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http://abcnews.go.com/onair/2020/transcripts/2020_990423_irs_trans.html
The New IRS?
20/20
Friday, April 23, 1999
(This is an unedited, uncorrected transcript.)
BARBARA WALTERS Now, a story about a government agency that everyone loves
to hate, the Internal Revenue Service. You may remember hearing awful
stories about how some taxpayers say they were treated by the IRS. Our
colleague Sam Donaldson is here with us because he has an exclusive report
on what can happen when the agency goes after not only the taxpayers, but
one of its own, hmm?
SAM DONALDSON, ABCNEWS That�s right, Barbara. Last year, Congress passed a
reform measure. President Clinton signed it into law. But it�s the agency
itself that has to make it work. And what we found is that a lot of people
inside the IRS may not be following the intent of the law. We also found
that when courageous IRS agents speak out to expose this, the agency seems
to be turning on them, not on the people doing wrong.
IDA MAE GRAHAM (PH) You go from day to day, and it�s created financial
problems.
JR HALE (PH) And they started harassing me, telling me they were going to
take the house and take the cars.
NANCY JOHNSON Maybe they haven�t realized that we�re still people.
SAM DONALDSON (VO) These three people say the IRS is making their life
miserable�- a familiar story, but one that was supposed to have changed
after years of taxpayer rights being violated.
SEN WILLIAM ROTH, CHAIRMAN, FINANCE COMMITTEE The committee will please be
in order.
SAM DONALDSON (VO) It was to investigate IRS abuse that the US Senate held
hearings in September of 1997. IRS employees came forward to testify, hidden
behind screens, their voices disguised�afraid, they said, of retaliation.
But one agent spoke out boldly, ready to risk her career for what she
believed�Jennifer Long from the Houston district of the IRS. She claimed
there was an unwritten policy that ...
JENNIFER LONG, IRS EMPLOYEE That when reviewing a tax case, it is now our
job to stick it to the taxpayer.
SAM DONALDSON (VO) Long was promised protection by the senators.
SEN PHIL GRAMM, (R) TEXAS We�re not going to tolerate anybody retaliating
against you.
SEN WILLIAM ROTH And you can be sure if it happens, we will take action.
SAM DONALDSON (VO) But two weeks ago, when Jennifer Long sat down with us,
she said retaliation against her by her superiors began almost immediately.
JENNIFER LONG It�s horrible. It�s horrible. I�ve had to change my entire
life to cope with this.
SAM DONALDSON (VO) Long has been with the IRS for 16 years and, before her
troubles began, with a good record. But now ...
JENNIFER LONG If someone comes to my desk to talk to me, my manager comes
right up and looks at them like, �What are you doing here?� And, of course,
people are frightened by this, because they see what they�ve done to me.
SAM DONALDSON (VO) But at least Long could take satisfaction that as a
result of those Senate hearings, an IRS reform bill was signed into law last
summer containing provisions to protect so�called �innocent spouses,� to
forgive the tax debts of true hardship cases and to correct other past
abuses. (on camera) So today, is this still going on?
JENNIFER LONG Yes.
SAM DONALDSON It is?
JENNIFER LONG Yes, it is. In fact, I feel like it�s worse.
SAM DONALDSON Who doesn�t have the message?
JENNIFER LONG Well, the people didn�t change. The same people that decided
that we were going to do this in the first place are still there.
SAM DONALDSON (VO) We decided to investigate the current state of IRS reform
for ourselves. And it didn�t take us long to come up with some troubling
cases.
NANCY JOHNSON We�ve got more people coming to help set stuff up.
SAM DONALDSON (VO) Meet Nancy Johnson. She is holding a yard sale. She is
selling her possessions, because she�s had to sell her house, her home for
24 years, and she and her daughter must move. They don�t know where they�ll
live now. Johnson�s life started spiraling downward when her late husband,
Steve, fell on hard times with his business. He started taking shortcuts
with his taxes, but his wife, Nancy, says he didn�t tell her. (on camera)
Now, when your husband brought the tax returns, did he say, �Now, honey, let
�s go over schedule A and B, particularly C, because that�s the business
schedule?
NANCY JOHNSON No. He would just bring them in and say, �All the taxes have
been figured. I need your signature.�
SAM DONALDSON And you would sign?
NANCY JOHNSON Well, of course.
SAM DONALDSON (VO) Steve Johnson�s business failed. The couple divorced in
1992. The next year Steve died of cancer, leaving behind a combined state
and federal tax debt of nearly $500,000. (on camera) Did you have $500,000?
NANCY JOHNSON Well, of course not. There was no way that I could have worked
every day for every hour of the rest of my life and been able to make that
kind of money.
SAM DONALDSON (VO) Johnson did have a home appraised at $222,000, on which
she owed just $41,000. If she could refinance, that money might well pay off
her entire renegotiated tax debt. But she needed both the state of Utah and
the IRS to agree to the plan, since they both had put liens on the house.
Utah tax agent Dolores Furniss (ph) agreed, because ...
DOLORES FURNISS, UTAH TAX AGENT I do believe that Nancy is an innocent
spouse.
SAM DONALDSON (VO) An innocent spouse�a concept last summer�s reform act
strengthened, meaning that if one spouse had no participation in or
knowledge of the other�s wrongful tax filing, the tax burden wouldn�t be
shifted to that �innocent� spouse. But the IRS blocked the plan that would
allow the refinancing because it, �would not protect the full interest of
the United States government.� So the mortgage company foreclosed on the
house which had an appraised value, remember, of $222,000.
NANCY JOHNSON The house was sold for $51,000.
SAM DONALDSON (on camera) $51,000?
NANCY JOHNSON Mm�hmm. There was less than $10,000 left for me.
SAM DONALDSON (VO) Johnson is at a loss to explain why the house brought so
little. Utah tax agent Dolores Furniss thinks forcing the sale of the house
made all the principals losers.
DOLORES FURNISS I was truly outraged. And I was outraged, because nobody won
on this thing other than the person who bought the home.
SAM DONALDSON (VO) And who lost?
DOLORES FURNISS The Internal Revenue Service, the Utah State Tax Commission
and especially Nancy Johnson.
SAM DONALDSON (VO) So one Saturday in March, with the house sold, the
possessions of a lifetime were disposed of in a yard sale.
NANCY JOHNSON So we cleaned everything out that we could.
DAUGHTER What did you sell the guitar for?
NANCY JOHNSON And we sold my daughter�s bed. We sold our dining room table.
MAN AT YARD SALE You want 10 on that?
NANCY JOHNSON Yeah. And we sold pictures off the walls.
WOMAN AT YARD SALE How much is the skirt?
NANCY JOHNSON Oh, 50 cents. Clothing. You can tell we�re trying to get
things moved out.
WOMAN AT YARD SALE Yes.
NANCY JOHNSON Have a good day. Thank you for stopping by. Just about
everything.
SAM DONALDSON (VO) Possessions sold and no place to go. But as Nancy Johnson
and her daughter Annie pondered their future, a good Samaritan materialized.
A friend, Marlene Benson, offered them a home. She would take the Johnsons
in.
MARLENE BENSON It�s small. It�s old. The kitchen is like a closet. But, you
know what? It�s your home, if you want it to be.
SAM DONALDSON (VO) For Annie Johnson, the moment was too much. The good
neighbor, Marlene Benson, wonders why the IRS did this.
MARLENE BENSON, NEIGHBOR I don�t know what they�re thinking, but they�re
certainly not thinking with any heart. There�s no heart involved. These are
people�s lives. This is not mathematics. This is not figures on paper. These
are people�s lives.
HUGH DOWNS A kinder, gentler IRS? Nancy Johnson�s case is now involved in an
IRS appeals process. But she says she�s already lost everything. Meanwhile,
in Houston, things had gone from bad to worse for Jennifer Long, the IRS
whistle blower. Would her testimony before the US Senate cost her too
dearly? The rest of Sam�s astounding story, in a moment.
(Commercial Break)
HUGH DOWNS We continue now with Sam Donaldson�s exclusive report on the IRS.
When we left off, supervisors were keeping a close watch on a whistle blower
who works inside the agency. Sam?
SAM DONALDSON Well, Hugh, we go to Houston now, the city where Jennifer Long
still works as an IRS agent. We discovered that the IRS may show the same
disregard for its own people as it so often seems to for the taxpayers. (VO)
The IRS says it wants to be the taxpayer�s friend. Its public relations
commercials make the point.
SPOKESMAN (TV COMMERCIAL) The Internal Revenue Service, working to put
service first.
SAM DONALDSON (VO) Jennifer Long, the IRS agent who testified before the
Senate in 1997, hears what the commercials say and, well ... (on camera) ...
why are you laughing?
JENNIFER LONG The advertisement is very good. It�s very appealing. But I
work there. I know that that is not what you find when you go there. These
people are mean here. They don�t care about somebody�s hardship.
SAM DONALDSON (VO) A case in point�perhaps, involves the Grahams, Ida Mae
and Curtis, who live in the city of south Houston.
IDA MAE GRAHAM I told Curt the other day that if anything happened to him, I
wasn�t going to move in with my children.
CURTIS GRAHAM That is, if the IRS took the place.
IDA MAE GRAHAM If they took the�our home.
SAM DONALDSON (VO) Curtis Graham is almost 79. Ida Mae, his wife of 54
years, is almost 71. Why would the IRS put a lien on their home? It seems
that years ago, Graham owned a strip mall. He got behind on his payments to
the bank and had to sell it in July of 1992 for $80,000. But Graham says he
didn�t get a penny of the money. Mortgages and property taxes took it all.
But the IRS said federal taxes were owed on the sale nevertheless, and they
socked the Grahams with a bill for $43,000. The Grahams couldn�t pay it.
CURT GRAHAM They keep threatening us. We got letters, probably every two to
three months about it.
IDA MAE GRAHAM I have just been where I even hate to almost see the mail
person coming.
SAM DONALDSON (VO) The Grahams do have a small income. There is Social
Security and, believe it or not, Curtis Graham still works full�time,
greeting customers at the door and looking out for shoplifters at a nearby
Wal�Mart store. (on camera) How long have you worked here at Wal�Mart?
CURT GRAHAM It will be five years in June.
SAM DONALDSON How much do you make here?
CURT GRAHAM I make $6.50 an hour. It�s approximately about $950 gross a
month.
SAM DONALDSON (VO) The Grahams would seem to fit the classic definition of a
hardship case, the very situation the new law signed by the President last
summer was meant to take care of. And in fact, Curtis Graham wrote the IRS,
asking for relief.
CURTIS GRAHAM I wrote the letter to Chuck White, telling him I just couldn�t
make payments on that at all, and I would like to seek forgiveness of it.
SAM DONALDSON (VO) Charles �Chuck� White, an IRS group manager in Houston.
(on camera) What did he reply?
CURTIS GRAHAM He had his assistant call. Said they were going to put a lien
on my home.
SAM DONALDSON (VO) The IRS did reduce the tax bill to $23,500 and stamped
the Grahams� file as �currently not collectible.� But the threat of
collection for a couple whose total income is just above the poverty line is
still there. (on camera) Did they say to you that they thought you were
going to come in to some financial fortune?
CURTIS GRAHAM No, they did�they did not, Sam. The only thing they said, they
would monitor my W�2 forms.
SAM DONALDSON To see if you made a lot more money?
CURTIS GRAHAM To see if I made a lot more money.
SAM DONALDSON (VO) Why didn�t the IRS simply write off the debt as a
hardship case, part of last year�s reform act? Remember, Graham had asked
the IRS for forgiveness.
VICKI ELIZARDO (PH), FORMER IRS REVENUE OFFICER He used the term
�forgiveness,� but we know what that means. The Internal Revenue Service
knows what a taxpayer is asking for.
SAM DONALDSON (VO) Former IRS revenue officer Vicki Elizardo worked in the
Houston district. She didn�t handle the Grahams� case. But we asked her to
look at it, and she says the IRS should have helped Graham apply for the
relief he was seeking. (on camera) You�re telling me that it�s the IRS�s
obligation to tell the taxpayer what the situation is?
VICKI ELIZARDO Absolutely.
SAM DONALDSON Not just remain silent.
VICKI ELIZARDO Absolutely. He was ignored. He was shuffled off as someone
who was not going to cause them any kind of pain or grief in the future, so
he could be ignored and shuffled along.
CURTIS GRAHAM I was in the Navy, World War II. I served in North Africa and
Sicily. I was proud to serve my country. But I�m not proud of the way the
IRS, which is a government agency, is doing us. They don�t need to treat
people like they�re criminals.
SAM DONALDSON (on camera) How do you think this is going to end, Mrs Graham?
IDA MAE GRAHAM Well, I really don�t know, Sam. I just�God gives us one day
at a time. And so, that�s what I�what I do.
SAM DONALDSON (VO) But the Grahams weren�t the only ones whose treatment by
the IRS in Houston is hard to understand.
JR HALE Most of these are going to be �96, �97, �98 ...
SAM DONALDSON (VO) Recently, Elizardo tried to go to bat for car salesman JR
Hale. As an IRS revenue officer, she had been pressing to collect his debt
to the federal government. She was trying to take his house when she learned
not only did Hale have heart problems, but his wife was sick, too.
JR HALE My wife was�came down with breast cancer. She�s gone through chemo,
and she, just three days ago, started into radiation therapy.
SAM DONALDSON (VO) Elizardo changed her mind and declared Hale a hardship
case.
VICKI ELIZARDO We should completely back off and look for an alternative
solution.
SAM DONALDSON (on camera) Now, is that your view because of just the way you
feel about people?
VICKI ELIZARDO No.
SAM DONALDSON Or is there a law or a rule under which that fell?
VICKI ELIZARDO Yes. Yes, absolutely. The tax code is very specific with
that.
SAM DONALDSON (VO) Elizardo wanted to abandon efforts to seize Hale�s house,
where his wife was now convalescing. But she says her superior disagreed.
She says Charles �Chuck� White, the same man who wouldn�t let the Grahams
off the hook, wouldn�t hear of a compromise with Hale.
VICKI ELIZARDO He felt that I should pursue the homestead, the potential of
the homestead seizure.
SAM DONALDSON (on camera) Well, didn�t you explain to him the medical
circumstances?
VICKI ELIZARDO Yes. In detail.
SAM DONALDSON What did he say?
VICKI ELIZARDO Basically, he wrote in their case file that the pursuit of
the seizure should be done regardless of the wife�s health.
SAM DONALDSON (VO) Last month, Elizardo was fired for allegedly not working
hard enough, though her boss Chuck White had previously rated her better
than good.
VICKI ELIZARDO All the way up the line in the Houston district, there is a
disregard for the law if it doesn�t fit with their agenda.
SAM DONALDSON (VO) We asked White for a formal interview, but he declined.
And when we approached him this week to ask him about these cases ...
20/20 STAFFER Can we talk to you about some of the practices going on here
at the IRS office?
CHUCK WHITE, IRS GROUP MANAGER Obviously, we have a communications officer
that you need to deal with. I cannot answer any of your questions.
20/20 STAFFER Sir?
CHUCK WHITE I�d love to, but I can�t.
SAM DONALDSON (VO) But the real shocker is what almost happened to Jennifer
Long. When we talked to her two weeks ago, she told us her bosses were upset
that she was talking to 20/20. We reminded her that back in 1997, senators
had promised her protection.
JENNIFER LONG My grade�13, low�level manager is not afraid of a United
States senator. What can the United States Senate do when the IRS is just
thumbing their nose at them?
SAM DONALDSON Well, guess what? Last week, on April 15, as taxpayers
scrambled to meet the deadline, the IRS moved to fire Jennifer Long. Her
GS�13 group manager delivered a notice in writing that Long had just 68 days
to improve her performance or face action that might well include dismissal.
We replayed Long�s prophetic words for the Senate committee�s chairman,
William Roth.
JENNIFER LONG My grade�13, low�level manager is not afraid of a United
States senator.
SAM DONALDSON (on camera) And sure enough, Senator, they tried to fire her.
SEN WILLIAM ROTH The commissioner withdrew that 60�day notice, because I
called him and said, �We cannot tolerate retaliation.� And I mean that.
SAM DONALDSON Before she testified before your committee in the four years
prior to that, Jennifer Long�s ratings had always been good ratings. After
she testified, she�s gotten nothing but failing grades.
SEN WILLIAM ROTH Outrageous. In a sense, it shows contempt of the Congress.
It shows contempt of the commissioner, and that�s got to be changed.
CHARLES ROSSOTTI, IRS COMMISSIONER Yes, I did talk to Senator Roth. He was
very upset about this. I was very upset about it, and that�s why we took
some pretty swift action to deal with this.
SAM DONALDSON (VO) IRS commissioner Charles Rossotti (ph), in addition to
ordering the letter to Long rescinded, replaced the acting director of the
Houston district and dispatched a team of top officials from Washington to
investigate.
CHARLES ROSSOTTI, IRS COMMISSIONER We�re not going to tolerate any
retaliation against a witness, either there or elsewhere.
SAM DONALDSON (VO) Rossotti insists he�s instituting reforms that will ease
taxpayer burdens, that will assure that innocent spouses and hardship cases
are handled properly throughout the IRS. But Rossotti is not the first IRS
commissioner to promise serious reform.
JENNIFER LONG I think Mr. Rossotti really does want things to change. But
the people, the management, they don�t want any part of that.
SAM DONALDSON Senator Roth plans to hold new hearings in September to
investigate the retaliation against Jennifer Long and to investigate why the
agency isn�t protecting the taxpayers the way Congress intended.
HUGH DOWNS Sam, what�s going to happen to these whistle blowers now?
SAM DONALDSON Well, Vicki Elizardo is appealing her dismissal, and Jennifer
Long is not out of the woods yet. But Hugh, Barbara, I assure you, we�re
going to continue to watch what happens in Houston. We�ll stay on the case.
BARBARA WALTERS And come back again and tell us, important. Thank you, Sam.
--------------END------------
Bard
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