The Tax Collector Gets Audited

By R.Z. Sheppard

A LAW UNTO ITSELF: POWER, POLITICS, AND THE IRS by David Burnham

Random House; 419 pages; $22.50

In the late 1950s, the literary critic and historian Edmund Wilson found himself in trouble with the Internal Revenue Service. Preoccupied with big ideas and momentous events, scraping by on stipends and feeling generally Olympian, he had neglected to file income tax returns between 1946 and 1955. The distinguished delinquent eventually paid up, but to settle the score he wrote The Cold War and the Income Tax, a 118-page pained yawp that argued there was not much difference between the IRS and the KGB. "The truth," wrote Wilson in 1963, "is that the people of the United States are at the present time dominated and driven by two kinds of officially propagated fear: fear of the Soviet Union and fear of the income tax."

Wilson was a forceful man of letters, not numbers. That may explain why the only Wilsons in David Burnham's blistering critique of the Internal Revenue Service are "James," a Supreme Court Justice who in 1794 rendered the decision that allowed President Washington to put down an armed tax revolt by Appalachian moonshiners; "Frank," an IRS investigator who helped nail Al Capone; and "Bob," a Republican Congressman tied to a tax ruling for ITT during the Nixon Administration. Nonetheless, Edmund remains half-right. Nightmares about the Soviets may have receded, but Americans have yet to lose their fear of filing.

With justification. Burnham, a veteran investigative reporter and author (The Rise of the Computer State), suggests that the IRS frequently uses its extraordinary powers of coercion in a presumptuous and reckless manner. He illustrates the charge with numerous cases, a few obviously selected for comic relief: the New York teenager, for example, who questioned the constitutionality of the income tax in a letter published in the Buffalo Courier-Express. Suspecting criminal noncompliance, 15 agents tailed the boy for four days, discovering that he talked to his mailman, ate pizza and read pornographic magazines. True, he never filed a tax form, but, then, he was still a dependent with no income.

That the IRS is another flawed bureaucracy is no surprise. When accountants find time for lunch they speak of little else. Whiffs of scandal occasionally become gusts, like a former IRS assistant commissioner who could not adequately explain why he charged the agency for airfare to visit his girlfriend. Burnham's audit includes abuses and inefficiencies that date back more than 50 years. Recent probes by the General Accounting Office have discovered broad areas of error and mismanagement. A study covering 1987, notes Burnham, concluded that the IRS failed to keep orderly accounts of its $1 trillion annual collections. For the same year, the GAO found that nearly half its samplings of 6 million notices and letters that the service sent to taxpayers were "incorrect, unresponsive, unclear or incomplete."

There are worse transgressions. Burnham cites cases of illegal IRS wiretapping, a bias against liberals and a frequent blind eye turned to its own regulations. Two years ago, the House Commerce, Consumer and Monetary Affairs subcommittee convened hearings on IRS procedures. Two weeks ago, the service announced a new ethics plan.

Burnham would prefer new blood; senior-level officials, he notes, nearly always have at least 20 years of service and have become locked into bad habits. "They have known about the mistakes for a very long time. And having spent their entire adult lives working in IRS offices and going to IRS parties and traveling with IRS partners to IRS meetings, they could be forgiven for thinking that they knew best." What they continue to know for sure is that they raise the money that runs the country, and that without a certain fear factor the system euphemistically known as "voluntary compliance" would not work.

Burnham's analysis is preoccupied with the power of an insular agency operating outside the usual system of checks and balances. Yet would tax collecting be less feared or more fair if the Legislative Branch took a greater role in running the IRS? It was Congress, after all, that created the so-called Tax Reform Act of 1986, a document so complex and contradictory that, Burnham says, it repeatedly stumped a convocation of some of the country's best tax lawyers and accountants. Part of the reason was that the ink from the Government's laser printers had hardly set when special interests ( were ordering tailor-made loopholes from their favorite legislators. Burnham does not delve into tax regulations -- the main source of unfairness -- but then he is only a reporter, not a masochist.

Unfortunately for the IRS, A Law unto Itself appears about the same time that taxpayers are receiving their forms for 1989. Will Burnham's form this year be the only piece of official IRS mail he finds in his box? He tells us that nearly everyone he interviewed said, at one point in their conversation, "I sure hope you have a good accountant."