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Thursday, February 13, 2014

Bill Henck: Whistleblower from Inside the IRS

And although not mentioned in this article, let us not overlook that The IRS is a Private Collection Agency for the US Federal Reserve!

Posted on February 6, 2014 by Scott Johnson in IRS
Bill Henck: Inside the IRS

As noted at the top, William Henck has worked inside the IRS Office of the General Counsel as an attorney for over 26 years. We submit the following personal account by Mr. Henck for the consideration of readers in the context of current controversies without further comment. He writes:

I have been an attorney in the IRS Office of Chief Counsel for over 26 years. Over a number of years, I have attempted, largely unsuccessfully, to alert the public to abuse within the IRS. One of my kids suggested that I contact a blog and Power Line has graciously agreed to publish this account.

I do not personally know whether the IRS has targeted conservative groups or individuals, but I do know that the environment within the agency is ripe for such activity and there is nothing to prevent it from occurring. As stated in more detail below, I have personally witnessed improper giveaways of billions of dollars to taxpayers with inside access at the agency, bullying of elderly taxpayers, the cover-up of managerial embezzlement and misappropriation of thousands of dollars in government funds, and a retaliatory audit. I have also heard credible accounts of, among other things, further improper giveaways, blatant sexual harassment, and anti-Semitism. 

All of these matters have been swept under the rug.

A number of years ago, a manager in my office was embezzling thousands of dollars in travel funds. His actions were common knowledge, but other managers, including a currently high ranking executive in the office of chief counsel, did not report him. I did report his conduct to the Treasury Inspector General for Tax Administration (TIGTA), but they did not investigate the matter for a considerable length of time. After I complained to my local congressman’s office, TIGTA finally forwarded the matter to the office of chief counsel to be handled internally. Eventually, the office of chief counsel made the manager pay the money back, but took no other disciplinary action, even though others who committed the same type of scheme were punished severely.

The manager in question has led a charmed life. Several years after this episode, he decided to retire, but was starting a new job in a different city two months before he was eligible to retire. He could have retired early or taken annual leave for two months before retiring. However, he did not want to take annual leave because federal employees can cash out annual leave when they retire. Rather than have him burn at least $20,000 in annual leave, the IRS transferred him to the new city, but did not give him any work, allowing him to work his new job while still receiving a government paycheck. I obtained an e-mail from this manager, in which he admitted that he had no work, that the IRS was not planning to give him any work in the new city, and that he was working on matters related to his new job while at the IRS. I forwarded this e-mail to TIGTA, but of course it was ignored by both TIGTA and the office of chief counsel. TIGTA has a well deserved reputation for protecting IRS managers. In fact, a TIGTA agent once stated that “we don’t investigate [IRS] managers.”

At the same time the manager was embezzling travel funds, I was working on a case involving what I call the Elmer’s Glue scam. Tax shelter operators misused a synthetic fuel credit by spraying watered down household glue on marketable coal, degrading the coal, but producing huge tax credits for investors. This was costing the Treasury at least $3 billion a year. The IRS turned a blind eye to this activity and harassed those of us in the agency who were trying to stop it. Since I had witnessed TIGTA help cover up embezzlement, I decided to go to the press about the Elmer’s Glue scam. The Wall Street Journal published a story about it, but the scam continued.

As a result of complaining about TIGTA’s inaction regarding embezzlement and speaking out about the Elmer’s Glue scam, my wife and I were subjected to a retaliatory IRS audit. After an experienced revenue agent from Fairfax spent an entire day auditing our tax returns, he stated that they were clean. 

Soon thereafter, he called me and apologetically stated that his “special projects” manager had ordered him to return to Richmond and “keep digging” into our returns. He stated that his regular manager would not have ordered this (I believe that because in 26 years at the IRS, I have never heard of an agent being sent back to continue a straightforward individual return that had been judged to be clean). I contacted the Washington Post and gave them a privacy waiver to discuss our tax returns with the Service. When the Post presented that waiver to the Service, they quickly dropped our audit. READ MORE>>