Fiscal Year 2003 Statutory Review of Disclosure of
Collection Activity With Respect to Joint Returns
May 2003
Reference
Number: 2003-40-110
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
7, 2003
MEMORANDUM FOR
COMMISSIONER EVERSON
FROM: Gordon C.
Milbourn III /s/ Gordon C. Milbourn III
Acting
Deputy Inspector General for Audit
SUBJECT: Final Audit Report - Fiscal Year 2003
Statutory Review of Disclosure of Collection Activity With Respect to Joint
Returns (Audit # 200340001)
This
report presents the results of our review to determine if the Internal Revenue
Service (IRS) is in compliance with Internal Revenue Code Section (I.R.C. §)
6103(e)(8) (Supp. IV 1998) related to the disclosure of collection activities
to joint filers.
In
summary, we could not determine if the IRS fully complied with I.R.C. §
6103(e)(8) requirements when responding to all written information requests
from joint filers. This is the fifth
year in which we have reported our inability to give an opinion on the IRS’
compliance with the provisions of I.R.C. § 6103(e)(8).
The
Treasury Inspector General for Tax Administration is required under I.R.C. § 7803(d)(1)(B)
(Supp. IV 1998) to annually evaluate the IRS’ compliance with the joint filer
request provisions of the law. IRS
management information systems do not separately record or monitor joint filer
requests, and the Congress has not explicitly required the IRS to do so. Furthermore, we do not recommend the
creation of a separate tracking system.
Accordingly, we are making no recommendations in this report.
Management’s
Response: IRS management continues to support their
determination to not develop a management control process to track joint filer
information requests. Since IRS
management believes that repeatedly addressing the issue is burdensome, the
Office of Legislative Affairs has drafted a legislative proposal for the
Congress to consider repealing I.R.C. § 7803(d)(1)(B). The proposal will soon be transmitted to the
Department of the Treasury in hopes it will support and forward the proposal to
the Congress. Management’s complete
response to the draft report is included as Appendix IV.
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 questions or Michael R. Phillips, Assistant Inspector
General for Audit (Wage and Investment Income Programs), at (202) 927-0597.
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – Management’s Response to the Draft Report
The Taxpayer Bill of Rights 2 (TBOR2) added Internal Revenue Code Section (I.R.C. §) 6103(e)(8) (Supp. IV 1998), which gives joint filer taxpayers who are no longer married or no longer reside in the same household the right to receive information regarding the Internal Revenue Service’s (IRS) efforts to collect delinquent taxes on their joint return liabilities. The procedures in I.R.C. § 6103(e)(8) require that the IRS provide, in writing, collection activity information to joint filers if they send in a written request. After passage of the TBOR2, the IRS Disclosure Office issued procedures which stated that if I.R.C. § 6103(e)(8) is not specifically cited in the request, the IRS can provide either an oral or written response, based upon I.R.C. § 6103(e)(7) (1994).
The IRS Restructuring and Reform Act of 1998
(RRA 98) added I.R.C. § 7803(d)(1)(B) (Supp. IV 1998),
which requires the Treasury Inspector General for Tax Administration to review
and certify annually whether the IRS is complying with the requirements of
I.R.C. § 6103(e)(8).
The RRA 98 required both the Department of
the Treasury and the Joint Committee on Taxation (JCT) to complete separate
studies of the scope and use of provisions regarding taxpayer
confidentiality. The JCT issued its
study report in January 2000 and recommended I.R.C. § 6103(e)(8) be amended to
allow for both oral and written information requests from joint filers. The Department of the Treasury issued its
study report in October 2000 with a similar recommendation to eliminate the
requirement that joint filer information requests be in writing. The Department of the Treasury’s report also
suggested that our reporting requirement regarding joint filer requests be
phased out.
In response to a recommendation in our Fiscal
Year 1999 audit report, the IRS agreed to perform separate analyses by January
2001 in the former National Headquarters Collection and Customer Service
functions to determine the volume of written joint filer requests
received. IRS management stated that
they would use the outcome of these analyses to determine if a centralized
management control process to track joint filer requests was warranted.
Due to the low volume of requests identified
during the Collection study, the former National Headquarters Customer Service
function did not perform its analysis.
In May 2001, management in the Small Business/Self-Employed and Wage and
Investment Divisions decided not to develop a new management control process to
track joint filer information requests.
We performed our review in the IRS National Headquarters in Washington, D.C., at the Small Business/Self-Employed and Wage and Investment Divisions and the Office of the National Taxpayer Advocate, during the months of February and March 2003. This audit was performed in accordance with Government Auditing Standards. Detailed information on the audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
We could not determine if the IRS fully
complied with I.R.C. § 6103(e)(8) requirements when responding to all written
requests from joint filers because of our inability to identify joint filer
requests received nationwide. In fact,
this is the fifth year
in which we have reported our inability to give an opinion on the IRS’
compliance with the provisions of I.R.C. § 6103(e)(8). This condition occurred because the IRS’
management information systems do not separately record or monitor joint filer requests.
During this review, management
from the Small Business/ Self-Employed and Wage and Investment Divisions
commented that the IRS’ position has not changed from last year and the IRS
does not plan to implement a system to identify or track joint filer requests
for collection activity. In addition, there is no statutory or
regulatory requirement for the IRS to develop a separate system that records or
monitors these requests. We do not
recommend the creation of a separate tracking system and are, therefore, making
no recommendations in this report.
Management’s
Response: IRS management continues to support their determination to not develop
a management control process to track joint filer information requests. Their response stated that since repeatedly
addressing the issue is burdensome, the Office of Legislative Affairs has
drafted a legislative proposal for the Congress to consider repeal of I.R.C. §
7803(d)(1)(B). The proposal will soon
be transmitted to the Department of the Treasury in hopes it will support and
forward the proposal to the Congress.
Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this review was to determine if the Internal Revenue Service (IRS) is in compliance with Internal Revenue Code Section (I.R.C. §) 6103(e)(8) (Supp. IV 1998) related to the disclosure of collection activities to joint filers. To accomplish our objective, we:
I.
Obtained confirmation from
the Small Business/Self-Employed and Wage and Investment Divisions that the IRS
does not have, nor does it plan to implement, a system or process to identify
or track joint filer requests for collection information relating to the
requirements of I.R.C. § 6103(e)(8).
II.
Interviewed personnel in the offices of the National
Taxpayer Advocate, the IRS Commissioner’s Executive Control Management System,
and the Treasury Inspector General for Tax Administration to determine if there
is a system or process that tracks taxpayer complaints relating to the
requirements of I.R.C. § 6103(e)(8).
Appendix II
Major Contributors to This Report
Michael R. Phillips, Assistant Inspector General for Audit (Wage and
Investment Income Programs)
Augusta R. Cook, Director
Paula W. Johnson, Audit Manager
Lynn Faulkner, Senior Auditor
Kristi Larson, Senior Auditor
Sharon Summers, Senior Auditor
M. Jean Bell, Auditor
Appendix III
Deputy Commissioner N:DC
Commissioner, Small Business/Self-Employed Division S
Commissioner, Wage and Investment Division W
Director, Compliance, Small Business/Self-Employed Division S:C
Director,
Compliance, Wage and Investment Division
W:CP
Director,
Customer Account Services, Small Business/Self-Employed Division S:CAS
Director,
Customer Account Services, Wage and Investment Division W:CAS
Director, Strategy and Finance W:S
Chief, Customer Liaison S:COM
Chief Counsel CC
National Taxpayer Advocate TA
Director, Legislative Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
N:ADC:R:O
Office of Management Controls N:CFO:AR:M
Audit Liaisons:
Executive Assistant, Director, Communications and Liaison CL
Director, Compliance, Small Business/Self-Employed Division S:C
Director, Compliance, Wage and Investment Division W:CP
Director, Customer Account Services, Small Business/Self-Employed Division S:CAS
Director, Customer Account Services, Wage and Investment Division W:CAS
Appendix IV
Management’s Response to the 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.