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MONDAY, MAY 18, 1998

Congress must fix problems with IRS

The unanimous vote on legislation to reorganize the Internal Revenue Service under an appointed review board shows, in addition to the political ease of attacking the federal government's most unpopular agency, the depth of the IRS' internal problems.

In recent months, witness after witness &emdash; both from within the agency itself and ordinary citizens &emdash; has told congressional committees of serious abuses at IRS hands.

Carol Ward, for example, made the mistake of calling an IRS auditor on his obvious financial ignorance during an audit of her Colorado Springs children's clothing stores. She admittedly said some harsh words: ''Based on what I can see of your accounting skills, you'd be better off dishing up chicken-fried steak on an interstate somewhere in Texas.''

The auditor got even for this remark. Three weeks later, as James Bovard writes in The Wall Street Journal, IRS agents responded by ''seeking to impose a financial death penalty on Ms. Ward.'' Her stores were raided, her bank accounts frozen and inventory seized. IRS agents allegedly told inquiring customers that Ward was a drug dealer. The IRS alleged that she owed $325,000 in back taxes.

She demanded a fresh audit, which found she owed only $3,400. But the IRS wouldn't give Ward's assets back to her unless she would sign an agreement not to sue for violations of her rights. She refused the blackmail.

The matter now is in court, but IRS officials continue to repeat charges proven false by the IRS' own audit.

This is just one of many cases that forced Congress to act to reform the IRS. But let us not forget that IRS abuses are part of a deplorable pattern for which the real root cause is a fundamentally corrupt Tax Code, written by the same Congress that has just proclaimed its outrage at the IRS.

The biggest problems with the tax system are that it confiscates too much money and that it is too complicated. Those problems aren't the IRS' fault.

Only Congress can fix them.

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