TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
Five Fair Tax Collection Practices Violations Resulted in Administrative Actions in Calendar Year 2007
September 5, 2008
Reference Number: 2008-10-162
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.
Redaction Legend:
1 = Tax Return/Return Information
3(d) = Identifying Information - Other Identifying Information of an Individual or IndividualsPhone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
September 5, 2008
MEMORANDUM
FOR
CHIEF COUNSEL
IRS HUMAN CAPITAL OFFICER
FROM: (for) Michael R. Phillips /s/ Michael E. McKenney
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Five Fair Tax Collection Practices Violations Resulted in Administrative Actions in Calendar Year 2007 (Audit # 200810004)
This report presents the results of our annual review of
Internal Revenue Service (IRS) administrative or civil actions that result from
Fair Tax Collection Practices[1]
(FTCP) violations by IRS employees. Section 1102 (d)(1)(G) of the IRS
Restructuring and Reform Act of 1998[2] requires the Treasury Inspector General for
Tax Administration to include in one of its Semiannual Reports to Congress information
regarding administrative or civil actions related to FTCP violations.
Impact on the Taxpayer
The abuse or harassment of taxpayers by the IRS employees while attempting to collect taxes reflects poorly on the IRS and can have a negative impact on voluntary compliance. We determined that for Calendar Year 2007, there were five cases involving FTCP violations for which the employee received administrative disciplinary action. In addition, the IRS’ computer system contained a high percentage of cases that were miscoded as FTCP violations when they did not involve these types of violations. Inaccurate data on the number of FTCP violations can impede IRS management’s efforts to detect and correct customer service problems that burden taxpayers.
Synopsis
The FTCP prohibit employees from using abusive or harassing behavior toward taxpayers when attempting to collect taxes. Employees who are found to have violated the FTCP could be subject to disciplinary action. In Calendar Year 2007, the IRS coded as FTCP violations ****1**** cases that were substantiated and resulted in an administrative action against the employee. In addition, we identified 11 cases that were coded as FTCP violations but should not have been because 1) the employee was not in a collection-related job series[3], or 2) the case did not involve a taxpayer or taxpayer representative.
Because of the high number of miscoded cases in previous years, we also reviewed all 157 cases in 6 other case categories to determine whether there were other cases that should have been coded as FTCP violations. We identified ****1**** additional cases that should have been coded as FTCP violations but instead had been coded as ****1**** Combined with the previously mentioned ****1**** cases that were correctly coded, there were a total of ****1**** FTCP violations that resulted in an administrative action against the offending employees. The employees involved in these ****1**** cases received disciplinary actions including admonishment, suspension, probation/separation, and removal. Incorrect information on FTCP violations can impede management’s efforts to identify and correct this type of behavior.
No civil actions resulted in the IRS paying monetary settlements to taxpayers because of an FTCP violation.
Recommendation
We recommended that the IRS Human Capital Officer ensure that the issue codes on the 13 cases we identified as being miscoded are corrected (11 cases incorrectly coded as FTCP and the ****1**** cases coded as ****1**** cases that should have been coded as FTCP violations).
Response
The IRS Human Capital Officer agreed to our outcome measure
and recommendation and has already taken corrective action. The coding for the
13 cases has been corrected. Further, additional
advice and guidance have been provided to the staff concerning the proper use
of FTCP codes. Management’s
complete response to the draft report is included as Appendix VII.
Copies of this report are also being sent to the IRS managers affected by the report recommendation. Please contact me at (202) 622-6510 if you have questions or Nancy A. Nakamura, Assistant Inspector General for Audit (Headquarters Operations and Exempt Organizations Programs), at (202) 622-8500.
Fair Tax Collection
Practices Violations Were Not Accurately Reported
No Fair Tax Collection Practices Civil Actions
Resulted in Monetary Settlements to Taxpayers
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix V – Fair
Tax Collection Practices Provisions
Appendix
VI – Fair Tax Collection Violation Issue Codes
Appendix
VII – Management’s Response to the Draft Report
Abbreviations
|
ALERTS |
Automated Labor and Employee Relations
Tracking System |
|
FTCP |
Fair Tax Collection Practices |
|
IRS |
Internal Revenue Service |
Section (§) 1102 (d)(1)(G) of the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998[4] requires that the Treasury Inspector General for Tax Administration include in one of its Semiannual Reports to Congress information regarding any administrative or civil actions related to violations of the Fair Tax Collection Practices (FTCP) listed in 26 U.S.C. § 6304.[5] The Treasury Inspector General for Tax Administration’s Semiannual Report to Congress must provide a summary of such actions and include any judgments or awards granted.
As originally enacted, the Fair Debt Collection Practices Act[6] included provisions that prohibit various collection abuses and harassment in the private sector. The restrictions do not apply to Federal Government practices. However, Congress believes that it is appropriate to require the IRS to comply with applicable portions of the Fair Debt Collection Practices Act and to be at least as considerate to taxpayers as private creditors are required to be with their customers. IRS Restructuring and Reform Act of 1998 § 3466(a) requires that the IRS follow FTCP provisions that are similar to the Fair Debt Collection Practices Act provisions (see Appendix V for a detailed description of FTCP provisions).
Taxpayer complaints regarding IRS employees’ conduct can be reported to several IRS divisions[7] for tracking. If a taxpayer files a civil action, or if IRS management determines that a taxpayer’s rights related to the FTCP might have been violated, the complaint may be referred and tracked on one or both of the following IRS systems:
The IRS began tracking FTCP codes on the ALERTS in March 1999[8] and on the Counsel Automated System Environment in June 1999. For this review, we analyzed closed cases for Calendar Year 2007 from the ALERTS to identify violations of the FTCP. To be an FTCP violation that the Treasury Inspector General for Tax Administration is required to report, the action must have been taken by an IRS employee who was involved in a collection activity and who received a disciplinary action that is considered an administrative action. We determined that usually only those employees in the job series listed below will be engaged in collection-related activities:
The law does not provide a definition of “administrative action.” We used the IRS’ definition of a disciplinary action when determining the number of violations to report under IRS Restructuring and Reform Act of 1998 § 1102 (d)(1)(G). As defined by the IRS, disciplinary actions range from a letter of admonishment to removal.
We could not ensure that the cases recorded on the ALERTS constitute all FTCP violations. The ALERTS tracks administrative actions taken against employees due to improper conduct. Lesser disciplinary actions, such as oral or written counseling, are not considered to be administrative actions under the IRS’ definition and are not tracked on the ALERTS. Because the IRS does not routinely track all informal oral counseling or minor actions against its employees, it is not possible for us to determine how often, or why, informal oral counseling or other minor disciplinary actions occurred. The scope of our audit was not intended to determine the accuracy or consistency of disciplinary actions taken against employees.
This review was performed at the IRS Human Capital and Chief
Counsel Offices in the IRS National Headquarters in
Fair Tax Collection Practices Violations Were Not Accurately Reported
****1, 3(d)****cases closed on the ALERTS during the period January 1 through December 31, 2007,[9] involved FTCP violations that resulted in an administrative action. The employees involved in these ****1, 3(d)**** cases received disciplinary actions including admonishment, suspension, probation/separation, and removal. Specifically, we identified:
A total of 35 cases were initially coded as FTCP complaints and closed on the ALERTS from January 1 through December 31, 2007.[10] We reviewed the cases and determined that ****1**** (as noted in “a.” above) were correctly coded as FTCP violations with an associated administrative action. Of the ****1**** remaining cases, 4 involved FTCP violations, but the disciplinary actions did not meet the criteria to qualify as an administrative action; 17 contained unsubstantiated allegations; and 11 were miscoded and were not FTCP violations because they were not worked by employees in a collection-related job series or did not involve a taxpayer or taxpayer representative.
In addressing the miscoding of cases in our prior FTCP report,[11] IRS management agreed to initiate a quarterly review of the ALERTS database to validate the use of the FTCP issue codes as a temporary measure until programming could be completed on a hard-code validation to the ALERTS system. According to Workforce Relations function staff, the first validation review was conducted on December 28, 2007, and covered the 6-month period of July through December 2007. The quarterly review would not have identified 10 of the 11 miscoded cases because the cases were closed prior to July 2007.
Because of the high
number of miscoded cases in previous years, we also reviewed all 157 cases on
the ALERTS in 6 other case categories involving employee misconduct
allegations, including those coded as either “Unprofessional Conduct” or “Not
Otherwise Coded” to determine if any of the cases should have been coded as
FTCP violations. We identified
****1**** additional
cases (as noted in “b.” above) with administrative actions that should have
been coded as FTCP but were coded as ****1**** In these cases, IRS employees used
****1**** while interacting with taxpayers on collection-related
issues. These ****1**** cases were closed from
May through October 2007. However, the
quarterly review process would not have identified these miscoded cases because
they were not originally coded as FTCP violations, and the review process validates
only those cases coded with the FTCP issue codes.
All data in the
ALERTS must be accurate so that IRS management can detect any problems or
trends that might exist and properly address them to minimize poor interactions
between IRS employees and taxpayers.
Additionally, the ALERTS is the data source for reports provided to a
number of oversight offices and at times is the basis for information provided
to Congress on legislation affecting the IRS.
Recommendation
Recommendation
1: The IRS Human
Capital Officer should correct the issue codes on the 11 cases incorrectly coded
as FTCP violations and the ****1****
that should have been coded as FTCP violations.
Management’s Response: The IRS Human Capital Officer agreed with the recommendation and took corrective action. The coding for the ****1****cases has been corrected. Further, additional advice and guidance have been provided to the staff concerning the proper use of FTCP codes.
No Fair Tax Collection Practices Civil Actions Resulted in Monetary Settlements to Taxpayers
There were no cases closed on the Counsel Automated System Environment in Calendar Year 2007 for which the IRS paid damages to taxpayers resulting from a civil action filed due to an FTCP violation.
Appendix I
Detailed Objective, Scope, and Methodology
The
overall objective of this audit was to obtain information on IRS administrative
or civil actions resulting from FTCP violations[12] by IRS employees. To accomplish the objective, we:
I.
Identified
the number of FTCP violations resulting in administrative actions.
A. Obtained a computer extract from the ALERTS[13] of any cases opened after
July 22, 1998, with an Issue Code of 141 to 147, and closed during
the period January 1 through December 31, 2007. We analyzed the ALERTS extract and obtained
additional case file information from the Labor Relations function, when
needed, to determine the type of violation.
B.
Determined if any cases involving FTCP violations
resulted in administrative actions.
C.
Obtained a computer extract from the ALERTS of
any cases opened after July 22, 1998, and closed during the period January 1 through
December 31, 2007, with the following Issue Codes:
·
013 (Position/Authority
Misuse - limited to only those
closed with a disposition code of 009 or higher).
·
020 (Fighting,
Assaults, and Threats - limited
to only those closed with a disposition code of 009 or higher).
·
058
(Unprofessional Conduct - limited to only those closed with a disposition code
of 009 or higher).
·
114
(Conviction Assault/Battery - all disposition codes).
·
119
(Threat of Audit/Personal - all disposition codes).
·
999 (Not
Otherwise Coded - limited to only those closed with a disposition code of 009
or higher).
D. Analyzed the ALERTS extract and determined if any of the cases in these categories were miscoded and should have been coded as FTCP violations. When needed, we obtained additional case file information from the Workforce Relations function to determine the reason for the miscoding and the final resolution of the case. We did not attempt to independently validate the accuracy of the ALERTS database for this review. We limited our work to assessing the accuracy of the Issue Codes for those cases that met the criteria listed in Steps I.A through I.C.
E. Determined if there were any FTCP violation cases (Subcategory 6304, established to track FTCP violations) resulting in IRS civil actions (judgments or awards granted) on the Office of Chief Counsel’s Counsel Automated System Environment[14] database that had been opened after July 22, 1998, and closed during the period January 1 through December 31, 2007. We determined that no cases on the Counsel Automated System Environment database met these criteria. Due to time constraints, we did not conduct validation tests of this System. The Calendar Year 2007 data were consistent with those of past years, and there is less risk that cases were misclassified because qualified attorneys were deciding if each case met the legal definition of an FTCP violation. For these reasons, we considered the data’s reliability as undetermined but suitable for use in this report.
Appendix II
Major Contributors to This Report
Nancy
A. Nakamura, Assistant Inspector General for Audit (Headquarters Operations and
Exempt Organizations Programs)
Jeffrey
M. Jones, Director
Joseph
F. Cooney, Audit Manager
Robert
Beel, Lead Auditor
Janice
A. Murphy, Senior Auditor
Chinita
M. Coates, Auditor
Appendix III
Commissioner C
Office of the Commissioner –
Attn: Chief of Chief C
Deputy Commissioner for Operations
Support OS
Director, Workforce Relations,
IRS Human Capital Office OS:HC:R
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 Liaisons: Chief Counsel
CC
IRS Human Capital Officer OS:HCO
Appendix IV
This appendix presents detailed information on the measurable impact that our recommended corrective action will have on tax administration. This benefit will be incorporated into our Semiannual Report to Congress.
Type and Value of Outcome Measure:
· Reliability of Information – Actual; 13 cases recorded on the ALERTS[15] (see page 3).
Methodology Used to Measure the Reported Benefit:
We reviewed the 35 FTCP complaints closed on the ALERTS from January 1 through December 31, 2007, and determined that:
· 10 cases were incorrectly coded as FTCP violations because the cases were not worked by employees in a collection jobs series.[16]
· ****1**** case was incorrectly coded as an FTCP violation because it did not involve a taxpayer or taxpayer representative.
We also reviewed 157 additional cases in 6 other case categories closed on the ALERTS during the period January 1 through December 31, 2007, involving employee misconduct allegations and determined that ****1**** cases should have been coded as FTCP violations but were incorrectly coded as “****1****
Appendix V
Fair Tax Collection Practices Provisions
To ensure equitable treatment of debt collectors in the public and private sectors, the IRS Restructuring and Reform Act of 1998[17] requires the IRS to comply with certain provisions of the Fair Debt Collection Practices Act.[18] Specifically, the IRS may not communicate with taxpayers in connection with the collection of any unpaid tax:
In addition, 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:
Appendix Vl
Fair Tax Collection
Violation Issue Codes
|
Issue Code |
Description |
|
141 |
UNUSUAL CONTACT
WITH TAXPAYER – Contacting a taxpayer before 8:00 a.m. or after 9:00 p.m., or
at an unusual location or time, or location known or which should be known to
be inconvenient to the taxpayer. |
|
142 |
DIRECT CONTACT
WITH TAXPAYER WITHOUT REPRESENTATIVE CONSENT – Contacting a taxpayer directly
without the consent of the taxpayer’s Power of Attorney. |
|
143 |
CONTACT AT
TAXPAYER EMPLOYMENT WHEN PROHIBITED – Contacting a taxpayer at their place of
employment when it is known or should be known that the taxpayer’s employer
prohibits the taxpayer from receiving such communication. |
|
144 |
HARASSMENT/ABUSE/THREAT
OF ABUSE – Conduct which is intended to harass or abuse a taxpayer, or
conduct which uses or threatens to use violence or harm. |
|
145 |
USE
OBSCENE/PROFANE LANGUAGE TO ABUSE – The use of obscene or profane language
toward a taxpayer. |
|
146 |
CONTINUOUS
PHONE CALLS WITH INTENT TO HARASS – Causing a taxpayer’s telephone to ring
continuously with harassing intent. |
|
147 |
PHONE CALLS WITHOUT MAKING FULL IDENTIFICATION DISCLOSURE
– Contacting a taxpayer by telephone without providing a meaningful
disclosure of the IRS employee’s identity. |
Source: IRS
ALERTS User Manual (April 2007).
Appendix VII
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] 26 U.S.C. Section 6304 (2004).
[2]
Pub. L. No. 105-206, 112 Stat. 685 (codified as
amended in scattered sections of 2 U.S.C., 5 U.S.C. app., 16 U.S.C., 19 U.S.C.,
22 U.S.C., 23 U.S.C., 26 U.S.C., 31 U.S.C., 38 U.S.C., and 49 U.S.C.).
[3] Tax Specialist – Job Series 0526; Tax Examiner – Job Series 0592; Contact Representative – Job Series 0962; Revenue Officer – Job Series 1169.
[4] Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of 2 U.S.C., 5 U.S.C. app., 16 U.S.C., 19 U.S.C., 22 U.S.C., 23 U.S.C., 26 U.S.C., 31 U.S.C., 38 U.S.C., and 49 U.S.C.).
[5] 26 U.S.C. § 6304 (2004).
[6] 15 U.S.C. §§ 1601 note, 1692 (2000).
[7] The IRS divisions are the Large and Mid-Size Business, Small Business/Self-Employed, Tax Exempt and Government Entities, and Wage and Investment Divisions.
[8] See Appendix VI for a description of the ALERTS FTCP violation codes.
[9] This included cases opened after July 22, 1998, and closed during the period January 1 through December 31, 2007.
[10] This included cases opened after July 22, 1998, and closed during the period January 1 through December 31, 2007.
[11]
Five Fair Tax Collection Practices Violations
Resulted in Administrative Actions in Calendar Year 2006 (Reference Number 2007-10-188, dated September 21, 2007).
[12] 26 U.S.C. Section 6304 (2004). FTCP provisions are explained in Appendix V.
[13] The Office of Workforce Relations’ ALERTS generally tracks employee behavior that might warrant IRS management administrative actions.
[14] The Counsel Automated System Environment is an Office of Chief Counsel inventory control system that tracks items such as taxpayer civil actions.
[15] The Office of Workforce Relations ALERTS generally tracks employee behavior that might warrant IRS management administrative actions.
[16] Tax Specialist – Job Series 0526; Tax Examiner – Job Series 0592; Contact Representative – Job Series 0962; Revenue Officer – Job Series 1169.
[17] Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of 2 U.S.C., 5 U.S.C. app., 16 U.S.C., 19 U.S.C., 22 U.S.C., 23 U.S.C., 26 U.S.C., 31 U.S.C., 38 U.S.C., and 49 U.S.C.)
[18] 15 U.S.C. Sections 1601 note, 1692 (2000).