TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION
THE OFFICE OF APPEALS HAS IMPROVED
ITS PROCESSING OF COLLECTION DUE PROCESS CASES
Issued on September 21, 2007
Highlights
Highlights of
Report Number: 2007-10-139 to the
Internal Revenue Service Chief, Appeals.
IMPACT ON TAXPAYERS
Overall, the Office of Appeals (Appeals) has made improvements to the
Collection Due Process (CDP) by properly classifying most taxpayer requests to
give taxpayers the Appeals review they are entitled to and by revising letters
to taxpayers to make them more descriptive.
However, Appeals hearing officers were still not consistently including
an impartiality statement in the case files, which presents a risk of prior
involvement in the taxpayer’s case and lack of independence. Also, Appeals hearing officers were not
always documenting whether the Collection function met all legal and
administrative requirements, potentially impacting the actions taken by
Appeals. In addition, the Collection
Statute Expiration Dates for some taxpayers were incorrectly lengthened (the IRS
generally has 10 years from the date of assessment to collect a liability owed
by a taxpayer -- the end of the 10-year period is the Collection Statute
Expiration Date), which is a potential violation of
taxpayer rights.
WHY TIGTA DID THE AUDIT
This
audit was initiated because the TIGTA is statutorily required to determine
annually whether the Internal Revenue Service (IRS) complied with the legal
guidelines and procedures provided under the CDP.
WHAT
TIGTA FOUND
Appeals has
improved its handling of CDP cases when taxpayers exercised their rights to
appeal the filing of a Notice of Federal Tax Lien or the issuance of a notice
of intent to levy. Nearly all requests
for a CDP hearing or an Equivalent Hearing (EH) were properly classified, which
allowed taxpayers to receive the right type of hearing. The CDP hearing and EH closing letters to
taxpayers included descriptive information relating to the issues raised by the
taxpayer as well as the Appeals determination of whether the proposed
collection action balances the need for efficient collection of taxes with the
legitimate concern of the taxpayer that any collection action be no more
intrusive than necessary.
Although
improvements have been made, in a small portion of CDP and EH cases, Appeals
hearing officers did not include the impartiality statement or document whether
the Collection function met all legal and administrative requirements when
filing a lien or issuing a notice of intent to levy. Also, there were a significant number of CDP
and EH cases in our samples containing errors with the Collection Statute
Expiration Dates. Some of the CDP cases
had the collection statute extended too long, improperly allowing the IRS too
much time to collect from taxpayers; conversely, other collection statutes were
not extended long enough or at all, reducing the time the IRS has to collect
the delinquent taxes.
WHAT TIGTA RECOMMENDED
TIGTA
recommended the Chief, Appeals take the following actions:
In
their response to the report, IRS officials stated they agreed with both
recommendations. They plan to revise
their written guidance to require that hearing officers verify and document
that legal and administrative requirements were met during the initial analysis
of the case. Also, Appeals stated they
have reviewed and corrected the incorrect Collection Statute Expiration Dates
for the taxpayer accounts identified during our audit.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2007reports/200710139fr.html.
Email
Address: Bonnie.Heald@tigta.treas.gov
Phone Number: 202-927-7037
Web Site:
http://www.tigta.gov