INTERNAL REVENUE SERVICE BUREAU OF CUSTOMS STATEMENT OF EUGENE T. ROSSIDES, ASSISTANT SECRETARY FOR ENFORCEMENT, TARIFF AND TRADE AFFAIRS, AND OPERATIONS ACCOMPANIED BY: VERNON D. ACREE, COMMISSIONER OF CUSTOMS GLENN R. DICKERSON, ASSISTANT COMMISSIONER, OFFICE OF ADMINISTRATION, BUREAU OF CUSTOMS KENNETH L. WILSON, DIRECTOR, BUDGET DIVISION, BUREAU OF CUSTOMS RAYMOND F. HARLESS, DEPUTY COMMISSIONER, INTERNAL REVENUE SERVICE JOHN F. HANLON, ASSISTANT COMMISSIONER, INTERNAL REVENUE SERVICE JOSEPH F. KUMP, ASSISTANT FISCAL MANAGEMENT OFFICER, INTERNAL REVENUE SERVICE EDWARD J. WIDMAYER, ACTING DIRECTOR, OFFICE OF BUDGET AND FINANCE, TREASURY DEPARTMENT BUDGET REQUEST Senator MONTOYA. The last two budget estimates also deal with the Treasury Department. These items are to be covered by the Assistant Secretary, Mr. Rossides, and his associates. Both of these items are contained in House Document No. 92-330. The first item is the request of $5 million for the "Compliance" activities of the Internal Revenue Service. The sum requested will provide for examination, audit and investigation of an increased number of income tax returns with the objective of intensifying efforts to suppress the illegal traffic in narcotics and dangerous drugs. The other request is in the amount of $2.7 million for the Bureau of Customs, salaries and expenses, for increased surveillance of port and dock areas. PREPARED STATEMENT Mr. Rossides, you may proceed with your statement which I understand covers both items. Do you wish to submit it for the record and then proceed to highlight it? Mr. ROSSIDES. Yes, Mr. Chairman. It is a pleasure to be here again. I will submit it for the record in view of the hour. Senator MONTOYA. It will be made a part of the record. (The statement follows:) 79-950 O 72 pt. 1 - 22 Mr. Chairman and members of the Committee, we are pleased to be here in behalf of the Treasury Department's 1973 supplemental appropriation request for the Internal Revenue Service and the Bureau of Customs to strengthen the Treasury Department's drive against narcotics trafficking. We feel that the importance of this effort can hardly be overstated. The supplemental request for the Internal Revenue Service is in the amount of $5,000,000 to provide an additional 238 special agent and revenue agent force (198 man-years this fiscal year). The supplemental request for the Bureau of Customs is in the amount of $2,700,000 to provide an additional 310 Customs Patrol Officers (180 average positions). Internal Revenue Service As you know, the combined effort to combat drug abuse involves more than one agency and more than one approach. IRS's contribution is made through the criminal and civil sanctions of the tax laws. The Service is making investigations leading to prosecution of major narcotics dealers for criminal tax violations and also assessing and collecting taxes and penalties on unreported income, thus reducing their working capital and impairing their operations. We presently have about 540 man-years, uivided between our Intelligence and Audit functions, applied to anti-narcotics work. This program level was authorized by Congress in our supplemental appropriation in late June 1971. Since then, many more subjects, or targets, for investigation have been identified than can be investigated with existing staff. There is now an inventory of over 900 suspected major narcotics dealers in 42 states and the District of Columbia who have been identified and over 800 of whom are under active tax investigation. Additional suspected large scale drug traffickers are being identified at a rate of 50 to 75 a month. There is vast potential in this anti-narcotics drive which we cannot realize at present strength. We are in urgent need of additional investigative personnel for this highest priority program. This supplemental budget request will boost our frontline special agent and revenue agent force in this program by 238 positions (198 man-years this fiscal year). Since the inception of the IRS program there have been 34 indictments of major drug figures for criminal tax violation and an additional 50 recommendations for prosecution have been forwarded to the Department of Justice. All of those tried so far (11) have been convicted and sentenced to prison terms. Tax assessments of $67.2 million have been made and assets seized amount to about $11.4 million, amply offsetting the program's cost, even when allowing for uncollectible assessments. This year, with a full pipeline from target selection through court action and with augmented investigative staff, the effect of the program will become increasingly felt. Although the program is only 14-1/2 months old, the results to date justify it being characterized as one of the most successful law enforcement programs ever undertaken. I would like to submit for the record a 14 month report on the program. There is a final point that should be emphasized: although the IRS anti-narcotics program does produce some revenue, it has never been intended solely as a revenue producing program. It is a special law enforcement effort aimed primarily at disrupting the narcotics traffic. The manpower requested for this priority effort is needed if we are to avoid drawing staff from our programs which do produce the bulk of the nation's revenue. Bureau of Customs The supplemental request for Customs in the amount of $2,700,000 provides for an additional 310 Customs Patrol Officers (180 average positions) for surveillance of port and dock areas to prevent the smuggling of narcotics and dangerous drugs. The capability of the Bureau of Customs to deal with narcotics smuggling has been much improved by additional inspectional and investigative personnel during the past three years. New systems and devices have been put into service, and while there is no doubt that drug traffickers have felt the effect of our increased manpower and technological improvements, much work remains to be done. A most serious loophole in the protection of our country against the introduction of illicit narcotics and other smuggled items is the lack of an adequate Customs patrol force. The patrol force simply has not kept pace with the other improvements in our enforcement program. The need for a substantive strengthening of the Customs Patrol Officer force has been recognized by every group that has studied the situation from the early 1960's to the present. In 1947, Customs had a patrol force of 1,650 nationwide. Reductions during the 1950's cut the patrol force to a level of only 450 by 1960. Today, there are only 588 Customs Patrol Officers nationwide. To give you an idea of the importance of the patrol force, let me outline some of the functions which a Customs Patrol Officer performs. The CPO is the "policeman on the beat," so to speak, in the nation's effort to stop narcotics smuggling across its borders. He is a uniformed law enforcement officer trained to patrol areas where smuggling is likely to occur. He is the man who searches ships and aircraft entering the United States. He provides surveillance over the crews of these vessels, and he patrols our waterfront and airport areas. He is, therefore, the front-line security officer--one of the basic units out of which we build the security of our nation's points of entry. One example will illuminate the type of contribution the CPO makes to our anti-narcotics program. Last April, the British ship M/V LAOMEDON arrived at Dodge Island Seaport, Miami, Florida, from llong Kong via Panama and Jamaica. Two Miami Customs Patrol Officers, on routine surveillance as part of the program against cargo theft, spotted a car and a man apparently acting as a lookout near the ship. The CPO's watched as two more men, one carrying a suitcase, approached the car from the ship. Then, two of the subjects under surveillance drove off in the car--it was stopped and searched, and 22 pounds of pure heroin were found in the suitcase in the trunk. I could cite many more examples of narcotics seizures by CPO's. Experience has shown that CPO's are especially effective (due to their physical location on docks, piers, warehouses, etc., and their dealings with truckers, longshoremen, and similar individuals) in developing information on smuggling. 1 In FY 1972 there were over 46,000 commercial vessel arrivals, of which only a handful were searched, and surveillance of crews was practically nonexistent. There are millions of private vessels capable of visiting foreign areas which cannot now be properly controlled. Thousands of points of easy entry (such as marinas, docks, piers, roads, railways, and the like) offer opportunities for illegal entry of drugs by smugglers. Customs enforcement coverage of these points, to the degree possible with its current force, has shown that uniformed employees like the CPO's do have a major impact (through search, seizures, surveillances, patrols, etc.) that is urgently needed to control drug smuggling. Customs Patrol Officers serve to keep control of entry points after normal business hours, and in this capacity the CPO is the most important person preventing clandestine operations by the smuggler. However, unless there is a surveillance in progress, most major entry areas must be left completely uncovered and unpatrolled between the hours of 6 p.m. and 8 a.m. Only New York, Honolulu, San Juan, and New Orleans are able to have CPO's on round-the-clock shifts, although even here each shift is entirely too small. Because of the lack of CPO manpower, such large ports as Boston, Baltimore, Philadelphia, Miami, Atlanta, Houston, Los Angeles, San Francisco, and Seattle are unable to maintain even minimum 3-shift operations. Adding to the problem is the fact that all these ports are open; that is, anyone has virtually free access on and off the piers. At Los Angeles there are currently only 15 CPO's available for service on a 7-day basis. This means that at a given time not more than three CPO's are available for enforcement functions throughout the entire metropolitan area of Los Angeles which includes major airports and numerous major seaport activities. It Our intelligence discloses that a major portion of the bulk shipments of heroin arrives in the United States by vessel, either directly or through contiguous countries, concealed in automobiles and cargo. This is supported by hard intelligence as well as cases successfully discovered and prosecuted. has been asserted by other police authorities (although Customs has no more definite confirmation) that the supply of heroin and hard narcotics was substantially diminished in New York, Philadelphia, and Baltimore during the East Coast strike last year. These factors point to the need for increased vigilance over arriving vessels, which can only be provided by strengthening the CPO force. In addition to deterring the threat of narcotics, the CPO is also an effective deterrent in the battle against other types of smuggling and against pilferage of articles from Customs custody. Cargo theft at airports and seaports has become big business for some underworld groups and is also an avenue by which narcotics may be introduced into the United States. We have received a considerable number of requests from port authorities, terminal operators, carrier associations, etc., for additional port patrol officers. In summary, a weak link in the Customs narcotics interdiction program is the lack of an adequate Customs Patrol Officer force. To rebuild the CPO force to a level at which it can begin to play its rightful part in the Customs enforcement program, we are requesting 310 additional CPO personnel. This is a beginning, but we feel that we can concentrate these additional CPO's in areas where the greatest enforcement return can be achieved. We appreciate the tremendous support this Committee has given Treasury law enforcement in general over the years, and in particular in providing funds and encouragement to the Bureau of Customs and the Internal Revenue Service to combat drug abuse. We will be pleased to answer any questions the Committee may have. |