Management Advisory Report:
Two Violations of the Fair Debt Collection Practices Act Resulted in
Administrative Actions (Fiscal Year 2002)
May 2002
Reference
Number: 2002-10-101
This report has cleared the Treasury
Inspector General for Tax Administration disclosure review process and
information determined to be restricted from public release has been redacted
from this document.
May
31, 2002
MEMORANDUM FOR
DEPUTY COMMISSIONER
CHIEF COUNSEL
FROM:
Pamela J. Gardiner /s/ Pamela J. Gardiner
Deputy Inspector General for
Audit
SUBJECT: Final Management Advisory Report: Two Violations of the Fair Debt Collection
Practices Act Resulted in Administrative Actions (Fiscal Year 2002) (Audit # 200210016)
This report
presents the results of our Fiscal Year 2002 Fair Debt Collection Practices Act
(FDCPA) review. The overall objective
of this review was to obtain information on the Internal Revenue Service’s
(IRS) administrative and civil actions resulting from FDCPA violations by IRS
employees. Section 1102 (d)(1)(G) of
the IRS Restructuring and Reform Act of 1998 (RRA 98) requires the Treasury
Inspector General for Tax Administration to include in one of its semiannual
reports to the Congress information regarding any administrative or civil
actions related to violations of the FDCPA.
The semiannual report
must provide a summary of such actions and include any judgments or awards
granted.
In
summary, we found two violations of the FDCPA reported by IRS management that
resulted in administrative actions against employees. However, there were no civil actions that resulted in the IRS
paying monetary settlements to taxpayers because of an FDCPA violation.
Management’s Response:
IRS
management agreed with the observations in our discussion draft report. Management’s complete response to the
discussion draft report is included as Appendix V.
Copies
of this report are also being sent to the IRS managers who are affected by the
report. Please contact me at (202)
622-6510 if you have any questions or Daniel R. Devlin, Assistant Inspector
General for Audit (Headquarters Operations and Exempt Organizations Programs),
at (202) 622-8500.
Two Fair Debt
Collection Practices Act Violations Resulted in Administrative Actions
No Fair Debt Collection Practices Act Civil Actions Resulted in a Monetary Settlement to a Taxpayer
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – Fair Debt Collection Practices Act Provisions
Appendix V – Management’s Response to the Discussion Draft
Report
Section 1102 (d)(1)(G) of the
Internal Revenue Service (IRS) Restructuring
and Reform Act of 1998 (RRA 98) requires the
Treasury Inspector General for Tax Administration to include in one of its
semiannual reports to the Congress information regarding any administrative or
civil actions related to Fair Debt Collection Practices Act (FDCPA)
violations. The
semiannual report must provide a summary of such actions and include any
judgments or awards granted.
The IRS’ definition of administrative action includes disciplinary
actions ranging from admonishment through removal. Lesser actions, such as oral or written counseling, are not
considered administrative actions. We
used the IRS’ definition of administrative actions when determining the number
of FDCPA violations to be reported to the Congress.
As originally enacted, the FDCPA included provisions that restricted various collection abuses and harassment in the private sector. These restrictions did not apply to federal government practices. However, the Congress believes that it is appropriate to require the IRS to comply with applicable portions of the FDCPA and to be at least as considerate to taxpayers as private creditors are required to be with their customers (see Appendix IV for a detailed description of the FDCPA provisions).
Taxpayer complaints about IRS
employees’ conduct can be reported to several IRS functions for tracking on
management information systems. If a
taxpayer files a civil action or if IRS management determines that the
taxpayer’s FDCPA rights were potentially violated, the complaint could be
referred and tracked on one or both of the following IRS systems:
·
Office of Workforce
Relations’ Automated Labor and Employee Relations Tracking System
(ALERTS), which generally tracks employee behavior
that may warrant IRS management administrative actions.
·
Office of the Chief Counsel’s Counsel Automated System
Environment (CASE), which is an inventory control
system that tracks items such as taxpayer civil actions or bankruptcies.
The IRS implemented FDCPA codes on
the ALERTS in March 1999 and on the CASE in June 1999.
For this Fiscal Year (FY) 2002 review, we analyzed closed cases from the ALERTS to identify violations of the FDCPA. However, we cannot ensure that cases recorded on the ALERTS encompass all FDCPA violations. As stated in our FY 2000 report on the FDCPA, data captured on the ALERTS related to potential FDCPA violations may not always be complete and accurate. During this FY 2002 review, we also did not determine the accuracy or consistency of disciplinary actions taken against employees for FDCPA violations reported to the Workforce Relations function. Fieldwork was performed in the Strategic Human Resources, Agency-Wide Shared Services, and Chief Counsel functions in the IRS National Headquarters during the period February to April 2002. This review was performed in accordance with the President’s Council on Integrity and Efficiency’s Quality Standards for Inspections.
Detailed information on our audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
To determine if any FDCPA violations resulted in an administrative action, we reviewed cases from the ALERTS coded as potential FDCPA violations that were opened after July 22, 1998, and closed during the period January 1 through December 31, 2001. Our review of all 52 cases coded as FDCPA violations identified 2 FDCPA violations that occurred after July 22, 1998, and resulted in administrative actions being taken against employees.
In one case, the IRS employee contacted the taxpayer without the consent of the taxpayer’s representative. The employee contacted the taxpayer on a Saturday, which is considered an unusual time (non-business day). Based upon this action, as well as the use of inappropriate language with the taxpayer, the employee received an official letter of reprimand.
In the second case, the IRS employee also directly contacted the taxpayer without the consent of the taxpayer’s representative. When contacted by the representative, the employee exhibited rude and discourteous behavior. As a result, the employee was given an official letter of admonishment.
In addition, IRS employees received written
counseling for FDCPA violations in two other cases closed during our audit
period (direct contact of the taxpayer without the representative’s consent and
rude behavior, respectively). Such
conduct, as exhibited in these four cases, impairs the ability of the IRS from
meeting its mission of providing top-quality customer service to taxpayers.
During the period January 1 though
December 31, 2001, there were no cases closed on the CASE
in which the IRS paid any money to taxpayers for civil actions resulting from
FDCPA violations. The CASE included one
closed civil action coded as FDCPA during the period of this review. However, our review of the case
documentation indicated that the alleged FDCPA violation occurred prior to
enactment of the RRA 98 (July 22, 1998).
As a result, the FDCPA provision did not apply to the IRS at the time of
the alleged violation.
Management’s Response: IRS management agreed with the observations in our discussion draft report and is initiating action to assure that the identification and reporting of FDCPA cases continues to be effectively monitored.
Appendix I
Detailed Objective, Scope, and Methodology
The objective of this review was to obtain information on Internal Revenue Service (IRS) administrative and civil actions resulting from violations of the Fair Debt Collection Practices Act (FDCPA) by IRS employees. Specifically, we:
I.
Determined the number of
FDCPA violations resulting in administrative actions.
A.
Obtained a computer extract
from the Automated Labor and Employee Relations Tracking System of the 52 cases
that were opened after July 22, 1998, and closed during the period January 1
through December 31, 2001, coded as FDCPA violations.
B.
Determined if any cases
involving FDCPA violations resulted in an administrative action.
II.
Determined the number of
FDCPA violations resulting in IRS civil actions (judgments and awards granted).
A.
Obtained a computer extract
from the Counsel Automated System Environment of the one Subcategory 511
(established to track FDCPA violations) case opened after July 22, 1998, and
closed during the period January 1 through December 31, 2001.
Appendix II
Major Contributors to This Report
Daniel R. Devlin, Assistant Inspector General for Audit
(Headquarters Operations and Exempt Organizations Programs)
Nancy Nakamura, Director
Jeffrey M. Jones, Audit Manager
Deadra M.
English, Senior Auditor
Donald
J. Martineau, Auditor
Appendix III
Commissioner N:C
Chief, Agency-Wide Shared Services A
Director, Strategic Human Resources N:ADC:H
Associate Chief Counsel (Procedure and Administration) CC:P&A
Director, Office of Workforce Relations N:ADC:H:R
Director, Personnel Services A:PS
National Taxpayer Advocate
TA
Director, Office of Program Evaluation and Risk
Analysis N:ADC:R:O
Office of Management Controls N:CFO:F:M
Director,
Legislative Affairs
CL:LA
Audit Liaisons:
Chief, Agency-Wide Shared Services A
Chief
Counsel CC
Director,
Strategic Human Resources N:ADC:H
Associate Chief Counsel (Procedure and
Administration) CC:P&A
Director, Office of Workforce Relations N:ADC:H:R
Appendix IV
Fair Debt Collection Practices Act Provisions
To ensure equitable treatment among debt collectors in the
public and private sectors, the Internal Revenue Service (IRS) Restructuring
and Reform Act of 1998 (RRA 98) requires the IRS to comply with certain
provisions of the Fair Debt Collection Practices Act. Specifically, the IRS may not communicate with taxpayers in
connection with the collection of any unpaid tax:
·
At unusual or inconvenient
times.
·
If the IRS knows that the
taxpayer has obtained representation from a person authorized to practice
before the IRS, and the IRS knows or can easily obtain the representative’s
name and address.
·
At the taxpayer’s place of
employment, if the IRS knows or has reason to know that such communication is
prohibited.
Further, the IRS may not harass,
oppress, or abuse any person in connection with any tax collection activity or
engage in any activity that would naturally lead to harassment, oppression, or
abuse. Such conduct specifically
includes, but is not limited to, the:
·
Use or threat of violence or
harm.
·
Use of obscene or profane
language.
·
Causing a telephone to ring
continuously with harassing intent.
·
Placement of telephone calls
without meaningful disclosure of the caller’s identity.
Appendix V
Management’s Response to the Discussion Draft Report
The response
was removed due to its size. To see the
complete response, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.