Mr. Chairman and Members of the Senate Finance Committee, I am pleased to be able to share a few of my thoughts and experiences with you today as you explore specific issues of IRS abuse of those the tax agency likes to call its "customers "- American taxpayers. For 16 years I worked as an historian for the federal government. Nine of those years were with the Department of Defense and the final seven were spent as the first and unfortunately, the last, official historian for the Internal Revenue Service. At the end of 1995, I resigned from my federal career in protest over the unwillingness of the IRS, or the Treasury Department Inspector General, to investigate my complaint of illegal document destruction by the IRS. I learned that the same federal investigator to whom I originally reported my concerns regarding this, had turned around and opened an investigation of me on unfounded and false charges of "wrongful release of confidential information." Later, I learned that this is a common tactic used against IRS employees who dare to speak up against management. I knew then that I had no alternative but to resign and try to raise awareness of the intransigence, arrogance, and abusive patterns of behavior that I found all too common inside the headquarters of the IRS. I decided to write a book which was published earlier this year entitled, "Unbridled Power."

My testimony today will touch briefly on three areas:

1. The cultural climate of the IRS;

2. List keeping at the IRS;

3. The IRS definition of "tax protester."

My introduction to the culture of the IRS came during my earliest days with the tax agency, in the fall of 1988. Although I had been hired as the first historian for the IRS, I found little interest or support for my efforts. I found even less history. By history I mean both an awareness of the heritage of the IRS as well as the raw material (the documentation) from which narrative history is distilled. Neither the documents nor the heritage were to be found. Initially, I found this curious. Later, I found it alarming.

At the IRS National Headquarters, there seemed little connection between the work of employees and actual tax collection - what I presumed to be the mission of the IRS. Rather than possessing any basic curiosity about the past, the IRS employees I encountered exhibited a wariness, a suspicion - assuming that anyone looking for records must have some definite agenda. An agenda presumed to be negative.

This reluctance to think about the past translated into routine day-to-day operations, meaning that all documents were tossed, shredded, whatever, when a program was completed - or shut down, as in the case of many IRS computer projects. No records. No paper trail. No history.

As time went on, I realized that this not only made my job as historian virtually impossible, but that it guaranteed that the IRS could never be held accountable for its actions.

With a sense of historical development, I came up with my own interpretation of this phenomenon. One could easily pass off the reluctance of the IRS to acknowledge its past as a reaction to a constant barrage of criticism. But the IRS is certainly not the only federal agency subjected to criticism from the press, Congress, or the public. Instead of reflecting on positive actions in response to criticism, the IRS proclaims that any criticism of the agency is "IRS bashing" and "will only lead to more tax protesters."

Rather than respond with solid information, historical examples, and analysis, the IRS jumps around skittishly, telling Congress that this reorganization, or that new position, or another new task force will remedy the current problem. The IRS has learned that its most effective response to inquiring questions from Congress, from the press, or from the American people is to hide behind the privacy laws. These are the laws meant to protect taxpayers. But by endlessly citing restrictions on its authority to comment on taxpayer cases, the IRS deflects criticism for any and all actions. In essence, the response of the IRS to question about anything and everything is, "Trust us. We're doing the right thing. We just can't tell you what that is because we're protecting American taxpayers."

A corollary to this defensive shield is the penchant of the IRS to destroy its paper trail. There were virtually no records of IRS actions throughout the twentieth century in any of the repositories where one would normally find federal records: the IRS itself, the National Archives (including the permanent archives in Washington, D.C., the 10 records centers around the country, or the Presidential libraries.)

In my early years with the IRS, a good question to ask was, "Where are the records?" What I learned was shocking. The records had been destroyed. Gone. Shredded. Tossed. They no longer exist due to a lack of attention to, or concern for, the law which requires all federal agencies to preserve records of what they do. It is as though the IRS assumed that laws which apply to the FBI, to the CIA, to every other part of the federal establishment can be ignored.

No other agency of our government could get away with this. I questioned the reason why it had taken so long for anyone to realize that the records were not just missing, but destroyed.

I believe the answer is based on fear. As taxpayers, why would we ever question the one agency that can truly bite back? Our fear of suffering a personal attack from the IRS generally keeps most of us in check. Our fear of being audited has allowed the IRS to theoretically eliminate any potential smoking guns by trashing its own records. This ensures that it can never be held accountable for its actions. How can you prove any wrongdoing when the evidence is already destroyed?

The IRS has learned that the privacy protections are its best weapon in its war against its "customers." There is an "us against them" mentality which is far too common among IRS employees. I witnessed and experienced this attitude firsthand for over seven years working at the IRS headquarters. When I questioned the lack of record keeping by the IRS, it was made clear to me that I was a "lone ranger," a "loose cannon," and "not a team player." Is it any wonder they investigated me?

I'll conclude this section with a stark example from my personal experience. After my protest resignation at the end of 1995, admittedly I was not on the "most favored" list of IRS. But when I went to the IRS National Office on Monday, April 15, 1996, to meet a friend who had invited me for lunch to celebrate my birthday, I did not expect to be threatened with arrest. But that is what happened.

While waiting for my friend to meet me at the entrance of the building, I was pulled aside by an IRS internal security agent who told me to leave immediately because I was officially "banned" from the building. I thought this was odd as I was standing in the front entrance, a public space, When I asked for an explanation, I was told that I was "banned" because I "did not turn in my official identification badge when I resigned four months earlier."

This was untrue.

When the agent detaining me prepared to call for Federal Protective Service agents to carry out her threat to arrest me, I knew I had to make a quick decision: let them carry through with this absurd threat, or turn and leave. I left. To this day, I wish I had stayed and made them carry through with their threat.

The IRS brought false charges against me, used government resources to pursue a false investigation of me, and continued to harass me even after I had resigned. With the IRS, as I am sure you will hear from others today, retaliation is prompt, swift and catastrophic.

My years with the IRS were spent exclusively in the National Office, the headquarters of the tax agency. Throughout my tenure at the IRS, I often heard stories that different types of codes were used to identify taxpayers and returns.

I have specific knowledge of one type of list maintained inside the IRS. It is a product of a secretive, cloistered unit of the IRS which existed from 1969 through 1973, known by the name "Special Services Staff," or SSS.

The SSS list had approximately 11,000 individuals and organizations designated as possible audit targets by the IRS. Who were these people and organizations? Some were names you will recognize: Shirley MacLaine, Joan Baez, John Lindsay, the Black Panthers, and the Student Nonviolent Coordinating Committee (SNCC). But most of those who made it onto the list were not household names but were individuals the SSS determined were of questionable character as determined by the SSS.

Ten employees of the SSS dutifully clipped newspaper articles each day. The FBI willingly sent over its own files on political dissidents and protesters, and subscriptions were taken to radical publications which were perused for names and other leads. All in all, the SSS targeted individuals with no known tax problems for audit simply because of their political activities.

The commissioner who abolished the SSS, Donald Alexander, actually testified before Congress in 1975 that he believed the SSS records should be taken "out on the mall and burned."

Yet, despite the fact that the SSS files remain intact at the IRS (at least through my resignation at the end of 1995), the IRS steadfastly refuses to release the files to researchers or even to the National Archives for safekeeping. Why? Because they contain "taxpayer information." Who is protecting whom, one has to wonder?

What has all this got to do with the present? Today I believe there exist thousands of names of American taxpayers whose Master Files are coded as TC-148, which brands them as "Illegal Tax Protesters." Whether this is a list, or compilation of files which bear that designation, is semantics. Just how many Americans bear this designation?

At the very least, we need to know if we are on that list. We reserve that right. The IRS says we can't know and don't have a right to know while simultaneously claiming Congress wants it this way. The only thing being protected in this scenario is the IRS.

Just what is a tax protester? Your definition, like mine, is probably different from the IRS definition. I learned that while inside the IRS.

A tax protester, in my definition, is not someone who may oppose our system of taxation, but pays his taxes nonetheless. A tax protester is not someone who says that our tax system is broken and must be dismantled, but still files a Form 1040. A tax protester is not someone who merely criticizes the IRS. A tax protester is not someone who challenges an IRS assessment.

But in the mind of the IRS, all of the above ideas fit the unofficial IRS profile of a tax protester. In the cloistered environment of the IRS, criticism of the IRS, or the income tax, equals tax protester. Anyone who has the misfortune of bearing that title is most likely going to witness first hand just what "taxpayer abuse" really means.

Don't get me wrong. I am not in any way condoning the actions of those who, by one manner or another, attempt to cheat or not live up to their financial responsibilities as a U.S. citizen. But I do recognize the use of the label of "Illegal Tax Protestor" as another powerful weapon of the most powerful agency in America.

It is time for Congress to compel the IRS to be more forthcoming about its audit procedures, even though the IRS would like us to believe that our system of taxation will collapse if the American people know how their tax collector goes about his or her business.

The IRS gains too much benefit from the privacy laws to come clean on its own. The culture of the IRS, built over decades of learning to hide behind the privacy laws, will not change on its own. Without intervention from Congress, it will not happen.

Last year, a top career IRS executive testified before Congress that, "There is the general view that the more mysterious tax enforcement is, the more likely taxpayers will voluntarily comply." Mystery breeds distrust and contempt. It also breeds fear, which compels many taxpayers to comply with the tax laws because they are afraid of the consequences, but it does not breed voluntary compliance or trust.

The arrogance of the IRS is outrageous and harmful. We lose more than we gain by allowing the IRS to operate in this manner. Congress must demand accountability from the IRS. Congress must shine the spotlight on the IRS and never switch the power off.

Thank you.