The IRS: Myths and Realities

During September 1997 and April 1998, the Senate Finance Committee conducted oversight hearings on Internal Revenue Service (IRS) operations. Through the testimony of a series of witnesses, Senator William Roth, the Chairman of the Senate Finance Committee, painted a picture of the IRS as an out-of-control agency, more evil than the dark side of the Force from Star Wars. Although subsequent investigations by the General Accounting Office and the Treasury Inspector General failed to substantiate most of the witnesses' testimony, Congress moved with lightning speed to pass the IRS Restructuring and Reform Act of 1998 (RRA 1998), the most sweeping overhaul of the IRS in 50 years. The public image of the IRS, highlighted in the hearings, was so powerful that Congress felt compelled to act.

The IRS: Myths and Realities examines many of the commonly held beliefs about the IRS and the U.S. tax system. Using the Senate Finance Committee hearings as the backdrop, the book traces the evolution of many of the commonly held beliefs about the IRS as portrayed in media accounts and Congressional hearings. The findings from independent investigations by the General Accounting Office, the Treasury Inspector General, and other investigative commissions are reviewed to show how these beliefs stand up when subjected to factual analysis. A case is made that many of the commonly held beliefs about the IRS are largely myths based on inaccurate information or isolated mistakes. Insights are provided on how the IRS and the U.S. tax system actually operate.

Stephen L. Daige retired from the IRS in 2004 after working more than 33 years for the agency. For 23 of his 33 years with the IRS, he was an executive responsible for IRS operations at the district and regional level. He lives in Wilmington, NC.