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- <text id=89TT2020>
- <title>
- Aug. 07, 1989: Fear And Cover-Ups In The IRS
- </title>
- <history>
- TIME--The Weekly Newsmagazine--1989
- Aug. 07, 1989 Diane Sawyer:Is She Worth It?
- </history>
- <article>
- <source>Time Magazine</source>
- <hdr>
- BUSINESS, Page 40
- Fear and Cover-Ups in the IRS
- </hdr><body>
- <p>A congressional probe finds a near epidemic of misconduct
- </p>
- <p> "Now, let me say to you, you're not dealing with
- ignoramuses on this committee. The IRS world that you describe
- . . . it's like the land of Oz, and you are the wizards."
- Georgia Democrat Doug Barnard Jr. delivered that blistering
- rebuke last week to Michael Murphy, deputy commissioner of the
- Internal Revenue Service. What provoked Barnard was Murphy's
- upbeat assessment of his agency's zeal for rooting out cases of
- misconduct among its own employees. But dozens of current and
- former IRS workers painted a different and disturbing picture
- of the agency in three days of testimony before the House
- Commerce, Consumer and Monetary Affairs subcommittee.
- </p>
- <p> What the subcommittee found was that while the largest and
- most feared civilian bureaucracy (total employees: 123,000)
- routinely clamps down on its low-level miscreants, it is prone
- to ignore wrongdoing by members of its old-boy network. At the
- same time, IRS managers appear to be so concerned with the
- agency's public image that they would rather suppress
- whistleblowers than root out unethical and illegal activity.
- Last week's hearings explored the results of a year-long probe
- by the subcommittee, which found evidence of misconduct and
- cover-ups involving more than 25 top IRS officials in ten
- cities. Among the allegations:
- </p>
- <p> In the best-known case of alleged IRS duplicity, details of
- which were reported exclusively in TIME last May, the
- subcommittee found that the agency was "inept" in probing the
- activities of staffer Ronald Saranow of Los Angeles. Saranow is
- suspected of using his influence as one of the most powerful
- officers of the IRS Criminal Investigation Division to encourage
- two tax probes against foes of Los Angeles-based jeansmaker
- Guess, Inc., for whom Saranow planned to work after his
- retirement in 1987. Saranow has denied any wrongdoing.
- </p>
- <p> The IRS has admitted that an agent "discarded" many
- internal documents concerning an IRS raid in 1986 that Saranow
- initiated against Guess's nemesis, Jordache Enterprises. The
- Justice Department is investigating the incident.
- </p>
- <p> Saranow and his personal lawyer, Richard Trattner, a former
- IRS employee, carried out an unauthorized "amnesty" program for
- Trattner's tax-evading clients. For years, Trattner supplied
- the IRS with anonymous, remedial tax payments from the clients,
- as well as keys to hidden safe-deposit boxes containing the
- unfiled tax returns of the cheaters. The purpose: to reduce the
- culpability of Trattner's clients in case they were
- investigated. If that happened, Trattner would steer the IRS to
- the tax returns as evidence of his client's participation.
- </p>
- <p> Anthony Langone, until recently the IRS assistant
- commissioner of criminal investigation, allegedly flew
- repeatedly around the U.S. at the agency's expense to visit a
- mistress. He also is suspected of taking thousands of dollars'
- worth of IRS training materials for use in a
- private-investigation network that he started with Saranow and
- other retired IRS kingpins. Langone denies the charges.
- </p>
- <p> The subcommittee will be watching closely to see how well
- the new IRS commissioner, Fred Goldberg Jr., who stepped in
- after the abrupt resignation of Lawrence Gibbs last March, will
- follow up on the allegations. "I think all of us understand that
- we have a big challenge ahead of us," testified Goldberg near
- the conclusion of the hearings. Last week's uncomfortable
- spotlight may have supplied the IRS with some much needed
- motivation. Said Edward Habecker, a former IRS official, in
- testimony at the hearings: "What is lacking today within the IRS
- is not the tools, but the desire to maintain high ethical
- standards."
- </p>
-
- </body></article>
- </text>
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