My name is Philip MacNaughton. I am a lawyer with offices in Houston,
and my practice includes representing taxpayers before the Internal Revenue
Service in tax controversies and collection matters.
The IRS claims its revenue officers are trained to be fair with taxpayers,
and that the occasional horror stories represent aberrant situations. I
will tell you about an IRS officer whose abusive actions may have literally
hounded a Houston taxpayer to death.
In 1995, a CPA referred to me a 61-year old swimming pool designer
who was being pursued by tax collectors in connection with the possible
assessment of payroll taxes. Although ill with heart disease and cancer,
the man was still working a few hours each day, supporting himself and
I contacted the revenue officer and provided information that had
been requested. I also sent him a letter detailing the taxpayer's fragile
medical condition, and asked him to route all communication with the taxpayer
In mid-1995, my office filed on behalf of our client a written offer
to compromise the taxes. Although the Internal Revenue Manual provides
that collection activities shall cease during the pendency of a good-faith
offer in compromise, that revenue officer continued his collection efforts
despite objections from me.
I advised the IRS revenue officer that continued collection efforts
were in violation of written IRS procedures and were also a threat to the
taxpayer's life because he suffered from heart disease, had experienced
heart attacks and had reported that the IRS collection actions were terrifying
In response, the IRS revenue officer typed up a summons ordering
the taxpayer to appear before him for face-to-face interrogation and then
personally drove it to the taxpayer's house and served it on his son. My
client called me, clearly shaken.
I called the revenue officer and asked him to provide me with any
questions to which he wanted answers, but he told me that what he wanted
- and intended to get - was a personal confrontation between himself and
my client. I asked him why, and he was simply silent.
I reminded the revenue officer that my client was ill with heart
disease and cancer and should not be subjected to the stress of face-to-face
interrogation. He responded then - but only with derisive laughter.
I contacted his supervisor, explained the situation and asked her
to stop the harassment, but she refused, saying that she "stood behind
her revenue officers". I asked her to simply assign the case to a
different revenue officer, but she refused that too.
Then I called the Chief of Collections and asked him to stop the
harassment, but he too declined. Next, I asked the Problems Resolutions
Office to issue a Taxpayer Assistance Order to stop the harassment. In
support of that request, I faxed them a copy of a letter from the taxpayer's
physician, which stated that the taxpayer was "severely impaired and
unable to ... withstand stressful situations because of his severe heart
failure and cancer....." The Problems Resolutions Office declined
to issue the TAO because there was "no significant hardship",
although they acknowledged that the officer was known to be "mean".
The IRS continued its collection actions. On October 28, 1995, my
client received a notice of intent to levy. Ashen faced and visibly distressed,
he hand delivered the letter to me that same day. Two days later, he died
from heart failure.
The taxpayer was 61 years old. He is survived by his wife and their
I provided this information to the Treasury Department and asked
them to investigate. The Regional Inspector General for Investigations/Southern
Region concluded that these "issues are best addressed by the agency
involved," and sent the file back to the IRS. The IRS then sent me
a letter which claimed to report the results of an investigation.
The IRS's investigation consisted entirely of accepting everything
said by the revenue officer whose behavior was in question. Not surprisingly,
the IRS came to the conclusion that the revenue officer's actions were
"taken in accordance with agency procedures."
Maybe no one can be certain that the revenue officer's actions were
the proximate cause of this taxpayer's death. But it is absolutely clear
to me that an IRS revenue officer demonstrated a callous disregard for
a taxpayer's life, and that his behavior was condoned by his supervisor,
by the Chief of Collections, by the Problems Resolutions office and by
the Treasury Department.
IRS abuse is not a series of isolated events. It is my experience
that IRS culture increasingly permits and even encourages taxpayer abuse.
Many IRS collection personnel regularly ignore written IRS rules and procedures,
jumping from one excuse to another while they continue to harass taxpayers.
I know of one IRS employee whose in-service instructor asked the
class how the IRS enforces tax compliance. After a moment of silence in
the classroom, he wrote the word "FEAR" in letters reaching from
the top of the blackboard to the bottom.
I hope these hearings and the reform bills will help correct the
IRS's drift into becoming our national bully.
But while these reforms are welcomed, they are a temporary fix. The
only long term solution is replacement of the income tax system as a method
of financing the government.
Even if Congress were able to stop all of the abuse and to spend
all the money needed to replace the IRS's Model T computer system, we would
still have a system that requires the deep intrusion of the Federal Government
into the daily life of many - if not most - Americans, and one that burdens
us every year with the need to spend time and money filling out exquisitely
No flat tax can solve this problem. I have never had an audit where
application of the correct brackets was an issue. The problem is that income
is a complicated concept. If you tax income, you have to define it, and
all simplistic definitions will fail. Any tax on income, whether flat or
graduated, will require a complex tax code and hence a huge federal bureaucracy.
On behalf of my clients, I thank you for refusing to tolerate IRS
I know you are busy. Thank you for your time.