IRS’ Corporate Culture

(630) 960-0500

By Tony Mankus, Esq.


Did you ever have any trouble dealing with an employee of the IRS?

Silly question, isn't it? That's like asking if you've ever had to inhale and exhale while you were alive.

When you deal with Revenue Officers or other employees of the IRS you wonder sometime why they act like they do, or why they seem to have a certain attitude. Some seem to have a superior attitude, some take a moral stance, some get bogged down in minutiae, while others just don't seem to care one way or another. Sometimes it seems that you can't reach a common ground of communication, even in non-adversarial settings. Sometimes, in other words, it seems like you're talking apples while they are talking oranges.

What's going on? Is it you? Is it the IRS employee? Or is it the IRS' CORPORATE CULTURE?

It may be any one of those things – or a combination of them, but, more likely than not, it's the IRS' CORPORATE CULTURE.


I'm not sure. IRS' corporate culture – or anybody else's, for that matter – is a vague, shifting concept that is not easily observable and even less measurable. It is a state of mind and, for that reason, hard to describe. Also behavior that may exhibit a certain trait is subject to multiple interpretations and may, in fact, have multiple purposes and motivations. Human behavior is capable of complex subtleties and varieties that defy scientific certainty. For this reason, any discussion on such a topic has to be subjective to a large extent.

Nevertheless, while I can't articulate clearly and simply what IRS' culture is, I know it's there. Or I know many bits and pieces of it that contribute to this thing called IRS' corporate culture. Or at least that's what I call it. I have heard others within the IRS call it that, as well. Certainly the IRS is not a corporation. But the term has acquired a meaning with the public at large and I will graft it on to this discussion to convey a concept that, I think, is helpful to understand in dealing with the IRS.

To understand, or at least to unravel IRS' corporate culture, you must understand the basic structure of the IRS. Once you do, I think it will help you to understand the context within which much of the behavior of its employees is exhibited. It may not make you feel any less frustrated in dealing with them, but it may make you a little more tolerant. In the discussion that follows below, I have broken down what I consider to be the major components of IRS' structure into distinct categories. They are not all inclusive and some elements of each component overlap between the categories. One other caveat. Many examples I give often involve personal experiences dealing with the Collection Division of the IRS. Though I have had significant dealings and experience with all divisions, my predominant experience has been with the Collection Division and, therefore, this article reflects that bias.


To begin with, one of the first things to understand about the basic structure of the IRS is the fact that it is a federal agency.

I know. You're floored by the profundity of that observation. You can't believe how perceptive I am. But before you flip to the next page or – worst yet – delete this article into the wastebasket, sit back and relax. Let me lead you through this analysis.

Under the U.S. Constitution the federal government has no power or authority to act unless such power or authority is specifically granted by the Constitution or by Congress. The Tenth Amendment to the Constitution states that, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Consequently, IRS has no authority to take any other action unless it is authorized by the Constitution or by statute. Historically, the federal government's authority to assess and collect income taxes has been a matter of some legal contention. This issue has been largely put to rest, however, with the passage of the Sixteenth Amendment which states that, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Over the years Congress has enacted many tax laws that have been codified into the Internal Revenue Code, affectionately known as the IRC. The IRC authorizes the Secretary of the Treasury, or his delegates, to take many actions, including the assessment and collection of taxes. Through a series of convoluted delegation orders, this authority has been passed down to line employees, such as revenue agents and Revenue Officers, who do the actual work. IRS is very careful about that. It wants to make sure that there is a constitutional or statutory authority for everything it does. The bureaucrats at the IRS understand very clearly that their very existence depends on granted authority and if there is one thing bureaucrats are good at it is self-preservation. Without that statutory authority they have no ground under them. So they go through great lengths to document it clearly – to such great lengths, in fact, that you wonder sometimes why they're getting bogged down in such minutiae. Well, the reason is CYA. They don't want to be accused of acting ultra vires, to borrow a legal phrase from the corporate world. A corporation has its Charter. To act outside it is to risk the wrath of its stockholders. For the IRS to act beyond the scope of statutory authority is to risk the wrath of lawyers like me, or, worst yet, the wrath of Congress which holds the power of the purse.

Also IRS knows that its mission will not win any popularity contests. It knows that it has the dirty job of collecting the money and turning it over to the Treasury without so much as a thank you. But let it overstep its bounds and it will have a bunch of Congressmen over it like the biblical plague of locust. Congressmen love to beat up on bad old IRS. It gets a lot of publicity and much sympathy from the voters who like IRS even less.

The consequence of this is twofold: IRS will spend an enormous amount of effort and energy to document and justify its existence and IRS will spend an enormous amount of effort and energy to CYA. This attitude trickles down from the top to the lower level employee. They have learned from experience that they don't usually get any praise for doing things right, but they sure do get HOLY HELL for screwing up.

In the larger sense, I'm glad that IRS is very careful about not overstepping its mandate. I don't want my government – which is too big and powerful anyway – doing more than it is authorized to do. I want them on a tight leash and I want them held to a high standard of conduct – even when they are dealing with scuzzy taxpayers. On the other hand, the practical result is a self-centered and defensive bureaucracy that is more concerned about covering its behind than carrying out its mission.

Another practical consequence of IRS being a federal agency is an inordinate amount of concern for RULES AND REGULATIONS – and the logical consequence of that: PAPERWORK! The amount of paperwork generated by the IRS, both internally and in dealing with the taxpayers is enormous. The paper IRS alone uses probably depletes the equivalent of all the trees in the Brazilian rain forest every year. (Just kidding. If you haven't figured it out yet, I like hyperbole.) It DOES use a lot of paper, though. The references you may have seen in IRS' documents to the Paperwork Reduction Act is a standing joke among tax lawyers and accountants. They all know it like we all know the “why did the chicken cross the street” joke – with about as many variations.

This concern for rules and regulations is so great that, at times, it takes on a life of its own. And once it takes on a life of its own, it sometimes loses touch with reality – or at least with common sense. There are many examples that can be used to illustrate this. One obvious one is where the taxpayer can discharge his tax liabilities to the IRS through bankruptcy, but does not want to do it for moral or practical reasons (it affects his credit). So he offers to pay IRS a portion of the money due in settlement for the total. IRS reviews the paperwork and finds, under its specific rules and regulations that it could, theoretically, collect more than is being offered and rejects it. The taxpayer files bankruptcy and discharges the entire liability. IRS gets nothing.

That, it seems to me, defies common sense – at least if the goal is to collect tax that is due. If the IRS can get something by using the broader logic of common sense rather than nothing by sticking to the narrower logic of the rules and regulations, it seems to me that it should opt for common sense. Either that or it should devise new rules and regulations which take common sense into consideration – if that's not an oxymoron. Some IRS rules and regulations DO counsel good judgment and common sense, but not enough of them, it seems. Aside from common sense and logic, IRS' own studies have shown that for all the offers in compromise that had been rejected in the past because IRS thought it could, theoretically, collect more money, the amount of money collected was, in fact, minuscule. That study was instrumental in getting IRS to revamp the procedures for offers in compromise. For years the offer in compromise was a theoretical tool that accumulated statutory dust, mummified into useless oblivion by the burden of rules and regulations surrounding its submission, review and acceptance. The number of submitted offers that had been accepted over the history of that statute could be counted on the fingers of one hand. IRS' own regulations forbade the Revenue Officers to even mention the offer in compromise to the taxpayer. It was like this family secret about the weird cousin who was kept in the closet and not spoken about in public.

Once the IRS loosened up its regulatory procedures, the floodgates opened and taxpayers who had been overwhelmed by taxes they could not pay began to submit offers in droves. The result has been additional money in the coffers of the Treasury and fewer neurotic taxpayers looking over their collective shoulders for big, bad Uncle Sam.

But it still hasn't opened the gates wide enough. In situations like the one cited above (i.e.: getting some money vs. getting no money because of potential bankruptcy) IRS still does not act sensibly.

Sometimes the situation is not as clear as the examples given above. Take, for example, the situation of a hardship case where the taxpayer is unable to pay the tax due because he doesn't have enough income to pay his ordinary living expenses, much less the tax liability. The IRS' rules and regulations require that he present IRS with evidence (i.e.: PAPERWORK) to substantiate his expenses, depending, in part, on the amount of expenses he is claiming and on the amount of the tax liability. Many ordinary, honest citizens are not good recordkeepers. Many of their expenses, such as food bills, are paid in cash. So the receipts they have to show IRS, if any, are few and not necessarily representative. In some cases IRS will disallow ordinary and necessary living expenses, or some part of them, because of the taxpayer's lack of records. This results in IRS trying to collect money the taxpayer does not have. The consequence is that the IRS will spend thousands of dollars in manpower and resources to collect a few dollars, at best. In many of those cases the taxpayer will revert back to the informal underground economy and the IRS will end up writing off the account as uncollectable anyway.

This again defies logic and common sense. Why beat a dead horse? It's not going to get up suddenly and start pulling the load. While it's true that IRS has begun to relax some of the evidentiary burden, most notably in the smaller collection cases being worked at ACS sites, it is equally true that the corporate culture still exists. Some Revenue Officers and their managers are still paper driven. They want to cut down all those trees without concern for the forest. To use another metaphor, they have taken the blinds off the dead horse and placed them firmly on their own heads.

If IRS did not carry it to such extremes in some cases, its concern for paperwork and rules and regulations would almost be understandable in situations such as the ones cited above, i.e.: in which the government is agreeing to take less money than is actually due, or where it is agreeing to hold off collection efforts due to hardship. One could justify IRS erring on the side of caution there. After all, IRS is “forgiving” some tax or at least agreeing not to dun the taxpayer for the foreseeable future. It is agreeing, in other words, to forgo the mandate of its mission and the least it could do is make sure that the taxpayer was truly unable to pay the full amount of the tax due. But this mania for paperwork and rules and regulations goes beyond the examples cited above. It extends to the opposite extremes. It extends to cases where the taxpayers want to PAY money to the IRS. Yes, you heard it right. If you want to pay money to the IRS, it will treat you no better than if you can't afford to pay the money you owe to the IRS. Sounds unbelievable, doesn't it?

Well, most of us have had experiences in dealing with the IRS, either as individual taxpayers or as representatives, that illustrate that thesis. I was involved in a number of cases where I've had cashiers' checks in hand, payable to the IRS, but could not get IRS to take the money. I often had to resort to extraordinary measures to get them to accept it. The examples are too numerous to cite and often involved unrelated and complex issues that would have to be explained in order to make them understandable. Also they involve real taxpayers who would not take kindly to a breach of their attorney/client privilege. So I will refrain from using them. I will describe one example in broad terms, however, in order to avoid specific identification. The tradeoff to the lack of specific detail, however, is that you will have to take my word for it that my perspective on the case is accurate.

It involved a large, publicly traded corporation that was prepared to pay IRS millions of dollars. It was very anxious to do the deal rapidly because, first, getting the issues resolved with the IRS was a prerequisite for making other major decisions and, second, the interest and penalty on the amount due was accruing at a rapid rate (about $50,000.00 per month). Despite my repeated efforts to get IRS to take the money, the case dragged on for almost a year before I was able to get someone to take charge of it and make some decisions. Admittedly, the case was complex and involved more than just IRS' concern for rules and regulations, but this concern was a very big part of it. In that particular case it turned out well for the IRS, but there was a real possibility that IRS' entrenched position could have resulted in only a fraction of the amount that was ultimately paid.

The examples above also illustrate another consequence of the IRS being a government agency: it is not motivated by profit. The bottom line is that the employees don't really care if they get the money or not. They are not rewarded by how much money they collect, as are their counterparts in corporate America. While I am not arguing necessarily that the IRS should be profit driven, I AM saying that IRS' concern for rules and regulations, as well as CYA, sometimes overshadow its mission of assessing and collecting taxes. Many of the IRS' employees approach a transaction from the point of view of running a regulatory gauntlet. They take the posture that, unless you cross all the regulatory “t”s and dot all the regulatory “i”s, they will not approve the transaction. Real life does not work that way. In order to make something work it usually requires that all the parties to a transaction work TOGETHER for the mutual benefit of everyone – even if their positions are adversarial. It is easier to sit back and take potshots at deficiencies than it is to roll up the sleeves and work together to RESOLVE them.


Another basic fact about the IRS is that it is a very large organization. That's another one of my profound observations. There aren't too many people that haven't heard about the size and the power of the IRS. But it's worth repeating every once in a while, like taking a cold shower. It tends to be a shock to the system. Last I checked, the IRS had over 100,000 employees nationwide. That's a large organization. It is larger than the populations of most of the cities in the U.S. Its annual budget is in excess of 10 billion dollars. (Although Congress has begun to shrink it in recent years) That's larger than the budgets of entire governments of third world countries. That's larger than the even the gross national products of many third world countries.

How does size of the IRS affect its corporate culture? In many ways. It means that the taxpayers, as well as the employees, are depersonalized. It means that much of the work is either centralized in large processing centers or fractionalized into specialized units – or both. If your case is at a large processing center, such as the ACS (Automated Collection System), you do not deal with any one person. You deal with any one in the group who happens to get your case randomly that day. He or she may not be aware of any previous conversations you had with someone else. They're supposed document on the computer the details of any previous contacts, but they don't always do it, or don't do it accurately. Also, in order to speed up documentation and to save space on the computer, they use coded words and abbreviations that are not universally understood by all the employees. The result is that you often feel like you have to rediscover the wheel every time you call. In one recent case I dealt with an ACS employee who promised to review the documents I faxed her and get back to me. When she called back I was away. So she left a message that she would call back, but if I wanted to know her decision I could call anyone else and ask that her documentation on the case be read back to me. When I did not hear from her I called and spoke to another employee, a very nice and friendly employee. She tried to read the first employee's documentation, but could not understand it.

If you attempt to deal by correspondence, the letters you send may get lost in the pile of paperwork, may end up sitting in some overworked person's in box or may even get deliberately destroyed – as some well publicized investigations have shown. If it is read by someone, you may get canned answer letters that do not address the issues you raise. Sometimes I receive letters from the service center that states, in effect, that we received your letter and will respond to it ASAP. That is usually followed by no response. Sometimes I receive those “we will respond to your letter ASAP” letters even when I have not sent them any letters that need responding to.

If your case gets assigned to a specialized unit, the issues you raise can only involve that particular unit's jurisdiction. The consequence of that is that, unless you have a problem that fits precisely the function of the person or unit you are dealing with, you may not be able to resolve it. Some problems do not fit neatly into the organizational units; others involve several units. In either case you may end up being pushed around between different departments and different employees, most of whom are overworked and do not want to take on another problem that is not clearly within their jurisdiction.

IRS' establishment of the Problem Resolution Office (“PRO”) is tacit admission of those problems. In many cases the PRO is helpful to resolve the problems discussed above, but it will only agree to take cases that have not been resolved through normal channels, whatever they are. That means that you have to go through pain, agony and delay before the PRO will get involved. From another perspective, the PRO is just another layer of bureaucracy created to deal with problems created by the fact that IRS is a large bureaucracy. It would be much less costly and frustrating for the taxpayer and for the IRS if it could deal with the issues the first time around, without having to resort to its backup system.


Another basic reality of the IRS is the large volume of work it must handle. Nationwide it handles millions of pieces of paper every month. During the filing season (around February 1st through April 15th), the volume of paper goes from mountainous to stratospheric. The staffing, though large, is never large enough to handle everything adequately. Congress tries to keep the IRS lean and mean with a budget that is not generous. The result is an emphasis on systems and procedures that handle large volumes of documents and little attention to individual detail. Large processing centers have been set up around the country to handle the volume of work. They resemble processing plants without the soot and grime involved in manufacturing. While automation is helpful, it does not solve all the problems. Also current automation is based on technology that is about 30 years old. By automation standards, that is ancient. IRS has made efforts to modernize it but has been stymied by budgetary restraints and, apparently, by its own well – publicized ineptitude.


Another factor in the corporate culture is the diversity of work that IRS must do. To begin with, there are different types of taxes and/or tax returns, including personal income tax, corporate income tax, estate tax, payroll tax, different types of excise taxes, partnership returns, exempt organization returns, etc. Then it must deal with interest and penalties, perhaps 200 different kinds in all. It must also handle some non-tax issues, including collection of some child support payments. It must process the returns, attempt to compel taxpayers who have not filed returns to file them, audit and assess additional taxes, adjust or abate taxes not correctly assessed, collect taxes that have not been paid, investigate taxpayers for potentially criminal tax activities, deal with bankruptcies and insolvencies, pass rules and regulations, give advisory opinions, respond to requests for help to tax or tax preparation questions, issue and maintain manuals for internal procedures, deal with internal dishonesty and corruption, etc. This puts an enormous burden on the IRS to do many things and do them without making mistakes. The trend in private industry has been in the opposite direction. It has been to pick out one or two things and do them well. McDonalds offers a limited menu, but you can get a pretty good hamburger and french fries. You can get them fast, cheap and in a clean setting. If you so choose, you don't even have to leave your car. Jiffy Lube doesn't fix all the problems with your car, but it sure does a good and fast job of changing your oil. Congress keeps adding more and more burdens on the IRS with the result that it is bogged down in a hodgepodge of duties that complicates an already overloaded bureaucracy.


Another component to the analysis of the corporate culture is the complexity of the tax laws. Some parts of the Code are so complex that even IRS' specialists have trouble understanding them. Even if they do, the burden of administering them is significant. IRS must issue new regulations or modify old ones, print new publications explaining the changes and train its employees who, in turn, must deal with very frustrated taxpayers and/or their representatives. In addition to the complexity, there is the issue of frequency of changes. Congress changes or modifies the tax laws with some regularity. The additional burden that is placed on the IRS by this is self-evident.


The main mission of the IRS is to assess and collect taxes. Assessment and collection of tax is fundamentally adversarial to the public. No one likes to pay taxes. Even the ones that pay voluntarily do so because they must, not because they like to. Some accept is as the price of democracy; others do so to be obedient to the law; others still do so for fear of being dunned by the IRS or, even worst, prosecuted criminally. Virtually any job in the IRS that involves contact with the public is adversarial in nature. Revenue Agents that audit the tax returns, Revenue Officer who collect the money, Special Agents who investigate possible criminal conduct, all must deal with individuals who do not want to be dealt with by the IRS. Even taxpayer service representatives or employees of the department that deals with organizations exempt from tax are not immune from the broad taint of the main mission of the IRS.

I often represent delinquent taxpayers who owe money to the IRS. If the taxpayers cannot pay all of it – which they rarely can – the taxpayers must submit financial information about themselves in order to enter into a payment agreement or make an offer of settlement with the IRS. These financial statements often become a bone of contention with the IRS employee who must determine its accuracy and establish an amount that the taxpayer is able to pay. Over the years some Revenue Officers had gotten into a habit of using the financial statement as an inquisitorial process to grill the taxpayers into disclosing the truth about their financial resources. That process usually heightened the adversarial relationship and made communication even more difficult than it already was.

While taxpayers and the IRS employees usually endure this adversarial relationship with varying degrees of civility, it sometimes breaks down into violence, even death. One particularly gruesome incident involved, among other things, poor judgement by the Revenue Officer. On September 23, 1983 James F. Bradley, who was then 63, shot and killed Revenue Officer Michael Dillon in the kitchen of Bradley's home. Bradley, a former employee of the IRS, was audited by the IRS six months after he left the Service. IRS determined that he owed an additional $2,500.00 for the 1981 tax year. Dillon was attempting to collect the remaining $500.00 due. Bradley told Dillon that he could not cover a check for the $500.00 and that Dillon would have to wait until Bradley received his next social security check. Dillon insisted on immediate payment, however. When Bradley refused again, an argument ensued. Dillon asked Bradley for consent to seize his property. Bradley left the kitchen and returned, bearing an M-1 rifle. He ignored his wife's pleas to put the rifle away. He walked within three feet of Dillon, who was seated, aimed the rifle at Dillon's torso, and said, “Mike, are you prepared to meet your maker?” He shot Dillon once, then shot him again as Dillon attempted to stand. Dillon fell to the floor. Bradley kneeled down and felt Dillon's pulse. He then shot Dillon again.

Many jobs in the private sector, and even in government, involve service to the public. Teachers, doctors, social workers and firemen all serve the public to a greater or lesser extent. Even surgeons, who must inflict pain on their patients, do so because the patients are diseased and seek out the surgeon in order to save their life. The patients are prepared to take risks and suffer pain in hopes of being cured. It's much harder to visualize the general good of democracy as a motivation for paying taxes, especially when taxpayers are aware of abuse and corruption in the government or in the political process generally. When individuals pay money to buy something, they see immediately something tangible in return, i.e.: the item they purchased. If the item is defective, they can often take it back and get a refund, or perhaps exchange it for one that is not defective. You do not get a tangible object in exchange for paying taxes; you get, at best, an absence of pain. And if you're not happy with what you get for paying taxes, i.e.: a big, inefficient government, corrupt politicians, etc., it's not very easy to exchange it for something more to your liking.

Thus this adversarial nature of the job wears the employees down. Over a period of time they become more suspicious, more defensive in their dealing with the public and even cynical, in some cases, especially when they constantly see perjury, fraud and other forms of tax evasion.


As was stated above, the main mission of the IRS is to assess and collect taxes and otherwise administer the tax laws in a fair way. While it is fairly easy to articulate, it is more difficult to implement. The difficulty arises in dealing with human nature. Human nature dictates that, in order to do something well for a continuous period of time, you must like it. Failing that, you must be motivated by it at some level, whether it be moral, altruistic or financial – or at least have artificial incentives built in to compensate for the drudgery of the labor. But how do you motivate or give incentives to IRS employees to assess and collect taxes? Assessment and collection of tax is not something every boy and girl aspires to when he or she is growing up. He or she aspires to be an astronaut, a ball player, scientist, detective, doctor, fireman, teacher, environmentalist, etc. Johnny or Jane does not aspire to be a Revenue Officers with the IRS. The gallows humor among the Revenue Officers is that they represent the second oldest profession in the history of civilization. We all know what the oldest profession is. Tax collectors are referred to in the Bible in pejorative terms. Like death, taxes are an unpleasant fact of life that we have to learn to deal with. But we sure don't have to like it.

So how do you inspire someone to collect taxes? Failing that, how do you build in incentives to the job? After all, many occupations in private industry or even academia are less than glamorous. How do they do it? How do they motivate someone to sell hamburgers, or shoes, or used car parts in a junkyard? How do they motivate bill collectors to go after debtors, for that matter? That's fairly analogous to the tax collector. The answer, in many cases, is PROFIT. If you give someone a percentage of what they sell or collect, they will try a little harder, even if they have the mundane and thankless task of sewing in thousands of buttons a week.

Unfortunately, the profit motive is not readily transferable to the IRS. Giving IRS collection agents a percentage of what they collect is subject to abuse and corruption. They could try to collect more than what is due or they could try to collect from people who can't afford to pay. They could end up using draconian collection measures beyond the powerful measures currently permitted by the Code. Even without the profit motive IRS agents have, in the past, used their powerful position to extort money from taxpayers in exchange for a reduction or forgiveness of the tax liabilities. Building in the profit motive would only exacerbate the danger of a position that is already fraught with potential for abuse.

The current system of motivation, if you want to call it that, seems to be a combination of “do the right thing”, whatever that means, “don't screw up” and “close cases”, especially old cases. Unofficially, the message also includes “please your boss if you want to get promoted and/or if you know what's good for you.” Those are not directly and viscerally linked to the assessment and collection of taxes. IRS managers are forbidden from maintaining statistical information on how much money is collected by Revenue Officers. They are rated by their managers on vague, non-intuitive concepts like timeliness of actions, taking on extra duties, cooperation, etc.


There is another component to IRS' corporate culture that should be taken into account: anti-corruption measures. Because of the powers granted to the IRS, there has always been a potential for abuse and corruption. Throughout its history IRS has, in fact, experienced those problems. In the early 1950s IRS established strong anti-corruption measures, including the establishment of the Inspection Service, which is generally under the direct authority of the Regional Commissioner. The Inspection Service is the internal watchdog of the IRS which, among other things, seeks to root out any dishonesty, fraud and corruption by the employees. To that end it investigates allegations made by the public, by management or by other employees of the IRS. It also conducts internal audits, listens in on phone conversations, reviews cases on a random basis, etc.

This makes the Inspection Service the Gestapo of the IRS with all the paranoia that this type of watchdog department engenders. The Inspectors are universally feared and disliked by the IRS employees. They are more concerned about not getting reported to Inspection than about serving the public. This discourages initiative and imagination. They would rather fill out forms and follow rigid procedures than use their imagination and common sense to solve issues that help taxpayers resolve their problems. Some employees become form driven and become bogged down in minutiae of the forms. The forms take on a life of their own, apart from the larger real world and common sense. They focus on the trees and fail to see the forest. Examples of this are too numerous to recount in completed detail. They range from inordinate attention to minor expenses claimed by the taxpayer on his financial statement to resistance to working creatively with financial institutions which are prepared to lend money to the taxpayer in order to pay the IRS.

Regarding inordinate attention to minor details, one case I had recently involved an offer in compromise. The taxpayer and his wife owned real property jointly with another couple, though the other couple resided elsewhere. There were also two mortgages on the property. The Revenue Officer asked repeatedly for documentation and explanations regarding the real property even though there was virtually no equity in the property – even if the taxpayer had owned it outright.

Regarding failure to cooperate with financial institutions, I had one case recently in which a commercial factor was prepared to pay a substantial amount of money to the IRS on behalf of the taxpayer if the IRS would subordinate its liens to the commercial factor. First the IRS employee charged with working the case delayed an inordinate amount of time before even reviewing it. Once he reviewed it, he demanded a substantial amount of paperwork, some of it inconsequential. Finally, he refused to issue a letter of commitment that IRS would subordinate its liens upon receipt of certified funds. The employee said that he was overworked and that he did not want to go through all the trouble of preparing a letter of commitment and then have the transaction fall apart. He said that this would be a waste of his valuable time. He said that the commercial factor should give the money to the IRS on his verbal assurance. Once he received the money he said he would issue the lien subordinations. The argument that his position was legally and commercially absurd did not seem to make an impression on him.

Another extention of this Gestapo syndrome is that employees are often afraid to appear friendly or even pleasant to the public for fear that this will be misconstrued as favoritism or, worst yet, as a solicitation for a bribe. To counteract this paranoia, they sometimes take on an authoritarian attitude that makes normal communication difficult. While this may be understandable in the more adversarial settings, such as when property of the taxpayer is being seized, it's not uncommon to see this type of an attitude even in the less adversarial settings, such as when taxpayers call the IRS with technical questions about tax law.

Other measures established, in part, to discourage corruption include, periodic rotation of cases between employees, transferring managers between various District Offices throughout the country, delegating authority for specific decisions on individual cases to the line employees assigned the cases, etc. The result of all these measures, while reducing the likelihood of corruption and dishonesty, is to create tension on the employees and frustration on the taxpayers. The tension created on the employees includes the fear of being investigated by Inspection, periodic frustration of having to familiarize themselves with someone else's cases, etc. The frustration to the public includes having to adjust to dealing with new employees periodically (although this is a blessing sometimes), inability of getting a manager to make decisions on a case or to overturn the decisions of line employees, etc.

But if the public is rightfully upset at being treated badly by IRS employees, it may want to take a measure of comfort in the fact that they're not the only ones IRS treats badly because of this Inspection Service paranoia. IRS employees have been known to turn the Inspection Service against each other. While this is required of the employees who become aware of corruption – even commendable – it's not uncommon among employees to use the Inspection Service to get even with some other employee who has allegedly transgressed them. I was personally involved in such an incident. I was a Revenue Officer at the time and conducted a seizure of the assets of a business that had failed to pay its payroll taxes. The business was a garage/tow truck operation that had numerous small items of property. I took a preliminary inventory of the assets and padlocked the business. I returned later with someone else and completed the inventory. I determined the value of the property and set a minimum bid in preparation for the sale. This minimum bid was subsequently adjusted to reflect distressed sale value. As is required by IRS' procedures, I sent in all the paperwork to a unit, which reviews it for completeness and accuracy of documentation. The person in this unit sent back the paperwork with notations that there were some omissions or inaccuracies. At the time, some of these notations seemed minute and bureaucratic to me, rather than substantive. While I corrected them as requested, my explanations may have included a touch of sarcasm aimed at the reviewer who appeared to me to be a personification of the overworked, underpaid bureaucrat who gets off on minutiae. Well, the reviewer did not take kindly to my comments and reported me to the Inspection Service. This set off a chain reaction that lasted a year or more and generated gobs of stress, anxiety and paperwork. I was interviewed, made to write more reports and explanations and attend hearings. My manager and his manager were made to write reports and attend hearings. The employees' union became involved and they generated reports and attended hearings. The upshot of all that was that I was given an oral admonishment, confirmed in writing by the Collection Division Chief, for “failure to follow proper seizure procedures.” No specifics were enumerated in the admonishment, although it did cite, in part, a section of the Handbook of Employee Responsibilities and Conduct. The part cited was: “Employees must conscientiously perform their duties to the Government and to the public. They are required to . . . dispose of their work promptly and accurately.”

My manager backed my actions fully in that case. He praised my actions and my decisiveness. In fact he liked all of my work and had recommended me for promotion to the ranks of management. The Collection Division liked decisiveness and, specifically, it liked seizures. In fact, a day or two after I agreed to sign off on the oral reprimand, I was promoted to a group manager. This matter was an example of government bureaucracy at its best.


And speaking of management, the last component of the IRS' corporate culture I will address is the structure and/or philosophy of IRS' management as it relates to dealing with the public. IRS managers will NOT make decisions on routine issues dealing with specific taxpayer cases. This is due, in part, to the well-established managerial concept that employees work the specific cases while managers manage the employees. Also managers like to delegate authority and give autonomous responsibility for cases to the employees. This gives the employees a sense of pride in their work. Interference and second-guessing in the cases tend to demoralize the employees. Therefore, the managers like to back them up on their decisions. Also interference in a case may be interpreted by our friendly Inspection Service as an attempt to exert undue influence for an improper purpose, such as – God forbid – treating some taxpayers more favorably.

But it is not that simple. (Nothing with IRS is simple) While the articulated explanations for managerial non-involvement appear to be well intentioned, logical and based on good management principles, the reality is different. Some managers have ulterior motives. They wish to weasel out of making tough decisions. They would rather have the employee deal with the messy situation involving the taxpayer. Other times they simply wish to avoid taking on extra duties and problems. Many of the employees become demoralized not because the manager becomes involved but because he or she does not. In many situations this helps neither the employee nor the taxpayer.

Lately, the top management of IRS has articulated the policy that if you, the taxpayer or the representative, do not get satisfaction at one level, you can go to the next level up. This has been helpful, though some managers – and even some employees – are still resisting this policy.


In light of all these forces and dynamics at work internally, how do the employees respond? Not very well, sometimes, especially the lower-level employees that bear the brunt of all the work and all the tensions of front line interaction with the public. Some become very tense; their judgment becomes impaired. Is it any wonder that they seem to act strangely form time to time, or that they seem to have an attitude? Most, however, learn to adjust to the system, one way or another. Some do it better than others.

Some drop out. They don't leave the Service, they simply withdraw from any meaningful involvement with their jobs. They do just enough to get by. They put in the time and punch in the clock, but they don't get involved emotionally. They establish good working relationships with some other employees and have coffee or lunch with them. They tell war stories to each other, they discuss technical issue, they talk about retirement or leaving the Service for the private sector. If they don't leave, they stop talking about leaving and just start talking about retirement. In one office I worked in, this employee did absolutely no work. Day after day he would talk to other employees or to his manager. He would go on breaks several times a day and talk some more. He was a likeable person and a good conversationalist. He had a terrific sense of humor. Eventually he was promoted to a group manager.

In some extreme cases, they simply stop caring all together. They don't talk about technical issues or about retirement. They simply don't want to do any work and don't wish to be bothered. If they are challenged, they file employee grievances or EEO complaints, if they qualify. The paperwork needed to fire them is too onerous so the managers don't bother. They sometimes give them a good evaluation and transfer them to another unsuspecting manager.

Some go to the other extreme. They become moralistic crusaders. The work and the pressure can become so depressing that they justify their existence by seeking out the moral high ground. They see themselves as the noble white nights fighting the corrupt public that refuses to pay taxes. They often bring up philosophical arguments such as, “I pay my taxes, why shouldn't they.” Or, “Not paying your taxes is unfair to the people who do.”

Some become very aggressive and actually start to like their job. They like to bang people about to see them suffer and cringe. They don't wish to be bothered with technical details and subtleties. They tend to see the situation in black and white. If you don't pay the tax, I will levy on your wages or close your business down.

Some become technical, bureaucratic paper pushers, small cogs in a big wheel. They read all the manuals and regulations and write memos. They get off on turf wars and become good infighters. If they feel that they have been transgressed upon, they bide their time and wait for an opportunity to strike back at the transgressor, or the imagined transgressor. Sometimes they wait months, or even years, but they eventually get even. They often have the moralistic crusader personalities, though not always. Sometimes they are simply Machiavellian.

Of course, these personality types are oversimplified stereotypes. Though there is a little bit of these traits in many employees, their extreme forms are not common. It's a tribute to human nature that many of the employees are honest, decent, hard working and conscientious. The ones I admire ost are the ones I call the crusty survivors. They have been through all the changes at IRS and the ups and downs without compromising their humanity and their conscientiousness. In spite of all the impersonality and negativism, they still care enough to try to do a good job for the public. They are the real heroes, not necessarily the ones that get the promotions or the awards. Unfortunately, there aren't enough of them around.

© Tony Mankus, Mankus & Marchan, Ltd.

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