Flashback: IRS Agents Accused of “Military Style Raids,” Harassed Children & Small Business Owners

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Posted by Alexander Hendrie on Tuesday, July 6th, 2021, 2:05 PM PERMALINK

President Biden wants to drastically increase the size and scope of the IRS. He has proposed $80 billion in new funding over the next decade and wants to hire almost 87,000 new agents, which would more than double the IRS workforce. He has also endorsed a bipartisan spending plan that would give the IRS $40 billion. 

Both proposals are designed to squeeze more money out of American taxpayers. This will not fall on large corporations and the wealthy as they have armies of accountants and lawyers that already help them navigate the tax code. Instead, it will fall on middle income Americans and small businesses. Biden’s proposal calls for “new specialized enforcement staff,” would require financial institutions to report inflows and outflows of businesses and individuals and would provide additional resources for the IRS to track cash and cryptocurrency transactions.

This should be concerning to taxpayers given the IRS has a history of targeting taxpayers with heavy handed tactics including intimidation and harassment. In the late 1990s, the IRS came under scrutiny for the harsh tactics it used to enforce the tax code. With tens of billion in new funding, it is not hard to see how these abuses could return. 

A 1998 article by Washington Post noted many small business owners were harassed by the IRS, only for the agency to find no evidence of wrongdoing:

“An Oklahoma tax-return preparer, a Texas oilman and a Virginia restaurateur told lawmakers how raiding parties of armed agents from the IRS Criminal Investigation Division barged into their homes or offices, frightened their employees and families -- and ultimately came up empty-handed."

“Two of the men said they later found that former employees had precipitated the raids, and that the IRS had done little or no checking on their informants' credibility. The third witness said he never could determine why he was targeted.”

One man described over a dozen armed IRS officials raiding his offices, seizing business documents, and harassing clients and employees: 

“Richard Gardner, whose company prepares 4,500 to 6,000 tax returns each year, said that one morning in 1995, he was called out of a meeting. He found 15 IRS agents and a half-dozen U.S. marshals in his lobby, "all armed and wearing those jackets that say in bright letters IRS' or U.S. Marshal' on the back."

“They seized his client records, computers, personal papers and other files, he said, and held them for two years while the IRS investigation continued. Gardner was able to buy new computers and continue in business, but the damage to his business was extensive. He said IRS agents went to clients and demanded they wear hidden microphones when meeting with Gardner; they hauled his wife before a grand jury; and his employees were told they would be able to buy his business cheaply because he would be out of business soon.”

These were not isolated cases. A 1998 article by the New York Times described “military style raids” by IRS agents against taxpayers who were accused of nonviolent behavior.  

A 1997 article by CNN summarized the findings of one Senate Finance Committee Hearing examining the IRS abuses. The article included the testimony of one witness IRS historian Shelley Davis, who noted that the IRS kept vast amounts of data on the American people. As the article stated:

Davis described the IRS as "the best secret-keeping agency in our government today. They are better than the CIA, better than the FBI."

She elaborated on the reasons she grew disillusioned with the way the IRS goes about its business. "I discovered that the IRS does keep lists of American citizens for no reason other than that their political activities might have offended someone at the IRS; about how the IRS believes that anyone who offers even legitimate criticism of the tax collector is a tax protester; about how the IRS shreds its paper trail, which means that there is no history, no evidence and, ultimately, no accountability.’

Another witness, Robert Schriebman, a tax professor at the University of Southern California noted that the IRS had broad authority to target taxpayers. As the article states:

“The IRS can take a taxpayer's home by just the signature of the district director alone," he said.

"There's no court hearing, there is no notice, there is no opportunity to litigate the merits of the IRS' claim," Schriebman said. "The IRS can close down a business ... and take away a taxpayer's livelihood by merely filing a few papers in federal court. The judge simply signs the seizure order and that's all there is to it. The taxpayer gets absolutely no notice, absolutely no opportunity to contest the legality of the assessment that the IRS claims is owed."

An article from ProPublica noted stories where young children were intimidated by IRS agents raiding the homes of taxpayers: 

“In 1997 and 1998, the Republican-controlled Senate held a series of dramatic hearings on alleged abuses by the IRS. Agency employees testified behind black curtains with their voices disguised, like Mafia snitches, to protect their identity. The testimony depicted an organization run amok, with claims of biased examiners and lurid tales of agents in flak jackets storming establishments. One restaurant owner told of a raid to seize business records at the home of an employee, during which agents forced a teenage boy to the floor at gunpoint and made a group of teenage girls at a slumber party get dressed “under the watchful eyes of male agents.” A USA Today headline read: “Witnesses Accuse IRS Investigators of ‘Gestapo-like’ Raids.”

Given the history the IRS has in harassing small businesses and workers, proposals to give billions more in taxpayers funds to the agency should be alarming to taxpayers.

 

Photo Credit: Cliff

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