Fiscal Year 2004
Statutory Review of Disclosure of Collection Activity With
Respect to Joint Returns
March 2004
Reference
Number: 2004-40-058
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.
March
15, 2004
MEMORANDUM FOR
DEPUTY COMMISSIONER FOR SERVICES AND ENFORCEMENT
FROM: Gordon C.
Milbourn III /s/ Gordon C. Milbourn III
Acting
Deputy Inspector General for Audit
SUBJECT: Final Audit Report - Fiscal Year 2004
Statutory Review of Disclosure of Collection Activity With Respect to Joint
Returns (Audit # 200440001)
This
report presents the results of our review the disclosure of collection activity
with respect to joint returns. 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) (2000) 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 sixth
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) (2000) 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 concurred with our determination to not recommend that the IRS
create a separate management system to track joint filer requests. In addition, they have put forth a proposal
to eliminate the legal requirement to conduct repeated reviews of this issue
since doing so places a burden on both our staff and the IRS. 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 affected by the report
results. 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) (2000), 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) (2000).
The IRS Restructuring and Reform Act of 1998
(RRA 98) added I.R.C. § 7803(d)(1)(B) (2000), 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 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 (SB/SE) and
Wage and Investment (W&I) Divisions decided not to develop a new management
control process to track joint filer information requests.
This review was performed at the IRS National Headquarters in Washington, D.C., in the SB/SE and W&I Divisions, and the Office of the National Taxpayer Advocate during the period October 2003 through January 2004. This audit was performed in accordance with Government Auditing Standards. Detailed information on our 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. This condition occurred because the IRS’ management information systems do not separately record or monitor joint filer requests. During this review, management from the SB/SE and W&I 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 making no recommendations in this report. This is the sixth 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).
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) (2000) 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
neither has, nor plans 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)
Mary V. Baker, Director
Bryce
Kisler, Audit Manager
Kristi
Larson, Senior Auditor
Sylvia
Sloan-Copeland, Auditor
Appendix III
Commissioner C
Office of the
Commissioner – Attn: Chief of
Staff C
Commissioner, Small Business/Self-Employed Division SE:S
Commissioner, Wage and Investment Division SE:W
Director, Communications and Liaison, Small Business/Self-Employed Division SE:S:MS:CL
Director, Compliance, Small Business/Self-Employed Division SE:S:C
Director,
Compliance, Wage and Investment Division
SE:W:CP
Director,
Customer Account Services, Small Business/Self-Employed Division SE:S:CAS
Director, Customer Account Services, Wage and Investment Division SE:W:CAS
Director, Strategy and Finance, Wage and Investment Division SE:W:S
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
RAS:O
Office of
Management Controls OS:CFO:AR:M
Audit Liaisons:
Chief, Customer Liaison, Small Business/Self-Employed Division SE:S:COM
Director, Communications and Liaison, National Taxpayer Advocate TA:CCL
GAO/TIGTA Liaison, Wage and Investment Division SE:W:S:PA
Appendix IV
The response was
removed due to its size. To see the
response, please go to the Adobe PDF version of the report on the TIGTA Public
Web Page.