On section 1203

A reader with a long background of employment at the IRS writes on an aspect of the IRS scandal that hasn’t received much attention and that draws on his experience at the agency:

I’m a fan and regular reader. Thanks for your yeoman’s work on the IRS scandal. I’m also retired from a 35-year law enforcement career, 22 of which were at the IRS Criminal Investigation Division, so I have some insight into the Service and its workings (although I spent all but one year doing money laundering – narcotics, and organized crime cases – rather than tax.)

I’m quite surprised that no one has mentioned Section 1203 of the Restructuring and Reform Act of 1998, which mandates terminations of IRS employees who commit any of what are known in the Service as the “10 Deadly Sins.” Passed in the 19990s after the last major Congressional hearings (Revenue Reform Act of 1998), section 1203 is the neutron bomb that hangs over employees. Violations of 1203 are supposed to be non-negotiable, with termination the only result, although I believe the Commissioner can mitigate and sometimes does, usually in cases involving non-wilfull understatement of tax liability.

At any rate, you’ll notice that several of these provisions could be applicable in the present instance, notably (b) (2), (b) (3) (A), and (b) (7). If I were Ms. Lerner, Mr. Miller (who relied heavily on 6103 in his testimony), or anyone in that chain, 1203 would be a huge concern. It is for every Service employee, which is why I and others were always very cautious about taking unapproved initiative in areas that skated close to 1203. (Getting that signature, for example, even in Title 18 seizures, which probably aren’t covered. But when you’re talking “shall terminate the employment” “probably” isn’t safe enough.)

I’m not a lawyer. I don’t know if these provisions would apply in the present case, but I and every employee are acutely conscious that they exist. This is why the concept of “two rogue employees” is so far-fetched for me. They would have to be very “rogue” to take their chances with 1203. Much more “rogue” than anybody I knew at IRS.

Finally, I’d note that when I was working at IRS-CID, taking the Fifth in any proceeding was grounds for termination. I have no idea whether that’s true for other IRS employees, but a Special Agent could never take five and survive. You don’t have a constitutional right to a government job.

I’ve included section 1203 below. Took it from the NTEU website. (I detested the NTEU and CID criminal investigators are not members of that or any union.)

Best wishes,
[Name withheld by request}, Special Agent (Retired)

On its face, section 1203 requires a final administrative or judicial determination. In the current scandal, we don’t even have pending administrative or judicial proceedings. Here is section 1203:

(a) In General.–Subject to subsection (c), the Commissioner of Internal Revenue shall terminate the employment of any employee of the Internal Revenue Service if there is a final administrative or judicial determination that such employee committed any act or omission described under subsection (b) in the performance of the employee’s official duties. Such termination shall be a removal for cause on charges of misconduct.

(b) Acts or Omissions.–The acts or omissions referred to under subsection (a) are–
(1) willful failure to obtain the required approval signatures on documents authorizing the seizure of a taxpayer’s home, personal belongings, or business assets;
(2) providing a false statement under oath with respect to a material matter involving a taxpayer or taxpayer representative;
(3) with respect to a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service, the violation of–
(A) any right under the Constitution of the United States; or
(B) any civil right established under–
(i) title VI or VII of the Civil Rights Act of 1964;
(ii) title IX of the Education Amendments of 1972;
(iii) the Age Discrimination in Employment Act of 1967;
(iv) the Age Discrimination Act of 1975;
(v) section 501 or 504 of the Rehabilitation Act of 1973; or
(vi) title I of the Americans with Disabilities Act of 1990;
(4) falsifying or destroying documents to conceal mistakes made by any employee with respect to a matter involving a taxpayer or taxpayer representative;
(5) assault or battery on a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service, but only if there is a criminal conviction, or a final judgment by a court in a civil case, with respect to the assault or battery;
(6) violations of the Internal Revenue Code of 1986, Department of Treasury regulations, or policies of the Internal Revenue Service (including the Internal Revenue Manual) for the purpose of retaliating against, or harassing, a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service;
(7) willful misuse of the provisions of section 6103 of the Internal Revenue Code of 1986 for the purpose of concealing information from a congressional inquiry;
(8) willful failure to file any return of tax required under the Internal Revenue Code of 1986 on or before the date prescribed therefore (including any extensions), unless such failure is due to reasonable cause and not to willful neglect;
(9) willful understatement of Federal tax liability, unless such understatement is due to reasonable cause and not to willful neglect; and
(10) threatening to audit a taxpayer for the purpose of extracting personal gain or benefit.

Our reader adds this note: “Believe me, every employee at IRS is acutely conscious of 1203, no matter where they work. After it was passed seizures, liens and levies dropped to almost zero. Took a long time for people to even think about sticking their necks out.”

We invite knowledgeable readers to weigh in in the comments or by email to [email protected].

UPDATE: Our reader writes to add yet another note:

The other thing I’d point out that is very odd about this is that IRS has been prohibited – by that same RRA98 – from using enforcement statistics to measure employee performance. Nobody’s allowed to rate you on how many cases you made, how many arrests, convictions, seizures, levies, taxes assessed, etc. Managers get in big trouble for that, but they still have to evaluate employee performance somehow, so the Service devised this whole scheme that revolves around time.

Elapsed time on a case is a huge issue. Agents get dinged if they’ve got too many hours or if a case drags on for too long. It’s all tracked in the computerized case management system, and managers get in trouble with their managers if their “inventory” (and yes, that is the term that is used to describe your case load) has overage cases. I can’t stress enough how important this is to the Service, and every employee knows it. Your performance report is going to be affected by overage cases, too many hours on a case, etc., but more importantly, the manager’s performance report is going to be affected, and her manager’s, and so on.

To have a statutory or Internal Revenue Manual deadline like 270 days to process something and to blow past without consequences is inconceivable to me. The day that thing went overage, the manager gets a report, and the employee gets asked why. The manager would keep getting reports until it was fixed, and if it wasn’t fixed soon, the SAC would be on the phone, because he or she is getting the same report, and his or her performance report (and bonuses) is on the line.

I obviously can’t speak for EO, but in CID, for an agent to have multiple overage cases like that would be impossible. This simply could not happen without dire consequences for everyone in the chain, and as a result, it never happened.

So, how do I explain a revenue agent in EO who has open cases that are 300 or even 700 days overdue? The only possible explanation is that management was okay with it, because it is absolutely impossible that they – and this includes everyone in the chain – didn’t know. Maybe they’ve got a good reason why they were okay with it, but the whole chain had to sign off on it. All the way to DC.

And to add this comment:

A minor correction to your post. When you say there’s been no administrative finding, that may or may not be true. The administrative finding is what happens internally at IRS. It’s the normal employee disciplinary process. This would not be public knowledge. A 1203 violation would get reported through the chain of command and investigated by management, which would make a finding. I doubt if TIGTA would be involved, but in any event, TIGTA doesn’t have the ability to discipline IRS employees. Only management does, in the name of the Commissioner.

So, if two Cincinnati EO employees were found to have gone “rogue” and committed a violation of 1203 or an IRM provision, they would be subject to the ordinary “administrative” disciplinary process. This would lead to termination in the case of a proved 1203 violation. Nobody outside the employee’s chain of command (and probably everybody in their office) would know what happened. Privacy and all that.

THE LAST WORD: See Daniel Foster’s NRO column “Firing Lois Lerner.” Subhead: “Not impossible, but almost.”

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