Internal Revenue Service

The Internal Revenue Service is the agency through which the Secretary of the Treasury administers the federal tax laws. Section 7801 of the Internal Revenue Code gives the secretary "full authority to administer and enforce the internal revenue laws" and "the power to create an agency to enforce these laws"; in the service's own words, "the IRS was created based on this legislative grant." Section 7803 provides for a Commissioner of Internal Revenue "to administer and supervise the execution and application of the internal revenue laws." Its main office is at 1111 Constitution Avenue NW in Washington, D.C.¹ The office of Commissioner of Internal Revenue was created in 1862, with an income tax to pay for the Civil War; in the 1950s the agency was reorganized to replace patronage appointments with career staff, and the Bureau of Internal Revenue was renamed the Internal Revenue Service. Only the commissioner and the chief counsel are appointed by the president and confirmed by the Senate.²

Operation Tradewinds

"In 1965, the Internal Revenue Service launched an investigation into the financial activities of American citizens in the Bahamas," the Supreme Court recorded in 1980; the project, Operation Trade Winds, was run from Jacksonville.³ In 1966 senior officers of IRS intelligence met Henry Petersen of the Justice Department's organized crime section to arrange "special handling" of evidence obtained in ways that "violated Bahamian laws." The intelligence chief, William Kolar, later went to work with the Justice Department lawyers Robert Peloquin and William Hundley at Intertel, a subsidiary of the company that owned the casino on Paradise Island.⁴

In 1972 the operation turned to the Castle Bank and Trust. On January 15, 1973, Norman Casper, a former Wackenhut agent paid as informant TW-24 and working for Special Agent Richard Jaffe, took a bank officer's briefcase from a Miami apartment and had some 400 documents photographed at an IRS agent's house before returning it; the IRS paid him 8,000 dollars in cash. A federal judge called the conduct "outrageous" in 1977. Chief Justice Warren Burger, concurring in the decision that reversed the suppression of the evidence, wrote that it "should not be read as condoning the conduct of the IRS 'private investigators,'" and the Court noted that after a congressional inquiry in 1976 "the Commissioner of Internal Revenue 'called off' Operation Trade Winds."³ The Wall Street Journal reported in 1980 that the tax cases had been dropped at the request of the CIA, for which the bank's founder, Paul Helliwell, had moved money.⁵

Exempt Organizations

After Representative Wayne Hays demanded in 1954 that the exemption of H.L. Hunt's Facts Forum be lifted, the IRS gave it what the trade weekly Broadcasting-Telecasting called "a clean bill of health."⁶ It later revoked the exemption of the Coalition for Freedom, run by Thomas F. Ellis, for political activity and private benefit to insiders.⁷ The Forms 990 that exempt bodies file with the service are the record from which Barry Mehler compiled the grants of the Pioneer Fund from 1971 to 1996, and from which the paid trustees of In-Q-Tel, among them George Tenet and Admiral Mike Mullen, are known.⁸⁹

Other Cases

In 1994 Nelson Bunker Hunt and William Herbert Hunt paid about 160 million dollars, most of it to the IRS.¹⁰ In July 2023 Senator Ron Wyden, chairman of the Senate Finance Committee, opened an inquiry into the roughly 158 million dollars that Leon Black had paid Jeffrey Epstein between 2012 and 2017 for tax, trust and estate-planning advice, and in July 2025 said the work deserved an IRS examination.¹¹ Among former employees, Robert Garder Terrell, spokesman and financial manager of The Finders, had been an IRS appeals officer, and Peter Videnieks, the Justice Department contracting officer on the PROMIS contract with Inslaw, had worked for the service.¹²¹³