EVERETT — An IRS agent was kicked out of an audit of the Everett Housing Authority after he allegedly asked about a female employee’s perfume, invaded her personal space and talked about the two being “alone again.”

The agent was three days into a weeklong audit in April when the Housing Authority employee told a manager that she no longer wanted to meet privately with the auditor.

“My first reaction was, ‘We are done with three days, we’ve got a couple more days, can’t we just get through this?’ ” said Bud Alkire, the Housing Authority’s executive director. “As the discussion went on and we learned about the (IRS agent’s) conduct, we couldn’t let this persist.”

The Housing Authority employee was assigned the task of providing the IRS agent with the authority’s payroll and other financial records, according to an e-mail obtained by The Herald through public records laws.

The employee told managers the agent positioned himself close to her while talking, leaned in toward her and asked if he was making her “uncomfortable.” She described the IRS agent as “slimey” (sic), according to a letter sent by Alkire to the IRS.

The agent also reportedly made several references to the woman about the penalties the IRS could bring down on the Housing Authority if he found problems.

Citing privacy concerns, the Housing Authority is not disclosing the employee’s name.

Reached at home and at work last week, the IRS agent declined to comment. He said he is forbidden to discuss with the press any topic regarding his employment. The Herald is not naming him.

IRS spokeswoman Judy Monahan in Seattle and spokesman Jesse Weller in Oakland, Calif., said they could not comment on the allegations or even confirm the IRS audited the Housing Authority. The IRS agent’s behavior was egregious, created a potentially hostile workplace and opened the possibility of a sexual harassment complaint for the IRS and Housing Authority, Alkire said in his letter to the IRS.

“Interspersed with personal comments were extensive remarks … about the fines and penalties the IRS could impose,” he wrote. “(The employee) was intimidated by the sexual innuendo in the tone and content of (the IRS agent’s) comments, and by the remarks about penalties.”

After being asked to leave on April 9, the agent stayed and attempted to discuss the matter. He warned the IRS would react by subpoenaing the Housing Authority’s records and reviewing them at its Bellevue offices, according to Alkire’s letter.

The agent works as an auditor with the IRS’s Federal, State and Local Governments unit.

Two days after the agent was sent away, a criminal investigator with the U.S. Department of Treasury was sent to Everett. The Treasury Department investigates allegations of abuse by the IRS.

The agent wanted to interview the woman but was thwarted after Alkire questioned whether he was qualified to handle the investigation, records show.

Alkire told him that it wasn’t a criminal matter but an “issue of violation of discrimination laws.” The investigator told Alkire that he would decide that. Alkire wanted to have the Housing Authority’s female attorney sit in on the interview. The investigator left after the pair could not agree on how the interview should occur, records show.

Treasury Department spokesman David Barnes said it’s against policy to confirm or discuss investigations.

This month, the IRS flew out a second auditor from its Nevada offices who completed the review, Alkire said in an interview last week.

The auditor reviewed payroll records and policies on the personal use of Housing Authority cell phones, laptop computers, cars and employer-provided meals. Tax forms sent to landlords who participate in the housing voucher program, known as Section 8, also were inspected.

A few irregularities were uncovered, but nothing serious enough to trigger fines, Housing Authority officials say.

Everett Housing Authority commissioner Lyle Ryan — one of six appointed by Everett’s mayor to oversee the public agency — said the incident was unusual and he believes Housing Authority managers handled the complaint appropriately.

The Housing Authority, which operates mostly on grants from the U.S. Department of Housing and Urban Development, has an annual budget of about $30 million. It has more than 100 employees, assists 2,400 households through its housing voucher program and another 1,000 families that live in public housing units in Everett.

The special IRS unit that inspects government agencies for tax compliance is taking a closer look at community colleges and housing authorities this year.

Reporter David Chircop: 425-339-3429 or dchircop@heraldnet.com.