

     (9) who demands, or accepts, or attempts to collect, directly or

 

     indirectly as payment or gift, or otherwise, any sum of money or

 

     other thing of value for the compromise, adjustment, or

 

     settlement of any charge or complaint for any violation or

 

     alleged violation of law, except as expressly authorized by law

 

     so to do. 99

 

 

[68] This provision at 26 U.S.C. 7214 appears to cover more employees than Section 1203 of the IRS Restructuring and Reform Act. Section 7214 applies to any officer or employee of the United States acting in connection with any revenue law of the United States; Section 1203 applies only to IRS employees. While both provisions contain mandatory language relating to dismissal from office or discharge from employment for violations of enumerated infractions, Section 7214 provides for not only administrative discipline, but also criminal penalties for such violations: upon conviction a fine of not more than $10,000, or imprisonment of not more than 5 years, or both. Section 1203 has no criminal penalties. Moreover, while Section 1203 says that the commissioner "shall terminate the employment of any Internal Revenue Service employee if there is final administrative or judicial committed any act or omission" of infractions listed therein, it authorizes the commissioner to take a personnel action other than termination, i.e., reduced discipline, for such an act or omission. The scope of infractions warranting discipline appears broader under Section 1203 than under Section 7214. The infractions described in Section 7214 appear to be traditional criminal ones, such as extortion, demanding greater sums than authorized by law, and conspiring or colluding to defraud the United States. Those described in Section 1203 include such things as violating any right of a taxpayer, taxpayer representative, or another employee of the IRS under the Constitution of the United States, any civil right established under various civil rights acts, willful failure to file any return required by the IRS Code of 1986 on or before the due date, including any extension, and willful understatement of any tax liability. 100

DEFENSE INTELLIGENCE EMPLOYEES

[69] Employees in defense intelligence positions may be terminated by the Secretary of Defense if the secretary (1) considers that action to be in the interests of the United States; and (2) determines that the procedures prescribed in other provisions of law that authorize the termination of the employment of such employee cannot be invoked in a manner consistent with the national security. The secretary's decision is final and may not be appealed or reviewed outside the Department of Defense (DOD). The secretary's authority may be delegated only to the Deputy Secretary of Defense, the head of an intelligence component of DOD (with respect to employees of that component), or the secretary of a military department (with respect to employees of that department). An action to terminate an employee by any such official may be appealed to the Secretary of Defense. The secretary must promptly notify the congressional oversight committees of the termination. The termination of the employee does not affect his or her right to seek or accept employment with any other federal government department or agency if the employee is declared eligible for employment by the OPM Director. 101

CENTRAL INTELLIGENCE AGENCY EMPLOYEES

[70] Central Intelligence Agency (CIA) employees may have their employment terminated by the CIA Director, at his or her discretion, whenever the director deems the termination necessary or advisable in the interests of the United States. The termination of the employee does not affect his or her right to seek or accept employment with any other federal government department or agency if the employee is declared eligible for employment by the OPM Director. 102

LAW ENFORCEMENT OFFICERS

[71] Law enforcement officers convicted of felonies would be subject to mandatory removal under one version of the Treasury, Postal Service, and General Government Appropriations Bill, 2001. 103 The section would amend 5 U.S.C. Chapter 73 by adding a provision that a law enforcement officer who is convicted of a felony shall be removed from employment, without regard to 5 U.S.C. Chapter 75, on the last day of the first applicable pay period following the conviction date. The section would not prohibit removal from employment before a conviction date. 'Conviction date' means the date on which an agency has notice of the date on which a conviction of a felony is entered by a federal or state court, regardless of whether that conviction is appealed or is subject to appeal. "Law enforcement officer" has the meaning given that term under 5 U.S.C. 8331(20) or 8401(17). The provision was originally introduced on April 12, 2000 by Senator Charles Grassley as S. 2404.

CONCLUSION

[72] During the May 3, 2000 joint review hearing conducted by the Senate Committees on Finance, Appropriations, and Governmental Affairs and the House Committees on Ways and Means, Appropriations, and Government Reform, Senator Grassley associated himself with the remarks of Senator Kerrey (about a potential double standard in enforcing tax compliance) and stated: "we want to make sure that you report to us according to what Senator Kerrey asked you to do, and I may have some follow-up on that because I want to make sure that there is not an attempt out there to sabotage what we wanted to accomplish through our legislation and make it more egregious, purposely, for the purpose of doing that." 104

[73] The National Treasury Employees Union believes that Section 1203 should be modified or repealed. During the April 10, 2000 House Government Management Subcommittee hearing, president Colleen Kelley stated that "NTEU vigorously opposed Section 1203 and continues to believe that this section of the Restructuring Act should be repealed." The union views the provision as creating anxiety among IRS employees and precluding "the trust necessary to continue to move toward a modernized IRS." 105 A modification suggested by NTEU would allow discretion for mitigating circumstances (such as not applying the provision to employees who are late in filing their taxes but are owed a refund). Currently, the commissioner has sole discretion to mitigate a penalty. The union would favor granting IRS managers the opportunity to provide for a penalty other than firing.

[74] As implementation of Section 1203 proceeds and as more data on violations of Section 1203 become available, amendments to the law may be considered.

 

FOOTNOTES

 

 

1 See 26 U.S.C. 7201-7203.

2 112 Stat. 720-722, July 22, 1998, 26 U.S.C. 7804 note.

3 The word "willful" was added in the conference committee.

4 The words "or taxpayer representative" were added in the conference committee.

5 The wording is that provided by the conference committee. Under the Senate-passed bill, the provision read, "violation of the civil rights of a taxpayer or other employee of the IRS." The IRS RRA '98 Section 1203 Procedural Handbook states the following on pp. 36- 37: "Title VI of the Civil Rights Act of 1964 prohibits discrimination against individuals on the bases of race, color, or national origin, by programs receiving federal financial assistance. Title VII of the Civil Rights Act of 1964 prohibits discrimination against individuals in the workplace on the bases of race, color, religion, national origin, or sex. Title IX of the Education Amendments of 1972 prohibits discrimination on the basis of sex for anyone in an education program or activity receiving federal financial assistance. This applies only to vocational, professional and graduate higher education and public institutions of undergraduate higher education. Age Discrimination in Employment Act (ADEA) of 1967 prohibits discrimination in the workplace on the basis of age (over age 40). Age Discrimination Act of 1975 prohibits discrimination on the basis of age in programs or activities receiving federal financial assistance. The Rehabilitation Act of 1973, as amended, prohibits discrimination in the federal workplace on the basis of a qualified employee's handicapping condition in hiring, promotion and other employment actions. It also requires affirmative action for the handicapped in federal employment. Americans with Disabilities Act (ADA) prohibits discrimination against qualified individuals on the basis of their mental or physical disability in all aspects of employment including job application procedures, hiring, advancement or discharge, employee compensation, job training as well as other terms, conditions and privileges of employment."

6 The wording is that provided by the conference committee. Under the Senate-passed bill, the provision read, "falsifying or destroying documents to conceal mistakes made by the employee with respect to a matter involving a taxpayer."

7 The wording is that provided by the conference committee. Under the Senate-passed bill, the provision read, "assault or battery on a taxpayer or other IRS employee."

8 The words "taxpayer representative" were added in the conference committee.

9 26 U.S.C. 7202 provides that willful failure to pay tax, in addition to other penalties provided by law, is a felony punishable, upon conviction, by a fine up to $10,000 or imprisonment for up to five years, or both, together with the costs of prosecution. 26 U.S.C. 7203 provides that willful failure to file a tax return, supply information, or pay tax, in addition to other penalties provided by law, is a misdemeanor punishable, upon conviction, by a fine up to $25,000 or imprisonment for up to one year, or both, together with the costs of prosecution.

10 This provision was added by the conference committee.

11 109 Stat. 509, Nov. 19, 1995, 26 U.S.C. 7801 note.

12 U.S. National Commission on Restructuring the Internal Revenue Service, A Vision for a New IRS; Report of the National Commission on Restructuring the Internal Revenue Service (Washington: June 1997), pp. 19, 50. Section 3701 of Public Law 105-206 provided that "In collecting data for the report required under section 1211 of the Taxpayer Bill of Rights 2 (Public Law 104-168), the Secretary of the Treasury or the Secretary's delegate shall, not later than January 1, 2000, maintain records of taxpayer complaints of misconduct by Internal Revenue Service employees on an individual employee basis." 112 Stat. 776, July 22, 1998, 26 U.S.C. 7804 note.

13 U.S. Congress, Senate Committee on Finance, Practices and Procedures of the Internal Revenue Service, hearings, 105th Cong., 1st sess., Sept. 23, 24, 25, 1997 (Washington: GPO, 1997), p. 310. Statement of Lawrence G. Lilly, who worked for IRS for 28 years, and whose last position was district counsel.

14 Ibid., p. 314. Statement of David Patnoe, an enrolled agent, who earlier served for over 10 years as an IRS revenue officer.

15 Ibid., pp. 333-334. Statement of Bruce A. Strauss, an enrolled agent, retired from IRS after 31 years service, the last 18 of which were as division chief within the Collection Division.

16 Ibid., pp. 348-350. Statement of Witness No. 1, who for 25 years worked for the IRS Collection Division or represented taxpayers before the division.

17 Ibid., p. 351. Statement of Witness No. 2, a criminal investigator with the IRS Internal Security Division.

18 Ibid., pp. 352-353. Statement of Witness No. 3, a GS-12 IRS revenue officer with over 35 years' service.

19 Ibid., p. 354. Statement of Witness No. 4, who had more than 25 years' IRS service, the majority as a revenue officer in the Collection Division.

20 Ibid., p. 355. Statement of Witness No. 5, a long-term IRS revenue officer.

21 Ibid., p. 356. Statement of Witness No. 6, an IRS Inspection Division employee.

22 Ibid., pp. 311-312.

23 U.S. Congress, Senate Committee on Finance, IRS Oversight, hearings, 105th Cong., 2 sess., April 28, 29, 30 and May 1, 1998 (Washington: GPO, 1998), pp. 273-274.

24 Ibid., pp. 236-237. Statement of Robert Edwin Davis, an attorney for almost 40 years, greatest part of whose practice involves representing taxpayers before the IRS and the Department of Justice.

25 Ibid., pp. 239-240. Statement of J. Earl Epstein, an attorney practicing tax law for the last 35 years and representing taxpayers before the IRS.

26 Ibid., p. 56. Statement of Philip McNaughton, an attorney representing taxpayers before the IRS.

27 Ibid., p. 58. Statement of Ray Cody Mayo, Jr., an assistant district attorney, board certified in taxation, who also represents taxpayers before the IRS.

28 Ibid., pp. 75-76. Statement of John Colaprete, a restaurant owner.

29 Ibid., pp. 80-81. Statement of Richard Gardner, the owner of a tax service company.

30 Ibid., pp. 82. Statement of W.A. Moncrief, Jr., the owner of an oil company.

31 Ibid., p. 106. Statement of Leroy W. Warren, a member of the NAACP National Board of Directors.

32 Ibid., pp. 132, 140, 143. Statement of Maureen O'Dwyer, a GS-13 international examiner, Manhattan District of the IRS.

33 Ibid., p. 147. Statement of Minh Thi Johnson, a revenue agent with IRS's Los Angeles District Office.

34 Ibid., pp. 148-149. Statement of Michael Ayala, an IRS analyst with over 30 years' service.

35 Ibid., pp. 152-154. Statement of Ginger Mary Jarvis, an acting team coordinator, IRS Manhattan District Office, with 23 years of tax experience in the public and private sectors) [sic].

36 Ibid., p. 172. Statement of Tommy A. Henderson, a special agent, IRS Criminal Investigation Division, with over 25 years' service.

37 Ibid., pp. 176-178. Statement of Patricia J. Gernt, a former special agent, IRS Criminal Investigation Division, Nashville District Office.

38 Ibid., pp. 180-181. Statement of Barbara Latham, a former tax fraud investigative aide, IRS Criminal Investigation Division, Nashville District Office, with 17 years' IRS service.

39 Ibid., pp. 19, 21. Statement of Yvonne D. DesJardins, chief of the Employee and Labor Relations Section, Personnel Branch, IRS, Washington, DC.

40 U.S. Congress, Senate Committee on Appropriations, Internal Revenue Service's Methods, special hearing, 105th Cong., 2 sess., April 14, 1998 (Washington: GPO, 1998), pp. 12-13. Statement of Linda Sanders.

41 Ibid., pp. 14-15. Statement of Dennis Marty.

42 Ibid., p. 27. Statement of Dr. Alvin Stjernholm.

43 Ibid., p. 33. Statement of Robert Lesher.

44 Ibid., pp. 42-43. Statement of Doris Martinez, a former IRS revenue agent, now in private tax practice.

45 Congressional Record, daily edition, vol. 143, Nov. 5, 1997, p. H10046.

46 U.S. Congress, House Committee on Ways and Means, Internal Revenue Service Restructuring and Reform Act of 1997, report to accompany H.R. 2676, 105th Cong., 1st sess., H. Rept. 105-364, part 1 (Washington: GPO, 1997), p. 77.

47 Ibid., p. 78.

48 Congressional Record, daily edition, vol. 144, May 7, 1998, p. S4520.

49 U.S. Congress, Senate Committee on Finance, Internal Revenue Service Restructuring and Reform Act of 1998, report to accompany H.R. 2676, 105th Cong., 2nd sess., S. Rept. 105-174 (Washington: GPO, 1998), pp. 99-100. (Hereafter referred to as Senate Committee Report.)

50 U.S. Congress, Conference Committees, 1998, Internal Revenue Service: Restructuring and Reform Act of 1998, conference report to accompany H.R. 2676, H. Rept. 105-599, 105th Cong., 2nd sess. (Washington: GPO, 1998), pp. 303-304.

51 Senate Committee Report, pp. 38-39.

52 Congressional Record, daily edition, vol. 144, May 4, 1998, p. S4183. When the termination provision was amended during Senate consideration of the bill, Senator Roth stated that "this amendment addresses a serious problem that came out during the hearings held by the Finance Committee last week." Congressional Record, daily edition, vol. 144, May 7, 1998, p. S4486.

53 Congressional Record, daily edition, vol. 144, May 7, 1998, p. S4486. Three acts or omissions were added by Senator Gramm's amendment. His statement explaining the amendment appears to group (8) and (9) when he speaks of the "second provision" in the quotation.

54 Ibid.

55 Congressional Record, daily edition, vol. 144, June 25, 1998, p. H5368. Congressional Record, daily edition, vol. 144, July 9, 1998, p. S7723.

56 U.S. General Accounting Office, Tax Administration: Investigation of Allegations of Taxpayer Abuse and Employee Misconduct Raised at Senate Finance Committee's IRS Oversight Hearings, GAO report OSI-99-9R (Washington: May 24, 1999). GAO declined to provide a copy of the report to CRS, stating that the report was "fully restricted." The Washington Post and Government Executive reported on an edited version of the report, which was released to Tax Notes. Both publications quoted the GAO finding that "Our investigation established that the allegations themselves had been based on an incomplete awareness of the total circumstances surrounding the matters." The press secretary for the Senate Committee on Finance is quoted: "The GAO, while they cannot confirm what some of these witnesses said, they also cannot discredit what they have said." See Albert B. Crenshaw and Stephen Barr, "GAO Report Exonerates IRS on '98 Accusations," Washington Post, April 25, 2000, p. E1 and Katy Saldarini, "Report Finds No Evidence for Claim of IRS Misconduct," Government Executive, April 26, 2000. Available on the Internet at [http://www.govexec.com]. See also footnote 71.

57 U.S. General Accounting Office, Tax Administration: Allegations of IRS Employee Misconduct, GAO report GGD-99-82 (Washington: May 1999), pp. 1-3.

58 Ibid., p. 4.

59 The regular disciplinary process is codified at 5 U.S.C. Chapter 43 on unacceptable performance and 5 U.S.C. Chapter 75 on adverse actions.

60 U.S. Dept. of the Treasury, Internal Revenue Service, RRA '98 Section 1203 Procedural Handbook, document 11043 (Washington: May 1999). U.S. Congress, Joint Committee on Taxation, Joint Review of the Strategic Plans and Budget of the Internal Revenue Service, 2000, hearing before the Senate Committees on Finance, Appropriations, and Governmental Affairs and the House Committees on Ways and Means, Appropriations, and Government Reform, 106th Cong., 2nd sess., May 3, 2000 (Washington: GPO, 2000), p. 122. (Hereafter cited as Joint Review Hearing.)

61 Joint Review Hearing, p. 102.

62 Ibid., pp. 103-104.

63 U.S. Treasury Inspector General for Tax Administration, Memorandum for Commissioner Rossotti, The Internal Revenue Service Can Further Improve Its Complaint Processing Procedures and Systems (Washington: Sept. 1999), p. 10. Printed from the Internet at [http://www.ustreas.gov/tigta/reports/199910070fr.html], visited Sept. 6, 2000.

64 Ibid., p. 11.

65 Meeting with staff of the IRS Commissioner's Complaint Processing and Analysis Group, Sept. 13, 2000.

66 U.S. Congress, House Committee on Ways and Means, Subcommittee on Oversight, Hearing on the Implementation of the Internal Revenue Service Restructuring and Reform Act, hearing, 106th Cong., 1st sess., July 22, 1999 (unpublished). Statement of Charles O. Rossotti, Commissioner, Internal Revenue Service.

67 U.S. Congress, Senate Committee on Finance, Hearing on the Status of Internal Revenue Service Reform, hearing, 106th Cong., 2nd sess., Feb. 2, 2000 (unpublished). Testimony of David C. Williams, Treasury Inspector General for Tax Administration.

68 Joint Review Hearing.

69 Ibid., p. 89.

70 Ibid., p. 97. Table 6 in the appendix, below, shows, by department and agency, the number of federal employees with unpaid income taxes as of Oct. 1999. The Washington Post reported: "Those in the federal government, however, are far more dutiful about paying taxes than is the public at large. Nationally, 8.12 percent of taxpayers owed back taxes, according to the IRS, while 5.25 percent of all government workers and retirees were behind." The newspaper also stated that "The IRS reported that 3.33 percent of its employees were behind on their taxes, including 1.87 percent who had not filed or paid." Albert B. Crenshaw and Stephen Barr, "Tax Truants Found in Capitol," The Washington Post, Mar. 30, 2000, p. A19.

71 Ibid., pp. 144, 191. See footnote 56.

72 Unless otherwise referenced, this section presents the views of NTEU as they were expressed to CRS during an Aug. 22, 2000 telephone conversation.

73 NTEU's Kelley Says IRS Report on Congressional Tax Liability Shows Basic Unfairness to IRS Employees," March 31, 2000. Printed from the Internet at [http://www.nteu,org/pressindex], visited Aug. 17, 2000.

74 U.S. Congress, House Committee on Government Management, Subcommittee on Government Management, Information, and Technology, Oversight of the Internal Revenue Service: The Commissioner Reports, hearing, 106th Cong., 2d sess., April 10, 2000 (unpublished). Statement of Colleen M. Kelley, National President, National Treasury Employees Union. (Hereafter referred to as Kelley Testimony.)

75 "NTEU President Kelley Wins Assurance from Treasury Tax IG That Investigation Policy Is Not a Form of Quota," Nov. 19, 1999. Printed from the Internet at [http://www.nteu.org/pressindex], visited Aug. 16, 2000.

76 Memorandum from Maureen Gilman, director of legislation, National Treasury Employees Union to CRS, Sept. 12, 2000. (Received via facsimile.)

77 "Remaking the IRS: What Role for Federal Managers?," The Federal Manager, Fall 1999, pp. 8-9. The interview was conducted by an IRS manager from the Manhattan, NY IRS district office who was also a member of the Federal Managers Association.

78 Ibid., p. 10.

79 The data included in this report are the most current provided to CRS as of the cover date and will be updated as additional data are provided.

80 U.S. Department of the Treasury, Internal Revenue Service, IRS to Share Disciplinary Information with NTEU, IR-1999-71, Aug. 23, 1999.

81 U.S. Department of the Treasury, Internal Revenue Service, Commissioner's Semiannual Disciplinary Actions Report (Washington: Sept. 2000). Provided to CRS during a Sept. 13, 2000 meeting. (Hereafter referred to as the Commissioner's Semiannual Report.)

82 Joint Review Hearing, p. 154.

83 Ibid.

84 Commissioner's Semiannual Report, p. 2.

85 Ibid.

86 The group's report was published in the Joint Review Hearing, p. 109.

87 Ibid., p. 101.

88 U.S. Internal Revenue Service, Summary of Disciplinary Actions, Jan. 11, 2000. Sent to CRS by facsimile Sept. 15, 2000. The IRS retained the merit pay designation 'GM' when that program sunset, hence the designation of some of the managers and supervisors as GM- 15.

89 Received by CRS, in-person, Oct. 18, 2000.

90 5 U.S.C. 4301 and 5 U.S.C. 4303.

91 5 U.S.C. 4314.

92 5 U.S.C. 7513 and 5 U.S.C. 7543.

93 Some provisions of Title 18 of the U.S. Code render a person ineligible to hold government office. See 18 U.S.C. 201, relating to bribery of public officials and witnesses; 18 U.S.C. 2381, relating to treason; 18 U.S.C. 2383, relating to rebellion or insurrection; and 18 U.S.C. 2385, relating to advocating the overthrow of the government.

94 26 U.S.C. 7213.

95 5 U.S.C. 7532(b).

96 5 U.S.C. 7312.

97 5 U.S.C. 7311 note.

98 5 U.S.C. 7326.

99 26 U.S.C. 7214.

100 Analysis provided by Thomas J. Nicola, legislative attorney, American Law Division, Congressional Research Service.

101 10 U.S.C. 1609.

102 50 U.S.C. 40314(g).

103 H.R. 4516, vetoed Oct. 30, 2000. Section 1001 contains provisions of H.R. 4985. See Section 639 of H.R. 4985.

104 Joint Review Hearing, p. 144.

105 Kelley Testimony.

 

END OF FOOTNOTES

 

 

* * * * *

APPENDIX

 _____________________________________________________________________

 

     TABLE 1. MEANING OF "WILLFUL" AND "INTENT" UNDER SECTION 1203

 

 _____________________________________________________________________

 

 Section 1203 Provision             Intent Requirement

 

 _____________________________________________________________________

 

 (b)(1) Willful failure to obtain   Willful means actual knowledge

 

 the required approval signatures   or reckless disregard of the

 

 on documents authorizing the       requirements to obtain signature

 

 seizure of a taxpayer's home,      approvals.

 

 personal belongings, or business

 

 assets

 

 _____________________________________________________________________

 

 (b)(2) Providing a false           Intent in this provision

 

 statement under oath with          requires that the employee (1)

 

 respect to a material matter       knew the statement was incorrect

 

 involving a taxpayer or            or made recklessly without an

 

 taxpayer's representative          honest belief in its truth. and

 

                                    (2) made it to mislead or

 

                                    deceive.

 

 _____________________________________________________________________

 

 (b)(3)(A) With respect to a        Intent means that:

 

 taxpayer, taxpayer

 

 representative, or other           (A) The employee's conduct must

 

 employee of the Internal Revenue   violate clearly established

 

 Service, the violation of -- (A)   constitutional rights, of which

 

 any right under the Constitution   a reasonable person would be

 

 of the United States;              aware.

 

 

 (b)(3)(B) With respect to a        (B) The employee's conduct must

 

 taxpayer, taxpayer                 be motivated by discrimination

 

 representative, or other           (i.e. treating employees,

 

 employee of the Internal Revenue   taxpayers, or taxpayer

 

 Service, the violation of -- (B)   representatives differently on

 

 any civil right established        the basis of race, sex, color,

 

 under -- (i) title VI or VII of    religion, national origin, age,

 

 the Civil Rights Act of 1964; (ii) or disability as defined by the

 

 title IX of the Education          civil rights statutes).

 

 Amendments of 1972; (iii) the

 

 Age Discrimination in Employment

 

 Act of 1967; (iv) the Age

 

 Discrimination Act of 1975; (v)

 

 section 501 or 504 of the

 

 Rehabilitation Act of 1973; or

 

 (vi) title I of the Americans

 

 With Disabilities Act of 1990.

 

 _____________________________________________________________________

 

 (b)(4) Falsifying or destroying    Intent in this provision

 

 documents to conceal mistakes      requires that the falsification

 

 made by any employee with          or destruction of the document

 

 respect to a matter involving a    must have been done to conceal

 

 taxpayer or taxpayer               mistakes.

 

 representative

 

 _____________________________________________________________________

 

 (b)(5) Assault or battery on a     Intent means that the assault

 

 taxpayer, taxpayer                 (imminent threat of a battery)

 

 representative, or other           (an unwanted touching) must have

 

 employee of the Internal Revenue   been done deliberately or

 

 Service, but only if there is a    purposefully.

 

 criminal conviction, or a final

 

 judgment by a court in a civil

 

 case, with respect to the

 

 assault or battery

 

 _____________________________________________________________________

 

 (b)(6) Violations of the           Intent means that the violation

 

 Internal Revenue Code of 1986,     of Code, regulations, or

 

 Department of Treasury             policies (including the IRM)

 

 regulations, or policies of the    must have been done for the

 

 Internal Revenue Service           purpose of retaliating against

 

 (including the Internal Revenue    or harassing a taxpayer,

 

 Manual [IRM]) for the purpose of   taxpayer representative or other

 

 retaliating against, or            IRS employee.

 

 harassing, a taxpayer, taxpayer

 

 representative, or other

 

 employee of the Internal Revenue

 

 Service

 

 _____________________________________________________________________

 

 (b)(7) Willful misuse of the       Willful in this provision means

 

 provisions of section 6103 of      the actual knowledge of or

 

 the Internal Revenue Code of       reckless disregard of the

 

 1986 for the purpose of            statutory provisions for

 

 concealing information from a      disclosing information in

 

 congressional inquiry              response to a congressional

 

                                    inquiry.

 

 _____________________________________________________________________

 

 (b)(8) Willful failure to file     Willful means the voluntary

 

 any return of tax required under   intentional violation of a known

 

 the Internal Revenue Code of       legal duty (timely filing of tax

 

 1986 on or before the date         return), for which there is no

 

 prescribed therefor (including     reasonable cause.

 

 any extensions), unless such

 

 failure is due to reasonable

 

 cause and not to willful neglect

 

 _____________________________________________________________________

 

 (b)(9) Willful understatement of   Willful means the voluntary

 

 Federal tax liability, unless      intentional violation of a known

 

 such understatement is due to      legal duty (accurate reporting

 

 reasonable cause and not to        of tax obligation) for which

 

 willful neglect                    there is no reasonable cause.

 

 _____________________________________________________________________

 

 (b)(10) Threatening to audit a     Intent in this provision means

 

 taxpayer for the purpose of        that the threat to audit must

 

 extracting personal gain or        have been made to extract

 

 benefit                            personal gain or benefit.

 

 _____________________________________________________________________

 

 Source. U.S. Dept. of the Treasury, Internal Revenue Service, RRA '98

 

 Section 1203 Procedural Handbook, document 11043 (Washington: May

 

 1999), pp. 4-5.

 

 _____________________________________________________________________

 

 

TABLE 2a. PROCEDURES FOR HANDLING ALLEGED ACTS OR OMISSIONS STATED IN SECTION 1203(b)(2), (b)(4), (b)(5), (b)(7), AND (b)(10)

                       ACT OR OMISSION ALLEGED

 

 

SECTION 1203

 

 

(b)(2) Providing a false statement under oath with respect to a

 

material matter involving a taxpayer or taxpayer representative;

 

 

(b)(4) Falsifying or destroying documents to conceal mistakes made by

 

any employee with respect to a matter involving a taxpayer or

 

taxpayer representative:

 

 

(b)(5) Assault or battery on a taxpayer, taxpayer representative, or

 

other employee of the Internal Revenue Service, but only if there is

 

a criminal conviction, or a final judgment by a court in a civil

 

case, with respect to the assault or battery;

 

 

(b)(7) Willful misuse of the provisions of section 6103 of the

 

Internal Revenue Code of 1986 for the purpose of concealing

 

information from a congressional inquiry;

 

 

(b)(10) Threatening to audit a taxpayer for the purpose of extracting

 

personal gain or benefit.

 

 

                             PROCEDURES

 

 

NO 1203 VIOLATION.

 

 

     Complaint is received.

 

 

     Case referred by phone to Treasury Inspector General for Tax

 

Administration (TIGTA) for investigation.

 

 

     Management completes Allegation Referral Form 12217.

 

 

     TIGTA investigates.

 

 

     TIGTA report of investigation to head of office.

 

 

     Management assesses 1203 violation.

 

 

     No 1203 violation.

 

 

     Routine administrative processing.

 

 

     Case ends.

 

 

1203 VIOLATION WITH MITIGATION RECOMMENDED.

 

 

     Same steps as stated immediately above through "Management

 

assesses 1203 violation."

 

 

     1203 violation determined.

 

 

     Proposal letter issued to employee.

 

 

     Employee provides oral or written reply.

 

 

     Deciding official validates 1203 violation.

 

 

     Case sent to the review board.

 

 

     Mitigation recommended.

 

 

     Case referred to the commissioner.

 

 

     If the commissioner mitigates the penalty, a decision is issued

 

and the action is effected.

 

 

     If the commissioner does not mitigate the penalty, a decision is

 

issued and the employee is terminated.

 

 

1203 VIOLATION WITH NO MITIGATION RECOMMENDED.

 

 

     Same steps as stated immediately above through "Case sent to the

 

review board."

 

 

     Mitigation not recommended.

 

 

     Employee is terminated by the deciding official.

 

 

TABLE 2b. PROCEDURES FOR HANDLING ALLEGED ACTS OR OMISSIONS STATED IN

 

              SECTION 1203(b)(1), (b)(3)(A), AND (b)(6)

 

 

                       ACT OR OMISSION ALLEGED

 

 

SECTION 1203

 

 

(b)(1) Willful failure to obtain the required approval signatures on

 

documents authorizing the seizure of a taxpayer's home, personal

 

belongings, or business assets;

 

 

(b)(3)(A) With respect to a taxpayer, taxpayer representative, or

 

other employee of the Internal Revenue Service, the violation of (A)

 

any right under the Constitution of the United States;

 

 

(b)(6) Violations of the Internal Revenue Code of 1986, Department of

 

[the] Treasury regulations, or policies of the Internal Revenue

 

Service (including the Internal Revenue Manual) for the purpose of

 

retaliating against, or harassing, a taxpayer, taxpayer

 

representative, or other employee of the Internal Revenue Service.

 

 

                             PROCEDURES

 

 

                         TAXPAYER COMPLAINT

 

 

DIVISION LEVEL FINDS NO 1203 VIOLATION.

 

 

     Complaint is received.

 

 

     Management completes Allegation Form 12217.

 

 

     Management gathers information.

 

 

     Division level determines whether threshold criteria are met

 

(for (b)(1), the threshold is whether required approval signatures

 

were obtained).

 

 

     Threshold not met, no 1203 violation.

 

 

     Administrative action process, if applicable.

 

 

     Case ends.

 

 

     Management finds no 1203 Violation.

 

 

     Same steps as stated immediately above through "Division level

 

determines whether threshold criteria are met."

 

 

     Potential 1203 violation.

 

 

     Case forwarded to Labor Relations (LR)

 

 

     Office for referral to TIGTA.

 

 

     TIGTA investigates.

 

 

     TIGTA report of investigation to head of office.

 

 

     Management determines 1203 violation.

 

 

     No 1203 violation.

 

 

     Initiate administrative action.

 

 

     Return Form 12217 to LR.

 

 

     Case Ends.

 

 

MANAGEMENT FINDS 1203 VIOLATION.

 

 

     Same steps as stated immediately above through "Management

 

determines 1203 violation."

 

 

     1203 violation.

 

 

     Proposal letter issued to employee.

 

 

     Employee provides oral or written reply.

 

 

     Deciding official validates 1203 violation.

 

 

     Case sent to the review board.

 

 

     If mitigation is not recommended, the employee is terminated by

 

the deciding official.

 

 

     If mitigation is recommended, the case is referred to the

 

commissioner.

 

 

     If the commissioner mitigates the penalty, a decision is issued

 

and the action is effected.

 

 

     If the commissioner does not mitigate the penalty, a decision is

 

issued and the employee is terminated.

 

 

                         INTERNAL COMPLAINT

 

 

NO 1203 VIOLATION.

 

 

     Complaint is received.

 

 

     Management completes Allegation Form 12217.

 

 

     Form 12217 forwarded to LR.

 

 

     LR referred to head of office.

 

 

     Head of office makes threshold determination.

 

 

     No 1203 violation.

 

 

     Initiate administrative action.

 

 

     Return Form 12217 to LR.

 

 

     Case ends.

 

 

MANAGEMENT FINDS NO 1203 VIOLATION.

 

 

     Same steps as stated immediately above through "Head of office

 

makes threshold determination."

 

 

     Potential 1203 violation.

 

 

     Refer to servicing LR office for forwarding to TIGTA.

 

 

     TIGTA investigates.

 

 

     TIGTA report of investigation to head of office.

 

 

     Management determines 1203 violation.

 

 

     No 1203 violation.

 

 

     Initiate administrative action.

 

 

     Return Form 12217 to LR.

 

 

     Case ends.

 

 

MANAGEMENT FINDS 1203 VIOLATION.

 

 

     Same steps as stated immediately above through "Management

 

determines 1203 violation."

 

 

     1203 violation.

 

 

     Proposal letter issued to employee.

 

 

     Employee provides oral or written reply.

 

 

     Deciding official validates 1203 violation.

 

 

     Case sent to the review board.

 

 

     If mitigation is not recommended, the employee is terminated by

 

the deciding official.

 

 

     If mitigation is recommended, the case is referred to the

 

commissioner.

 

 

     If the commissioner mitigates the penalty, a decision is issued

 

and the action is effected.

 

 

     If the commissioner does not mitigate the penalty, a decision is

 

issued and the employee is terminated.

 

 

TABLE 2c. PROCEDURES FOR HANDLING ALLEGED ACTS OR OMISSIONS STATED IN

 

                        SECTION 1203(b)(3)(B)

 

 

                 ACT OR OMISSION ALLEGED

 

SECTION 12O3

 

 

(b)(3)(B) With respect to a taxpayer, taxpayer representative, or

 

other employee of the Internal Revenue Service, the violation of --

 

(B) any civil right established under -- (i) title VI or VII of the

 

Civil Rights Act of 1964; (ii) title IX of the Education Amendments

 

of 1972; (iii) the Age Discrimination in Employment Act of 1967; (iv)

 

the Age Discrimination Act of 1975; (v) section 501 or 504 of the

 

Rehabilitation Act of 1973; or (vi) title I of the Americans With

 

Disabilities Act of 1990.

 

 

                             PROCEDURES

 

 

                    TAXPAYER-INITIATED COMPLAINT

 

 

     Case referred to TIGTA for investigation.

 

 

     TIGTA refers to head of office or LR for determination of 1203

 

violation and disposition.

 

 

     Determination of whether adverse action or administrative action

 

apply.

 

 

     Either adverse action process or administrative action process

 

followed.

 

 

                    EMPLOYEE-INITIATED COMPLAINT

 

 

     Employee elects either a negotiated process or an Equal

 

Employment Opportunity (EEO) process. If the negotiated process is

 

selected, the negotiated procedures apply. If the EEO process is

 

selected, the EEO procedures apply.

 

 

EEO PROCEDURES OR NEGOTIATED PROCEDURES -- NO FINDING OF

 

DISCRIMINATION OR NO SETTLEMENT AGREEMENT.

 

 

     EEO issues closed by withdrawal, lapses of action, or no finding

 

of discrimination. Cases referred to head of office through LR. Case

 

ends.

 

 

EEO PROCEDURES OR NEGOTIATED PROCEDURES -- A FINDING OF

 

DISCRIMINATION OR SETTLEMENT AGREEMENT.

 

 

     There are five kinds of referral to Discrimination Complaint

 

Review Unit (DCRU) under a finding of discrimination or settlement

 

agreement. (1) EEO issues raised in the negotiated grievance process

 

are referred to DCRU by management (2) Settlement agreements at the

 

pre-complaint stage are referred to DCRU by the servicing EEO office;

 

(3) Settlement agreements at the formal complaint stage are referred

 

to DCRU by the regional complaints center; (4) Settlement agreements

 

and findings of discrimination where the aggrieved elected for a non-

 

hearing decision are referred to DCRU by the Office of Equal

 

Opportunity Program (OEOP); (5) Settlement agreements and findings of

 

discrimination at an administrative or judicial hearing are referred

 

to DCRU by General Legal Services.

 

 

     All these referrals go to the National Director EEO

 

Discrimination Complaint Review Unit. DCRU makes a preliminary

 

determination of potential 1203 violation.

 

 

     If no potential 1203 violation, LR coordinates with head of

 

office that will make the final decision.

 

 

     If a potential 1203 violation, the case is forwarded to TIGTA

 

with a copy to LR.

 

 

     TIGTA conducts an investigation, focused on whether any IRS

 

employee intentionally violated one of the listed laws.

 

 

     TIGTA report of investigation to head of office.

 

 

     Management determines potential 1203 violation.

 

 

MANAGEMENT FINDS NO 1203 VIOLATION.

 

 

     No 1203 violation.

 

 

     Initiate administrative action.

 

     Return Form 12217 to LR.

 

 

     Case ends.

 

 

MANAGEMENT FINDS 1203 VIOLATION.

 

 

     1203 violation.

 

 

     Proposal letter issued to employee.

 

 

     Employee provides oral or written reply.

 

 

     Deciding official validates 1203 violation.

 

 

     Case sent to the Review Board.

 

 

     If mitigation is not recommended, the employee is terminated by

 

the deciding official.

 

 

     If mitigation is recommended, the case is referred to the

 

commissioner.

 

 

     If the commissioner mitigates the penalty, a decision is issued

 

and the action is effected.

 

 

     If the commissioner does not mitigate the penalty, a decision is

 

issued and the employee is terminated.

 

 

TABLE 2d. PROCEDURES FOR HANDLING ALLEGED ACTS OR OMISSIONS STATED IN

 

SECTION 1203(b)(8) AND (b)(9)

 

 

                       ACT OR OMISSION ALLEGED

 

 

SECTION 1203

 

 

(b)(8) Willful failure to file any return of tax required under the

 

Internal Revenue Code of 1986 on or before the date prescribed

 

therefor (including any extensions), unless such failure is due to

 

reasonable cause and not to willful neglect;

 

 

(b)(9) Willful understatement of Federal tax liability, unless such

 

understatement is due to reasonable cause and not to willful neglect.

 

 

                             PROCEDURES

 

 

NO 1203 VIOLATION.

 

 

     Employee Tax Compliance (ETC) Branch contacts employee.

 

 

     Employee either provides information to ETC or fails to respond

 

to ETC.

 

 

     If ETC cannot resolve the case based on the information provided

 

by the employee. ETC refers case to LR for coordination with

 

management.

 

 

     Management gathers facts.

 

 

     Management determines 1203 violation.

 

 

     No 1203 violation.

 

 

     Administrative action process.

 

 

     Case ends.

 

 

1203 VIOLATION WITH MITIGATION RECOMMENDED.

 

 

     Same steps as stated immediately above through "Management

 

determines 1203 violation." (If criminal implications, the case is

 

referred to TIGTA for investigation.) 1203 violation.

 

 

     LR issues proposal letter to employee.

 

 

     Employee returns oral or written reply.

 

 

     Deciding official validates 1203 violation.

 

 

     Case sent to review board.

 

 

     Mitigation recommended.

 

 

     Case referred to the commissioner.

 

 

     If the commissioner mitigates the penalty, a decision is issued

 

and the action is effected.

 

 

     If the commissioner does not mitigate the penalty, a decision is

 

issued and the employee is terminated by the deciding official.

 

 

1203 VIOLATION WITH NO MITIGATION RECOMMENDED.

 

 

     Same steps as stated immediately above through "Case sent to the

 

review board."

 

 

     Mitigation not recommended.

 

 

     Employee is terminated by the deciding official.

 

 

TABLE 2 SOURCES. U.S. Congress, Joint Committee on Taxation. Joint

 

Review of the Strategic Plans and Budget of the Internal Revenue

 

Service, 2000, hearing before the Senate Committees on Finance,

 

Appropriations, and Governmental Affairs and the House Committees on

 

Ways and Means, Appropriations, and Government Reform, 106 th Cong.,

 

2nd sess., May 3, 2000 (Washington: GPO, 2000). pp. 123-127. U.S.

 

Dept. of the Treasury, Internal Revenue Service, RRA '98 Section 1203

 

Procedural Handbook, document 11043 (Washington: May 1999), pp. 14-

 

21.

 

 

 ______________________________________________________________________

 

  TABLE 3. ALL DISCIPLINARY ACTIONS, JANUARY 1 THROUGH JUNE 30, 2000

 

 ______________________________________________________________________

 

 

 DISCIPLINARY ACTION         ALL OFFENSES   EMPLOYEE TAX COMPLIANCE

 

 ______________________________________________________________________

 

 

 Written Counseling             1,139                588

 

 Admonishment                     466                343

 

 Reprimand                        301                139

 

 Suspension                       257                 91

 

 Removal                          155                 26

 

                                _____              _____

 

 Total                          2,318              1,187

 

 ______________________________________________________________________

 

 

 SOURCE. U.S. Department of the Treasury. Internal Revenue Service,

 

 Commissioner's Semiannual Disciplinary Actions Report, Sept. 13,

 

 2000. Not all tax compliance cases are Section 1203 violations. The

 

 26 removals for tax compliance reasons were Section 1203 violations.

 

 Data provided to CRS during a meeting with staff of the IRS

 

 Commissioner's Complaint Processing and Analysis Group, Sept. 13,

 

 2000.

 

 ______________________________________________________________________

 

 

     TABLE 4. ALL DISCIPLINARY ACTIONS BY GRADE, JANUARY 1 THROUGH

 

                             JUNE 30, 2000

 

 ______________________________________________________________________

 

 Grade                 Number of Employees     Disciplinary Actions

 

                      (As of Feb. 26, 2000)

 

 ______________________________________________________________________

 

 GS-1                             169                  3

 

 GS-2                           1,023                 11

 

 GS-3                           4,611                171

 

 GS-4                           7,515                363

 

 GS-5                           9,164                294

 

 GS-6                           6,873                209

 

 GS-7                          11,492                305

 

 GS-8                           8,387                223

 

 GS-9                           7,332                126

 

 GS-10                            840                 21

 

 GS-11                          9,519                148

 

 GS-12                         11,865                159

 

 GS-13                         14,466                186

 

 GS-14                          5,606                 51

 

 GS-15                          1,913                 44

 

 Executives                       279                  4

 

 _____                        _______              _____

 

 Total                        101,054              2,318

 

 ______________________________________________________________________

 

 

 SOURCE. U.S. Department of the Treasury, Internal Revenue Service,

 

 Commissioner's Semiannual Disciplinary Actions Report, Sept. 13,

 

 2000. The report does not provide data on the number of cases

 

 investigated nor on the nature of the misconduct by grade. Tax

 

 delinquency, absence and leave, underreported tax liability (but not

 

 in violation of section 1203), and indebtedness/excessive borrowing

 

 are the most frequent offenses which result in discipline. Not all

 

 tax compliance cases are section 1203 violations. Data provided to

 

 CRS during a meeting with staff of the IRS Commissioner's Complaint

 

 Processing and Analysis Group, Sept. 13, 2000.

 

 

 ______________________________________________________________________

 

     TABLE 5. SECTION 1203 ALLEGATIONS RECEIVED AND INVESTIGATED,

 

                         JULY 1998 TO MAY 2000

 

 ______________________________________________________________________

 

 Type of                 Received    Received   Investiga-     Substan-

 

 Allegation              by          by         tions or       tiated

 

                         TIGTA       IRS        Inquiries      Section

 

                                                Completed by   1203

 

                                                TIGTA or IRS   Viola-

 

                                                               tions

 

 ______________________________________________________________________

 

 (b)(1) seizure           14            8            7            0

 

 without approvals

 

 

 (b)(2) false             15            8            5            0

 

 statement under

 

 oath

 

 

 (b)(3) violation        169          193          170            0

 

 of Constitutional

 

 or civil rights

 

 

 (b)(4) falsifying        38           46           24            1

 

 or destroying

 

 records

 

 

 (b)(5) assault            0            7            3            0

 

 or battery

 

 

 (b)(6) retaliate        399          990          830            0

 

 or harass

 

 

 (b)(7) misuse of          0            3            3            0

 

 5 U.S.C. 6103

 

 

 (b)(8) untimely           5          443          256          102

 

 filing of federal

 

 tax return

 

 

 (b)(9)                   30           31           15            2

 

 understatement

 

 of federal tax

 

 liability

 

 

 (b)(10) threat           13           52           36            4

 

 to audit for

 

 personal gain

 

 ______________________________________________________________________

 

 Total                   683          1781        1349          109

 

 ______________________________________________________________________

 

 

 SOURCE. U.S. Congress, Joint Committee on Taxation, Joint Review of

 

 the Strategic Plans and Budget of the Internal Revenue Service, 2000,

 

 hearing before the Senate Committees on Finance, Appropriations, and

 

 Governmental Affairs and the House Committees on Ways and Means,

 

 Appropriations, and Government Reform, 106th Cong., 2nd sess., May 3,

 

 2000 (Washington: GPO, 2000), p. 109. The numbers cannot be added

 

 across columns. Most of the allegations received by TIGTA are

 

 referred to the IRS for action either as a report of investigation or

 

 a referral for a management inquiry. The IRS has not yet submitted an

 

 update of this table to CRS.

 

 

 ______________________________________________________________________

 

 TABLE 6. FEDERAL EMPLOYEES' UNPAID INCOME TAXES, OCTOBER 1999

 

 ______________________________________________________________________

 

 Department       Number of     Number of          Total      Number of

 

                  Employees     Taxpayers          Balance    Taxpayers

 

                                with a             Owed($)    with

 

                                Balance Due                   Install-

 

                                or Nonfiler                   ment

 

                                Accounts                      Agree

 

                                                              ments

 

 ______________________________________________________________________

 

                          LEGISLATIVE BRANCH

 

 ______________________________________________________________________

 

 U.S. Senate           6,304           476          2,400,910      162

 

 

 U.S. House of        10,489           881          8,135,740      255

 

 Representatives

 

 ______________________________________________________________________

 

                           Executive Branch

 

        Executive Office of the President and Cabinet Agencies

 

 ______________________________________________________________________

 

 Executive Office      1,632           107            652,210       36

 

 of the

 

 President

 

 

 Agriculture         108,929         4,231         17,365,688    1,604

 

 

 Commerce             43,707         2,809         14,798,180    1,024

 

 

 Defense             684,388        50,205        217,385,014   19,502

 

 

 Education             4,915           466          3,432,267      188

 

 

 Energy               15,859           715          3,508,952      276

 

 

 Health and Human     60,420         3,920         20,704,809    1,558

 

 Services

 

 

 Housing and Urban    10,252           878          6,094,640      358

 

 Development

 

 

 Interior             72,830         3,290         15,162,903    1,237

 

 

 Justice             124,910         4,944         16,876,311    2,345

 

 

 Labor                15,908         1,226         10,125,845      544

 

 

 State                17,128         1,074          3,474,781      254

 

 

 Transportation       64,135         3,055         20,281,441    1,208

 

 

 Treasury            144,482         5,491         19,110,684    2,408

 

 

 Veterans Affairs    219,153        16,652         94,984,018    6,789

 

 ______________________________________________________________________

 

                           Executive Branch

 

                         Independent Agencies

 

 ______________________________________________________________________

 

 

 African Development      24             5             13,430        3

 

 Foundation

 

 

 Agency for            2,427           214            824,072       38

 

 International

 

 Development

 

 

 American Battle          50             2             25,980        0

 

 Monuments Commission

 

 

 Appalachian Regional     10             1             11,517        0

 

 Commission

 

 

 Board of Governors    1,688           138          1,180,095       50

 

 of the Federal

 

 Reserve System

 

 

 Central             unknown           419          2,260,981      144

 

 Intelligence

 

 Agency

 

 

 Commodity Futures        571           43            338,821       22

 

 Trading Commission

 

 

 Consumer Product         483           35            114,868       15

 

 Safety

 

 Commission

 

 

 Corporation for          596           62            308,628       25

 

 National and

 

 Community Service

 

 

 Environmental         19,045        1,028          5,993,734       391

 

 Protection

 

 Agency

 

 

 Equal Employment       2,944          251          1,035,141       104

 

 Opportunity

 

 Commission

 

 

 Export Import Bank       407           37            183,719        19

 

 of the United States

 

 

 Farm Credit              296           17            115,838         8

 

 Administration

 

 

 Federal Bureau of     28,456        1,122          3,707,893       510

 

 Investigation

 

 

 Federal                1,968          160            698,434        59

 

 Communications

 

 Commission

 

 

 Federal Deposit        7,409          447          2,502,909       178

 

 Insurance

 

 Corporation

 

 

 Federal Election         343           37            224,992        14

 

 Commission

 

 

 Federal Emergency      9,876          744          4,970,338       255

 

 Management Agency

 

 

 Federal Housing          118           12             86,100         6

 

 Finance

 

 Board

 

 

 Federal Labor            234           20            103,177        10

 

 Relations

 

 Authority

 

 

 Federal Maritime         136           11             43,116         6

 

 Commission

 

 

 Federal Mediation        287           18             48,195        10

 

 and Conciliation

 

 Service

 

 

 Federal Trade            974           64            426,121        21

 

 Commission

 

 

 General Services      14,215          950          4,094,384       417

 

 Administration

 

 

 Government Printing    3,262           369         2,056,659       167

 

 Office

 

 

 Inter-American            62             4             1,627         1

 

 Foundation

 

 

 International Boundary   285            13            20,628         7

 

 and Water Commission

 

 

 Merit Systems            231            23           586,112         6

 

 Protection Board

 

 

 National Aeronautics  18,941           687         4,513,508       242

 

 and Space

 

 Administration

 

 

 National Archives      2,612           166           684,454        76

 

 and Records

 

 Administration

 

 

 National Credit          976            22           122,955         7

 

 Union

 

 Administration

 

 

 National Endowment       426            33           124,493        11

 

 for the Arts

 

 

 National Labor         1,895           127         1,370,628        48

 

 Relations Board

 

 

 National Science         980           130           538,231        54

 

 Foundation

 

 

 National Security    unknown           715         2,556,082       229

 

 Agency

 

 

 National                 435            26           157,028        13

 

 Transportation

 

 Safety Board

 

 

 Occupational Safety       63             2             1,578         0

 

 and Health Review

 

 Commission

 

 

 Office of Personnel    3,691           330         2,364,922       138

 

 Management

 

 

 Panama Canal             308            29         1,000,049         2

 

 Commission

 

 

 Peace Corps              829            63           293,672        14

 

 

 Pension Benefit          737            83           444,661        31

 

 Guaranty

 

 Corporation

 

 

 Railroad Retirement    1,252            81           515,780        35

 

 Board

 

 

 Securities and         2,858           197         1,460,245        79

 

 Exchange

 

 Commission

 

 

 Selective Service        218            26            79,581        14

 

 System

 

 

 Small Business         4,543           325         2,571,308       128

 

 Administration

 

 

 Smithsonian            5,109           476         1,627,169       180

 

 Institution

 

 

 Social Security       63,957         3,593        16,232,484     1,552

 

 Administration

 

 

 Tennessee Valley      13,321           511         2,357,523       202

 

 Authority

 

 

 U.S. Commission on        81             8            20,143         5

 

 Civil Rights

 

 

 U.S. Information       3,889           315         1,913,566        96

 

 Agency

 

 

 U.S. International       402            26           278,889         6

 

 Trade Commission

 

 

 U.S. Nuclear           2,925           131           581,115        49

 

 Regulatory

 

 Commission

 

 

 U.S. Office of            80             2               514         1

 

 Government Ethics

 

 

 U.S. Office of Special    88             7            31,942         5

 

 Counsel

 

 

 U.S. Soldiers and        813            79           416,120        33

 

 Airmens Home

 

 

 U.S. Tax Court           243            10            84,242         4

 

 ______________________________________________________________________

 

 

Source. U.S. Dept. of the Treasury, Internal Revenue Service, FERDI Annual Match Oct. 1999 Combination Balance Due and Potential Nonfiler with Population and Installment Agreement Data. Sent to CRS by IRS Legislative Affairs Division by facsimile Sept. 7 and 12, 2000.
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