WASHINGTON - Two years after embarrassing allegations of misconduct and abuse of power by several of its managers, the Internal Revenue Service is getting good marks for improving its ethical climate.
"Substantial progress has been made," says Rep. Douglas Barnard, D-Ga., whose House Government Operations subcommittee has been investigating the IRS for three years.
Even the National Coalition of IRS Whistleblowers, a Church of Scientology offshoot that dogs the agency's every move, offers a grudging commendation for positive strides to clean up the problem.
Nevertheless, IRS Commissioner Fred Goldberg Jr. told Barnard's panel last week, "We still have a long way to go - and in many respects our job will never be finished."
The subcommittee in July 1989 investigated seven cases of alleged wrongdoing by some senior managers, a designation covering 1,500 people each making more than about $60,000 a year. The allegations involved activities of the IRS Criminal Investigation Division, which investigates criminal violations of tax laws, and the Office of Inspection, which polices employee conduct.
The subcommittee said its investigation "revealed a pattern of improper and possibly unlawful conduct by a significant number of senior IRS employees," followed by poor investigations, inadequate punishment and morale problems among IRS rank-and-file.
Among the allegations:
-- The head of the Criminal Investigation Division in Los
Angeles allegedly involved himself in an investigation of the makers of Jordache jeans while weighing a post-retirement job offer from friends at Guess? Inc. - competitors to Jordache.
-- The same official, Ronald Saranow, allegedly arranged a system under which clients of his personal lawyer could get immunity from prosecution if they anonymously paid their taxes into a lockbox.
-- The Criminal Investigation chief in Cleveland and two of his managers allegedly went joyriding in a government boat and otherwise misspent federal money. The IRS investigation of the case was "inept and superficial," the subcommittee said.
-- Three Office of Inspection managers in Chicago reported misconduct by their boss and allegedly were retaliated against. IRS inspectors bungled the investigation, the subcommittee said.
The events "have seriously compromised the integrity and fairness with which the IRS performs its tax administration responsibilities," the subcommittee concluded.
One of the first steps the IRS took to correct the problem was to move 21 staff members and $1.9 million to the Treasury Department inspector general, an independent office that now investigates allegations against senior IRS managers and employees of the Office of Inspection.
The IRS also is requiring that all executives and managers complete ethics training by September. The agency has a new computerized system for tracking disciplinary actions and is trying to devise a way to publicize those actions while protecting employees' privacy.
The General Accounting Office, the investigative arm of Congress, reviewed 127 allegations, most of which grew out of the subcommittee's inquiry. The inspector general dismissed 64 of the allegations without an investigation or sent them back to the IRS because they did not involve misconduct.