COMMITTEE MEMBERS STATED IN THEIR OPENING REMARKS THAT AMERICANS SPENT $44 TO $63 BILLION ON ILLEGAL DRUGS IN 1978. THE HEARINGS FOCUSED ON LARGE SCALE NARCOTICS TRAFFIC, OFTEN INVOLVING ORGANIZED CRIME AND SOPHISTICATED FINANCIAL MANIPULATIONS. OFFICIALS FROM THE DRUG ENFORCEMENT ADMINISTRATION, THE CUSTOMS SERVICE, FEDERAL BUREAU OF INVESTIGATION, AND DEPARTMENT OF JUSTICE DESCRIBED THEIR EFFORTS TO COMBAT DRUG TRAFFIC. FLORIDA LAW ENFORCEMENT PROFESSIONALS DISCUSSED THE FLOW OF DRUGS THROUGH THAT STATE AND ITS IMPACT ON CRIME AND THE ECONOMY. DRUG TRAFFIC BETWEEN MEXICO AND THE U.S. WAS COVERED IN TESTIMONY FROM A U.S. DISTRICT ATTORNEY IN CALIFORNIA. THE COLOMBIAN EMBASSADOR TO THE U.S. USED COLOMBIA'S EXPERIENCES WITH DRUG TRAFFICKERS TO DEMONSTRATE THE VAST FINANCIAL IMPACT THAT THESE ACTIVITIES HAVE ON A DOMESTIC ECONOMY. A MAJOR CONCERN THROUGHOUT THE HEARINGS WAS THE ROLE OF THE INTERNAL REVENUE SERVICE (IRS) IN INVESTIGATING DRUG TRAFFICKERS. THE TAX REFORM ACT OF 1976 ESTABLISHED VERY RESTRICTIVE GUIDELINES ON DISCLOSURE OF TAX RETURN INFORMATION BY THE IRS, AND CONSEQUENTLY THEIR ACTIVITIES AGAINST ORGANIZED CRIME HAVE DECREASED. SEVERAL IRS OFFICIALS COMMENTED ON CONFLICTS BETWEEN DISCLOSURE PROVISIONS OF THE LAW AND CRIMINAL TAX LAW ENFORCEMENT. OVER THE PAST FEW YEARS, THE IRS HAS DECIDED TO CONCENTRATE ON INVESTIGATING THE INCLUDES A DICTIONARY OF TERMS TO AID THE READER IN ORGANIZED CRIME FIGURES. LAW ENFORCEMENT PROFESSIONALS FELT THAT THE IRS SHOULD AGAIN BECOME ACTIVE IN COMBATTING DRUG TRAFFIC. SELECTED EXHIBITS ARE PROVIDED, INCLUDING REPORTS ON CURRENCY FLOWS AND OFFSHORE BANKING. THE APPENDIX CONTAINS CORRESPONDENCE BETWEEN THE COMMITTEES AND THE IRS AND A 1974 SPEECH GIVEN BY THE COMMISSIONER OF INTERNAL REVENUE TO THE AMERICAN BAR ASSOCIATION. (MJM)