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August 22, 2007
The Tax Man at Your Door
Joseph J. Thorndike

Full Text Published by Tax AnalystsTM

Joseph J. Thorndike is a contributing editor with Tax Analysts. E-mail: Joe_Thorndike@tax.org.


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    Once upon a midnight dreary, while I pondered, weak and weary, Over many a quaint and curious volume of forgotten lore, While I nodded, nearly napping, suddenly there came a tapping, As of some one gently rapping, rapping at my chamber door. "'Tis some visitor," I muttered, "tapping at my chamber door — Only this, and nothing more."
— Edgar Allan Poe, "The Raven"

As the sun climbed into the sky on July 29, 1953, Boston commuters made their way to work. For most, it was just another Wednesday, with cloudy skies and temperatures in the mid-80s. But for 280 employees of the IRS, the day was anything but ordinary. With orders from Washington, an army of revenue agents fanned out across the city, knocking on doors and looking for tax delinquents.

The canvass, supervised by New England Regional Commissioner William A. Gallahan, was both simple and systematic. Agents across New England were assigned to particular streets and instructed to knock on the door of every business or residence. When taxpayers answered, they were asked whether they had filed a return for 1952. If yes, then they were asked for proof of payment — a receipt, perhaps, or a cancelled check.

Nonfilers were told to expect a summons from the IRS. Those claiming to have filed but lacking proof got a brief reprieve: On returning to the local office, revenue agents checked names against agency records.

Taxpayers who could provide proof were off the hook — sort of. Agents were specifically instructed not to attempt any sort of spot audit; they were looking for nonfilers, not tax avoiders. But agents were encouraged to keep an eye out for signs of unexpected affluence, including anything "definitely inconsistent with income reported or taxes paid."

The Results

According to press reports, taxpayers throughout most of New England greeted the itinerant agents with civility, if not enthusiasm. According to Gallahan, most accepted the necessity of such a survey. Rhode Islanders, however, proved troublesome. Agents reported "a good many doors slammed in their faces," according to The New York Times. And some taxpayers were furious. "My husband's in the service," declared one woman as she shut the door. "What more do you want?"

What the IRS wanted was money. "From indications we have," Gallahan told reporters, "we think there are too few returns filed and too many delinquents in this region." But it wasn't just flinty New Englanders who posed a problem for the agency. The income tax was still a new burden for most Americans: It had only reached the middle class in the early 1940s, when lawmakers transformed it from a tax on the rich to a tax on almost everyone. It took a while for many people to get wind of their new fiscal responsibility, and policymakers worried incessantly about widespread noncompliance. Accordingly, they also tried the door-to-door canvass in cities around the country, including Dallas, Denver, Cincinnati, Omaha, San Francisco, and Los Angeles.

But New England was the principal testing ground for this new enforcement technique, and early results seemed encouraging. Of the 8,800 people surveyed in New England during the first two days of the canvass, 1,150 had failed to file at least one required form. Agents collected more than $242,000 in payments, including $80,000 ponied up while agents stood at the door.

Even more striking, another $162,000 came from worried nonfilers who rushed to pay before agents even reached their doorsteps. "Like most income-tax enforcement techniques, this was a psychological weapon," Time magazine observed. "When the Los Angeles newspapers said that a canvass had begun, 1,200 people showed up at the Internal Revenue office before it opened next morning; some asked for forms as far back as 1935."

In the New England region, about 13 percent of taxpayers turned out to be delinquent. But compliance varied considerably between states. Rhode Island, somewhat predictably, proved a particular trouble spot, with a delinquency rate of 34 percent. Maine took second place at 21.6 percent, while Connecticut, Vermont, and New Hampshire all registered in the single digits. Also, some forms turned out to be more troublesome than others, with Form 1040ES, the declaration of estimated tax, accounting for the largest number of problems.

Pleased with the results, Gallahan scheduled similar surveys for late August and subsequent months. Eventually, he hoped to reach every one of New England's 5 million business and individual taxpayers.

The Backlash

Gallahan's boss, IRS Commissioner T. Coleman Andrews, also pronounced himself pleased with the results. In a letter to one unhappy congressman from Connecticut, Andrews pointed out that costs for the July canvass — principally in the form of staff time — had totaled just $10,250. With delinquent payments still coming in, the agency was collecting $24 for every $1 it spent. "To me this is good business," Andrews declared.

Andrews was a tough customer, brought in to remake the IRS after its corruption scandals of the early 1950s. He came to Washington from Virginia, where he had made a name for himself as an anticorruption crusader in the state auditor's office. He styled himself a "Byrd Democrat," after Virginia's senior senator, committed to fiscal austerity and governmental efficiency.

While heading the IRS, Andrews orchestrated several reforms, including a shift of many positions and functions from Washington to the agency's numerous field offices. "We're taking away from the red-tape crew," he bragged to Time, "and increasing the workers who go out and actually harvest the tax crop." The canvass seemed a logical element of this program, and Andrews insisted that it would be "stepped up and intensified." Plans for a national rollout went forward.

But Andrews faced a rebellion in Congress. Lawmakers from New England were outraged at this intrusive innovation. Massachusetts Rep. Philip J. Philbin called it "an abhorrent method of tax gouging and snooping." Indeed, he said, it "smacks of the Gestapo and OGPU [Soviet secret police] methods of the police state."

Philbin's Connecticut colleague, Rep. Albert Paul Morano, offered a similar assessment in very similar language. "It's not fair to subject millions of good responsible citizens to Gestapo-like measures to track down a few evaders," he told Andrews in a letter. The agency, Morano insisted, should avoid "totalitarian methods." Rep. Edith Nourse Rogers, also of Massachusetts, chimed in with her own inflammatory rhetoric: "This is the sort of thing that the Communist government does in Russia."

Andrews was unmoved by such complaints. Agents were specifically instructed to avoid confrontational tactics, he said, including any forced entry into a home or place of business. "If the taxpayer is unwilling to talk with the agent, that ends it," he explained defensively. Uncooperative taxpayers, of course, might still be summoned to the local IRS office. But agents were given "plain instructions" to avoid personal questions or intrusive queries.

Perhaps. But those assurances didn't stop the press from dubbing the canvass "Operation Snoop." Editorial opinion was mixed (isn't it always?), but one notable voice of support came from The Wall Street Journal. "There is some talk of opposition to this project from politicians who say that people will not like Federal agents checking up on them," the paper observed. "There has even been talk that this is something like a Nazi Gestapo or a Russian MVD [Ministry of Internal Affairs], harassing the honest."

But the Journal found that language to be irresponsible and off base. "While those who want to gyp the government won't like it," the Journal predicted, "we suspect that most taxpayers will be happy to see the system work. For if there is anything a taxpayer dislikes more than paying up, it is the person who ought to pay and doesn't."

The End

The editors were right, at least initially. In a nationwide poll, the American Institute for Public Opinion found that 53 percent of those questioned approved the door-to-door hunt for tax delinquents. Respondents cited the need to keep the system fair for honest taxpayers. In an article for the Los Angeles Times, pollster George Gallup offered a few sample comments gleaned from respondents:

  • "Everyone should pay his taxes."
  • "It's the only way to prevent tax dodging."
  • "Those who've paid won't object."
  • "The government is entitled to the taxes."

But if support ran strong, so did opposition. Fully 39 percent disapproved of the canvass, citing cost and privacy concerns:
  • "It's wasteful and expensive."
  • "It will cost them more than they take in."
  • "It's snooping — and invasion of citizens' privacy."
  • "It's going to make a lot of people mad."

Poll results did not follow party lines. "Democrats and independents see exactly eye to eye with GOP voters," Gallup reported. But regional variation was striking, with opposition especially strong in the South and weak in the West.

The high negatives associated with the canvass were ominous, at least for fans of vigorous enforcement. While Andrews continued to insist that plans for a nationwide rollout were intact, he suspended further experiments with the technique.

In early October, the regional commissioner for California announced an end to the survey around Los Angeles. In its place, he established a new, more focused enforcement initiative. Using data gathered during the canvass, the IRS would target business lines and occupations that seemed particularly prone to problems. The overall delinquency rate for the LA region, he noted, was just 1 percent, but it reached as high as 15 percent for some occupations.

The California program would soon prove a model for other regions. And while the IRS never formally abandoned the canvass, it slipped from public view in the last few months of 1953.

A couple of years later, the canvass lost its most important advocate when Andrews left for a job in the private sector. But within a few months, Andrews was back in the headlines, this time for denouncing the income tax. His complaints must have warmed the hearts of a few New England lawmakers: "I don't believe in the Government reaching down into your pocket and taking money by force, by police state methods," he told a reporter in April 1956, "but that's what it is doing every day under our tax system."