TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
Efforts to Collect Delinquent Employment Taxes Owed by Government Entities Could Be Improved
August 27, 2007
Reference Number: 2007-10-166
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.
Phone Number |
202-927-7037
Email Address | Bonnie.Heald@tigta.treas.gov
Web Site | http://www.tigta.gov
August 27, 2007
MEMORANDUM
FOR
COMMISSIONER, SMALL BUSINESS/SELF-EMPLOYED DIVISION
COMMISSIONER, TAX EXEMPT AND GOVERNMENT ENTITIES DIVISION
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Efforts to Collect Delinquent Employment Taxes Owed by Government Entities Could Be Improved (Audit # 200610034)
This report presents the results of our review to determine whether the Internal Revenue Service (IRS) has implemented an effective process to collect delinquent employment taxes and secure delinquent returns owed by Federal, State, and local government entities. This audit was requested by the IRS Chief Financial Officer.
Impact on the Taxpayer
Government
entities, including those in the Federal Government, are not exempt from meeting
employment tax deposit and reporting requirements. As of December 2006, Federal Government entities
owed approximately $45 million in delinquent employment taxes. Additional emphasis is needed in three key
areas related to the IRS’ efforts to resolve these types of delinquencies. It is critical to the image of the
Synopsis
The IRS has enhanced its efforts to address delinquent employment taxes owed by government entities in multiple areas. For example, three different IRS functional offices (the Tax Exempt and Government Entities (TE/GE) Division, the Small Business/Self-Employed (SB/SE) Division, and the Office of the Chief Financial Officer) formed a working group to discuss ways to address Federal Government entity employment tax delinquencies. In addition, beginning in June 2005, the SB/SE Division, which is responsible for seeking repayment and securing past due tax returns from delinquent entities including government entities, established a special unit at the Brookhaven Campus[1] in Holtsville, New York, to address Federal Government entity tax delinquency cases. This unit was established to work directly with delinquent Federal Government agencies to reduce the taxes due through payments, filing of tax returns, and corrections to accounts, as necessary. For State and local government entity delinquencies, the SB/SE Division uses standard collection processes and enforcement tools to collect the delinquencies. As of January 2007, delinquent State and local government entity accounts totaling $254 million were assigned to the SB/SE Division Collection Field function[2] for resolution. These collection services are provided pursuant to a Memorandum of Understanding between the SB/SE and TE/GE Divisions.
In our opinion, this coordinated approach represents a marked increase in emphasis since the last time we reviewed this area. Specifically, in 2002, we reported[3] that the TE/GE Division did not have an effective agreement with the SB/SE Division to provide for allocation of the resources necessary to help ensure government entities complied with Federal tax requirements for the submission of tax returns and related payments.
Despite these efforts, the IRS needs to take additional actions in three key areas to effectively address government entity employment tax delinquencies. First, efforts to identify and address the causes of government entity tax delinquencies need to be expanded. For example, the special unit established at the Brookhaven Campus does not routinely track information regarding how these cases are resolved (e.g., was the money collected or the account adjusted) or gather data during the collection process on the causes of the delinquencies.
Second, controls over case processing and the administration
of enforcement actions on government entity delinquency cases need to be
strengthened. At the time of our review, the Brookhaven
Campus lacked comprehensive guidelines and procedures to guide the
assignment, control, and resolution of Federal Government entity cases. As
a result, the Brookhaven Campus could not determine the exact
receipt/assignment date or current status of balance-due and delinquent-return
cases in its inventory. Information
gathering on State and local government entity delinquency trends is similarly
minimal despite an IRS procedure requiring that, prior to pursuing collection
actions against government entities, revenue officers and/or their managers
contact the Federal, State, and Local Governments (FSLG)
office Specialist designated for their respective offices. Our review of 133 State and local government
entity delinquency cases assigned to revenue officers indicated this procedure
was followed in only 7 cases.
Finally, the IRS needs to develop alternative
strategies to address delinquent Federal Government entity accounts that the
Brookhaven Campus could not readily resolve.
In general, Federal Government agencies cannot use current year funding
to satisfy prior year debts, and prior year funding is often limited at the
start of a new fiscal year.
Our review of the inventory of Federal Government entity
delinquent tax cases located at the Brookhaven Campus as of December 2006 indicated
99 entities owing $5.8 million had been assigned for resolution for more than 1
year. The IRS informed us it plans to
perform an onsite review of a sample of aged delinquencies to gain a better
understanding of the reasons why these entities are unable to timely resolve
their outstanding tax debts.
Recommendations
We recommended the Director, Collection,
SB/SE Division, in coordination with the Director, FSLG, TE/GE Division, develop
a methodology for recording and sharing information regarding case resolution
actions and causes of all Federal Government entity delinquencies; reinforce
IRS procedures requiring revenue officers or their managers to contact FSLG office
Specialists prior to pursuing collection actions against government entities
and explore the feasibility of preparing a quarterly report of new State and
local government entities assigned to the Collection Field function; ensure
comprehensive guidelines and procedures are developed to guide the assignment,
control, and resolution of Federal Government entity cases; reinforce existing
IRS procedures regarding issuance of a final notice of the intent to levy[4]
to a State or local government entity; and continue ongoing efforts to develop a process for resolving aged
delinquent Federal entity accounts.
Response
IRS
management agreed with our recommendations.
A new database has been developed to capture the causes and case
resolutions for all open and closed Federal Government delinquency cases worked
by the Brookhaven Campus special unit and a process will be created to share
this information with the FSLG office. The
SB/SE Division will also work with the TE/GE Division to create a single point
of contact within the FSLG office for revenue officers and determine the
content, creation, delivery, and use of a quarterly report of new State and
local government entities assigned to the Collection Field function. Additionally, the development of the new
database allows for complete inventory management, in-process case monitoring,
and the inclusion of a current compliance indicator. The SB/SE Division will also issue a
memorandum to remind and inform revenue officers of their notification requirements
regarding issuing a final notice of the intent to levy to a State or local
government entity. Finally, SB/SE
Division analysts continue to review
current procedures, identify obstacles, explore alternative procedures and case
processes, and identify opportunities for improvement to resolve these cases. Once this analysis is completed, the team will
create a report and present its findings and recommendations to IRS executives
for consideration. 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 recommendations. Please contact me at (202) 622-6510 if
you have questions or Nancy Nakamura, Assistant Inspector General for Audit (Headquarters Operations and Exempt Organizations
Programs), at (202) 622-8500.
Efforts to Collect
Delinquent Employment Taxes Owed by Government Entities Have Been Enhanced
Appendices
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
Abbreviations
|
CFO |
Chief Financial Officer |
|
FSLG |
Federal, State, and Local Governments |
|
IRS |
Internal Revenue Service |
|
SB/SE |
Small Business/Self-Employed |
|
TE/GE |
Tax Exempt and Government Entities |
Government entities, including those
in the Federal Government, are not exempt from meeting employment tax deposit
and reporting requirements. According to
the Internal Revenue Service (IRS), 86,000 Federal, State, and local government
entities in the
The Tax
Exempt and Government Entities (TE/GE) Division has primary responsibility for
employment tax returns filed by TE/GE Division taxpayers. The FSLG office within the TE/GE Division has
primary responsibility for ensuring employment
tax returns are accurately filed and paid by
Federal Government entities,
In a previous audit report,[7] we identified that the TE/GE Division did not have an effective agreement with the SB/SE Division to ensure government entities complied with Federal tax requirements for the submission of tax returns and related payments. That report identified more than 12,000 Federal, State, and local government entities as delinquent in Calendar Years 1999, 2000, and 2001. Additional analysis of these entities showed 2,697 entities had not submitted their required tax payments and 1,604 entities had not submitted their required tax returns.
Currently, the SB/SE Division provides collection services to the TE/GE Division under a 5-year Memorandum of Understanding effective through Fiscal Year 2011. Under this Memorandum, the SB/SE Division is responsible for providing services for the resolution of government entity collection cases and calculation of the performance measures used to evaluate the effectiveness of the collection program. Such measures include the number of TE/GE Division taxpayer records entering the SB/SE Division Collection Field function[8] and the number of TE/GE Division taxpayer records resolved.
This review was performed at the Detroit, Michigan; New York, New York; and Nashville, Tennessee, SB/SE Division Area Offices; the Brookhaven Campus[9] in Holtsville, New York; the IRS National Headquarters in the SB/SE Division, in New Carrollton, Maryland; and the Office of the Chief Financial Officer (CFO) in Washington, D.C., during the period July 2006 through March 2007. The audit was conducted 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.
Efforts to Collect Delinquent Employment Taxes Owed by Government Entities Have Been Enhanced
The IRS has enhanced its efforts to address delinquent employment
taxes owed by government entities in several areas. For example, three different IRS functional
offices (the TE/GE Division, the SB/SE Division, and the CFO) formed a working group to discuss ways to
address Federal Government agency employment tax delinquencies. Additionally, in June 2005, the CFO
issued letters to the CFOs of each Federal Government agency that owed
employment taxes in an attempt to inform senior-level management of the taxes
owed and resolve the delinquencies at the agency level. Finally, beginning in June 2005, the SB/SE
Division established a special unit in the Brookhaven Campus to address Federal
Government entity tax delinquency cases.
This unit was established to work directly with delinquent Federal Government
agencies to reduce the tax due through payments, filing of tax returns, and corrections
to accounts, as necessary. As of December 2006, approximately $45
million in delinquent employment taxes related to Federal Government entities was
assigned to the Brookhaven Campus for resolution. It is critical to the image of the
Delinquent employment taxes owed by State and local
government entities are addressed by the SB/SE Division using standard
collection processes. As of January 2007,
delinquent State and local government entity accounts totaling $254 million
were assigned to the SB/SE Division Collection Field function for
resolution. The IRS informed us that, in
comparison, almost $6 billion in delinquent business employment taxes was
assigned to the Collection Field function as of January 2007. Collection
services are provided pursuant to a Memorandum of Understanding between the SB/SE
and TE/GE Divisions.
In our opinion, this approach represents a marked increase in emphasis since the last time we reviewed this area. Specifically, in 2002, we reported that the TE/GE Division did not have an effective agreement with the SB/SE Division to provide for allocation of the resources necessary to help ensure government entities complied with Federal tax requirements for the submission of tax returns and related payments.
Despite these efforts, the IRS needs to take additional actions in three key areas to effectively address government entity employment tax delinquencies. Specifically, the IRS needs to:
Efforts to Identify and Address the Causes of Government
Entity Tax Delinquencies Need to Be Expanded
Although the IRS has expanded its efforts to collect delinquent employment taxes owed by government entities, progress in identifying and addressing the causes of these delinquencies has been limited. For example, the special unit established at the Brookhaven Campus to address Federal Government entity delinquencies does not routinely track information regarding how these cases are resolved or gather data during the collection process on the causes of the delinquencies. Without this type of information, the IRS cannot effectively identify taxpayer knowledge gaps and direct its outreach and education efforts. Federal Government entity tax delinquencies represent an ongoing problem for the IRS and, in our opinion, cannot be effectively addressed without reliable trend information regarding the causes of these delinquencies. During the first quarter of Fiscal Year 2007, approximately $8.5 million in new delinquencies from 51 Federal Government entities were assigned to the Brookhaven Campus. However, we were unable to readily determine the amount collected by the Brookhaven Campus from resolved Federal Government entity cases during this period because the IRS does not routinely track this type of information.
Information gathered regarding State and local government entity delinquency trends is similarly minimal despite an IRS procedure requiring that, prior to pursuing collection actions against government entities, revenue officers and/or their managers contact the FSLG office Specialist designated for their respective offices. Our review of 133 State and local delinquency cases assigned to revenue officers indicated this procedure was followed in only 7 cases. FSLG office Specialists serve as a point of contact for their customers and work with government entities to help bring those entities into compliance. Without these contacts by the SB/SE Division, FSLG office Specialists have no way of readily determining which State and local government entities in their geographic areas of responsibility are assigned to the Collection Field function for resolution of outstanding tax delinquencies. As discussed previously, delinquent State and local government entity accounts totaling $254 million were assigned to the SB/SE Collection Field function for resolution as of January 2007.
The primary cause for the lack of useful trend information
regarding government entity delinquencies is a lack of recording and sharing of
information between the SB/SE Division and the TE/GE Division. We also found that not all SB/SE Division field-level
collection managers were aware of the requirement to contact the FSLG office
Specialists when working State and local government entity delinquencies. The
collection and analysis of reliable trend data related to government entity
delinquencies would help both Divisions in their efforts to address
noncompliance of this taxpayer segment through sound planning, management, and
oversight.
Recommendations
Recommendation 1:
The Director, Collection, SB/SE Division, in coordination
with the Director, FSLG, TE/GE Division, should develop a methodology for
recording and sharing information regarding case resolution actions and causes of
all Federal Government entity delinquencies processed by the Brookhaven Campus,
to allow the FSLG office to better focus outreach and education efforts for
this taxpayer segment.
Management’s Response: IRS management agreed with this
recommendation. A new database has been
developed that captures the causes and case resolutions for all open and closed
Federal Government delinquency cases worked by the Brookhaven Campus special
unit. Also, SB/SE Division Collection
Policy and Campus analysts will create a process to share this information with
the FSLG office for the purpose of enabling the FSLG office to focus outreach
and educational efforts for this taxpayer segment.
Recommendation 2:
The Director, Collection, SB/SE Division, should 1)
reinforce IRS procedures requiring that revenue officers and/or
their managers contact FSLG office Specialists designated for their respective
offices prior to pursuing collection actions against government entities and 2)
work with the FSLG office to explore the
feasibility of preparing a quarterly report of new State and local government
entities assigned to the Collection Field function. The report would help ensure FSLG office
Specialists are aware of new State and local government entity delinquencies
and provide useful nationwide trend information regarding these types of cases. This report could also serve as a supplemental
notice if revenue officers do not always contact the FSLG office Specialists.
Management’s Response:
IRS management
agreed with this recommendation.
The SB/SE Division
will work with the TE/GE Division to simplify the notification process by
creating a single point of contact in the FSLG office for revenue officers. Additionally, the SB/SE Division and the TE/GE
Division FSLG office will meet to determine the content, creation, delivery,
and use of a quarterly report of new State and local government entities
assigned to the Collection Field function.
Controls Over Case Processing and the Administration of Enforcement Actions on Government Entity Delinquency Cases Need to Be Strengthened
Our review of a random sample of 133 State and local government and 42
Federal Government entity delinquency cases identified 3 areas in which controls
over the processing of these types of cases needs to be improved. Specifically, we found:
The Brookhaven Campus, which assumed responsibility
for addressing Federal Government entity tax delinquency cases in June 2005,
did not consistently address unfiled employment tax returns (including both
current and prior year returns) until after June 2006. Prior to June 2006, cases in which a Federal Government
entity was under investigation for not filing one or more required tax returns
were not assigned for resolution. As of
December 2006, 143 Federal Government entities still had not filed 750 required
tax returns. Over 95 percent of the 750
tax returns not filed related to employment taxes.
Finally, management information regarding Federal Government entity cases assigned to the Brookhaven Campus special unit is not sufficiently comprehensive to allow for effective oversight of this critical process. For example, at the time of our review, it was difficult to readily determine from available management information the exact receipt/assignment date or current status of the Federal Government entity balance-due and delinquent-return cases assigned to the special unit at the Brookhaven Campus.
In general, the conditions we identified are attributable to a lack of comprehensive guidelines and procedures to guide the assignment, control, and resolution of Federal Government entity cases. In addition, not all Collection Field function managers we interviewed were aware that revenue officers on their staff were required to notify the SB/SE Division Territory manager before issuing the Final Notice letter to a government entity. This notification requirement ensures Collection Field function management is timely informed of planned collection actions involving government entities, including potentially sensitive entities such as school districts or rescue worker retirement funds.
The maintenance of
accurate data regarding case assignment and actions is essential to the
effective management of work-in-process at the Brookhaven Campus. In addition, addressing the filing of
current returns as part of the processing of Federal Government entity
delinquencies will assist these Federal Government entities in avoiding future
delinquencies.
Recommendations
Recommendation 3: The Director, Collection, SB/SE Division, should ensure comprehensive guidelines and procedures are developed to guide the assignment, control, and resolution of Federal Government entity delinquency cases. These procedures should at a minimum: 1) establish a reliable methodology for controlling assigned cases and monitoring the status of in-process work and 2) include a requirement that a determination of current compliance with tax obligations be made on all assigned cases.
Management’s Response: IRS management agreed with this recommendation. A new database has been developed which allows for complete inventory management, monitoring of in-process cases, and the inclusion of a current compliance indicator.
Recommendation 4: The Director, Collection, SB/SE Division, should reinforce existing IRS procedures requiring that revenue officers notify the appropriate SB/SE Division Territory manager before issuing a final notice of the intent to levy to a State or local government entity.
Management’s Response: IRS management agreed with this
recommendation. The SB/SE Division will
review this notification procedure and determine if any changes are needed
prior to reinforcing the existing procedures. A memorandum will be issued to remind revenue
officers of the notification requirement and/or to inform them of any changes.
Alternative Strategies Need to Be Developed to Address Delinquent Federal Government Entity Accounts That the Brookhaven Campus Could Not Readily Resolve
The collection of aged debts from Federal Government
entities represents a unique challenge to the IRS because, in general, Federal Government
agencies cannot use current funding to satisfy debts properly chargeable to a
prior year. In addition, prior year
funding is often limited and generally remains open for only 5 years.
Our review of the inventory of Federal Government entity
delinquent tax cases located at the Brookhaven Campus as of December 2006
indicated 99 entities owing $5.8 million had been assigned for resolution for
more than 1 year. More than $1 million
of the $5.8 million related to tax years 2001 and earlier. As discussed previously, as of December 2006,
143 Federal Government entities still had not filed 750 required tax
returns. Further, 466 (62 percent) of
the 750 unfiled returns related to tax periods at least 3 years old. The continued existence of significantly aged
delinquent Federal Government entity accounts, despite the IRS’ repeated
attempts to secure repayment, raises the possibility that these entities may
simply not have the funding available to satisfy these delinquencies.
At the time of our review, the IRS lacked a viable
methodology for addressing aged Federal Government entity delinquencies that the
Brookhaven Campus cannot readily resolve. Further, IRS policy prohibits the use of
enforcement actions, such as the filing of liens or levies, against Federal
entities. Thus, the ability of the IRS
to enforce collection of delinquent taxes from Federal Government entities is
limited. The IRS informed us it plans to
perform an onsite review of a sample of aged delinquencies, to gain a better
understanding of the reasons why these entities are unable to timely resolve
their outstanding tax debts. This onsite
review is tentatively scheduled for late in Fiscal Year 2007.
Recommendation
Recommendation 5: The Director, Collection, SB/SE Division, should continue ongoing efforts to develop a process for resolving aged delinquent Federal Government entity accounts.
Management’s Response: IRS management agreed with this recommendation. SB/SE
Division analysts continue to review current procedures, identify obstacles, explore
alternative procedures and case processes, and identify opportunities for improvement
to resolve these cases. Once this
analysis is completed, the team will create a report and present its findings
and recommendations to IRS executives for consideration.
Appendix I
Detailed Objective, Scope, and Methodology
Our overall objective was to determine whether the IRS has implemented an effective process to collect delinquent employment taxes and secure delinquent returns owed by Federal, State, and local government entities. To accomplish this objective, we:
I. Determined whether the IRS has developed a coordinated national strategy for addressing government entity employment tax delinquencies.
A. Interviewed appropriate TE/GE Division, SB/SE Division, and CFO personnel to obtain their perspectives regarding barriers to the timely collection of delinquent employment taxes owed by Federal, State, and local government entities.
B. Ascertained whether the roles and responsibilities of the TE/GE and SB/SE Divisions and Office of the CFO in collecting delinquent employment taxes owed by Federal, State, and local government entities are clearly identified in a current Memorandum of Understanding and are adequate for ensuring effective oversight.
II. Ascertained whether field-level controls are effective to ensure government entity employment tax delinquencies are resolved timely and effectively.
A. Identified
and selected random samples of in-process cases from three randomly selected
SB/SE Division Collection Area Offices[12]
and the Brookhaven Campus[13]
in
B. Reviewed the selected cases to determine whether adequate and effective efforts were taken to resolve the delinquencies and secure any delinquent returns.
C. Interviewed selected SB/SE Division Collection Field function managers to obtain their input/concerns regarding the IRS’ current approach to collecting delinquent employment taxes from government entities.
D. Interviewed selected field office managers from the FSLG office to obtain their input/concerns regarding the FSLG office’s efforts within the IRS’ current approach to collecting delinquent employment taxes from government entities.
E. Identified the total current population of all FSLG office entities with delinquencies and stratified the results by the collection status of the delinquencies. For this analysis, we made a Master File[15] data request in December 2006. To validate the reliability of the electronic data extracted, we compared it to SB/SE Division Collection Field function inventory contained on the Integrated Collection System and inventory lists maintained by the CFO. We determined the reliability of the electronic data was adequate and valid for use in making analytical conclusions. We relied on information provided by the IRS regarding total employment tax filers, total FSLG entities involved as employers, and total delinquent business employment taxes. We did not verify the accuracy of this information.
III. Determined the effectiveness of the CFO’s efforts to assist in the resolution of government entity employment tax delinquencies.
A. Interviewed selected CFO personnel to obtain their input/concerns regarding the IRS’ current approach to collecting delinquent employment taxes from government entities. We ascertained any barriers encountered when attempting to assist in resolving government entity delinquencies as well as any new initiatives/best practices.
B. Reviewed actions taken by the Office of the CFO in Fiscal Years 2005 and 2006 to assist in the resolution of government entity employment tax delinquencies.
Appendix II
Major Contributors to This Report
Nancy
Nakamura, Assistant Inspector General for Audit (Headquarters
Operations and Exempt Organizations Programs)
John
R. Wright, Director
Anthony
J. Choma, Audit Manager
Seth
A. Siegel, Lead Auditor
Robert
Beel, Senior Auditor
James
S. Mills, Jr., Senior Auditor
Arlene Feskanich, Information Technology Specialist
Appendix III
Acting Commissioner C
Office of the Commissioner – Attn: Acting Chief of Staff C
Deputy Commissioner for Operations Support OS
Deputy Commissioner for Services and Enforcement SE
Chief Financial Officer OS:CFO
Deputy Commissioner, Small
Business/Self-Employed Division SE:S
Deputy Commissioner, Tax Exempt and
Government Entities Division SE:T
Director, Campus Compliance Services, Small
Business/Self-Employed Division SE:S:CCS
Director, Collection, Small
Business/Self-Employed Division SE:S:C
Director, Government Entities, Tax Exempt and
Government Entities Division SE:T:GE
Director, Collection Policy, Small
Business/Self-Employed Division
SE:S:C:CP
Director, Campus Compliance Operations, Brookhaven,
Small Business/Self-Employed Division
SE:S:CCS:CCO:BR
Chief Council
CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk Analysis RAS:O
Office of Internal
Control OS:CFO:CPIC:IC
Audit
Liaison: Commissioner, Small Business/Self-Employed Division SE:S
Appendix IV
Management’s Response to the Draft Report
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.
[1] The data processing arm of the IRS. The campuses process paper and electronic submissions, correct errors, and forward data to the Computing Centers for analysis and posting to taxpayer accounts.
[2] The unit in the Area Offices consisting of revenue officers who handle personal contacts with taxpayers to collect delinquent accounts or secure unfiled returns. An Area Office is a geographic organizational level used by IRS business units and offices to help their specific types of taxpayers understand and comply with tax laws and issues.
[3] Additional Management Actions Should Be Taken to Ensure That Government Entities’ Customers Meet Their Federal Tax Obligations (Reference Number 2002-10-123, dated September 2002).
[4] A levy is a means to take property by legal authority to satisfy a tax debt. The IRS uses a levy as a tool to collect on balance-due accounts that are not being voluntarily paid.
[5] A compliance check is a voluntary contact with a government entity that involves a review of its filed information and tax returns; this check does not relate to determining a tax liability for any particular period. The compliance check is a tool to help educate government entities about their reporting requirements and increase voluntary compliance.
[6] An examination is an inspection of an individual’s or an entity’s books and records. In addition, an examination involves the questioning of witnesses to determine the individual’s or entity’s correct tax liability.
[7] Additional Management Actions Should Be Taken to Ensure That Government Entities’ Customers Meet Their Federal Tax Obligations (Reference Number 2002-10-123, dated September 2002).
[8] The unit in the Area Offices consisting of revenue officers who handle personal contacts with taxpayers to collect delinquent accounts or secure unfiled returns. An Area Office is a geographic organizational level used by IRS business units and offices to help their specific types of taxpayers understand and comply with tax laws and issues.
[9] The data processing arm of the IRS. The campuses process paper and electronic submissions, correct errors, and forward data to the Computing Centers for analysis and posting to taxpayer accounts.
[10]
A levy is a means to take property by legal
authority to satisfy a tax debt. The IRS
uses a levy as a tool to collect on balance-due accounts that are not being
voluntarily paid.
[11]
A Territory Manager is a second-level manager
who oversees groups in a geographic area.
[12] A geographic organizational level used by IRS business units and offices to help their specific types of taxpayers understand and comply with tax laws and issues.
[13] The data processing arm of the IRS. The campuses process paper and electronic submissions, correct errors, and forward data to the Computing Centers for analysis and posting to taxpayer accounts.
[14] The unit in the Area Offices consisting of revenue officers who handle personal contacts with taxpayers to collect delinquent accounts or secure unfiled returns.
[15] The IRS database that stores various types of taxpayer account information. This database includes individual, business, and employee plans and exempt organizations data.