How Can Rossotti Reform the IRS?

0 Comments | Insight on the News, May 21, 2001 | by John Berlau

Charles Rossotti's alleged mistreatment of a whistle-blower and the perception of a conflict of interest over his holdings a major IRS vendor are raising concerns on Capitol Hill.

Senators sat in stunned silence as IRS revenue agent Jennifer Long detailed abusive practices that were commonplace at her agency. "Courageous Jennifer Long" as she was referred to by then-Finance Committee chairman William Roth, R-Del., was the only IRS agent testifying at that fall 1997 committee hearing who did not conceal her identity.

Long shocked committee members and much of the nation with charges that the IRS selectively audited taxpayers who were poor and vulnerable, routinely fabricated evidence against taxpayers and used rigid quotas and goals for revenue collection as a means of encouraging agents to "stick it" to taxpayers. The sworn testimony of Long and others resulted in Congress passing a law in 1998 to overhaul the agency and give taxpayers added protection from abuse.

But lawmakers also were concerned about the fate of Long and other whistle-blowers inside the IRS. One month after Long testified -- during the confirmation hearing of Charles Rossotti, Bill Clinton's nominee to be the new IRS commissioner -- Roth asked Rossotti to pledge under oath to "protect employees who report IRS misconduct from retaliation."

Citing his experience as cofounder and senior executive of the information-technology consulting firm American Management Systems (AMS), Rossotti answered that "probably the most powerful management tool over the last 28 years is trying to create an atmosphere where people feel that they should report good, as well as bad, news; that they can talk." That said, Rossotti promised to "take action to eliminate the kind of unacceptable practices that were said in your hearing" to exist at the IRS. Hailed as a reformer, Rossotti was confirmed as commissioner by a vote of 92-0.

Three-and-a-half years later, despite bipartisan praise of Rossotti for changing the culture of the agency, Long believes she still is being made to pay for exposing those IRS abuses. On April 15, 1999, the IRS gave Long a notice of termination -- which it decided not to act upon after she alerted Congress and the press. But the apparent vendetta was not put to rest. Recently some of her IRS bosses tried to derail Long's application for an accounting license by telling the Texas State Board of Public Accountancy that she lacked skill, character and integrity.

Long and her attorney believe Rossotti sanctioned the recent action. "It appears from information we are getting that Commissioner Rossotti has taken a direct interest in her case," said Lung's attorney, David Lopez, citing unnamed observers inside the agency. "He is the root source of some of the problems."

There is considerable concern in Washington that Rossotti's actions in the Long case, combined with potential conflicts of interest from not divesting his millions of dollars in stock in AMS -- a direct vendor to the agency he heads -- could demoralize IRS employees and derail congressional efforts to reform the agency. Pete Sepp, a vice president of the National Taxpayers Union (NTU), once praised Rossotti as a reformer. But after recent incidents, Sepp tells Insight that, while he's not sure that Rossotti is part of the problem, "he's looking less and less [like] part of the solution."

In February, after Long passed her certified public accountant (CPA) exam, she gave her bosses at the IRS office in Houston a routine form from the Texas licensing board that asks employers to verify an applicant's character and fitness for duty. The IRS sent the form back to the Texas board, declining to answer the question but saying that it would send a "narrative." K. Steven Burgess, an IRS compliance are director based in Dallas -- someone Long says she had neither met nor discussed her work with -- drafted a letter accusing the whistle-blower of sloppy practices during audits. The letter, a copy of which Insight has obtained, called Long's audit probes "inadequate." Burgess did not return Insight's telephone calls asking for comment.

The Texas board granted Long her accounting license before the letter, dated March 22, was sent. But to IRS watchers, the matter is far from over. Sen. Charles Grassley, R-Iowa, has replaced Roth as chairman of the Senate Finance Committee and is a staunch champion of whistle-blowers. He has sent Rossotti a strongly worded letter noting that the committee had verified before the 1997 hearing that every performance evaluation Long had received gave her at least a satisfactory rating. "I can only conclude that this action by the IRS may be a precursor to a termination of Ms. Long in retaliation for her testimony as a congressional witness," Grassley wrote.

Grassley and his staff so far have refrained from publicly placing blame on Rossotti, but Long and Lopez say the commissioner's fingerprints are all over this matter. Long says she called Washington headquarters several times to complain. Her phone calls went unreturned, she says, until an IRS deputy commissioner, Dale Hart, called and told Long she would get a copy of the narrative letter when it was finished. "I felt like they were aware and supporting this effort to try to keep me from getting the CPA license" Long tells Insight. Hart did not return Insight's calls.