Former IRS commissioner has choice words for Rossotti's minions

0 Comments | Insight on the News, August 19, 2002 | by John Berlau, | Jennifer G. Hickey

A distinguished former commissioner of the Internal Revenue Service (IRS) who gained bipartisan respect for his Commitment to fairness and taxpayer privacy strongly has criticized the agency he used to head for making public the names of prominent Americans who had sought advice from an accounting firm about reducing their tax burdens.

"It's not a good idea, in my judgment, to put taxpayer returns and taxpayer information on the front page of any paper, even the Wall Street Journal," says Don Alexander, IRS commissioner from 1973-77 and now a partner at the Akin Gump law firm in Washington. Indeed, he tells INSIGHT, "I continue to believe that taxpayer privacy should be the rule, and that exceptions, particularly with regard to the privacy of individuals, should be greatly, greatly, limited."

Tax experts say that the tenure of Alexander stands in sharp contrast with that of current IRS Commissioner Charles Rossotti, who was appointed by president Bill Clinton. Though a Nixon appointee, Alexander is credited with resisting Nixon's attempts to politicize the IRS and use it to harass Nixon enemies. Under Rossotti, by contrast, "random" audits continued to be launched against those Clinton saw as enemies--people such as Juanita Broaddrick, who alleged that Clinton raped her when he was Arkansas attorney general. The latest disclosure of names under Rossotti includes Earl Phillips Jr., whom President Bush appointed as ambassador to Barbados, and Bill Simon, Republican candidate for governor of California.

The IRS published the names in public court filings against the accounting firm KPMG LLP, which the agency contends is promoting illegal tax shelters. Never mind that the clients of KPMG whose names were disclosed had not been charged with any crime, and that it has not even been proved that the investment plans targeted by the IRS were or are illegal. It is not even clear that any of the named individuals participated in KPMG investments. They may simply have been seeking advice on how to reduce their tax burdens legally. Still, supporters of California incumbent Democratic Gov. Gray Davis have created a torrent of slander from the bizarre IRS revelations, accusing Simon of not paying his "fair share" in taxes.

The IRS said it included the names simply as part of its case against KPMG. But Alexander and others say that, if this were the case, there are a number of ways the names could have been revealed to the court without making them public. Veteran tax reporter George Guttman of the Tax Notes newsletter says Rossotti's IRS even gave some reporters CD-ROMs of the case with the list of names, which is "virtually unheard of."

The conservative Landmark Legal Foundation has filed a complaint with the Justice Department. Arguing that there may have been political motivation, Landmark notes that not only is the IRS headed by Clinton holdover Rossotti, but Stuart Gibson, the lead Justice Department attorney on the case against KPMG, is a "Democratic Party activist in Virginia."

Alexander, who still practices law before the IRS, did not directly criticize Rossotti. But he said that if he were still in charge of the agency, things would be different. "[Rossotti is] a very fine person, but I'm not sure that he was involved in this at all," Alexander says. "I would have been involved, but then I was a tax professional.... I would have done my best to prevent this from happening, and I rather believe I would have been successful."