TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
Fiscal Year 2008 Statutory Audit of Compliance With Notifying Taxpayers of Their Rights When Requested to Extend the Assessment Statute
June 5, 2008
Reference Number: 2008-40-127
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
Phone Number |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
June 5, 2008
MEMORANDUM FOR DEPUTY COMMISSIONER FOR SERVICES AND ENFORCEMENT
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Fiscal Year 2008 Statutory Audit of Compliance With Notifying Taxpayers of Their Rights When Requested to Extend the Assessment Statute (Audit # 200840006)
This report presents the results of our review to determine
whether the Internal Revenue Service (IRS) was complying with Internal Revenue
Code Section 6501(c)(4)(B), which requires that the IRS provide notice to taxpayers
of their rights to decline to extend the assessment statute of limitations or
to request that any extension be limited to specific issues or a specific
period of time. The Treasury Inspector
General for Tax Administration is required to provide information annually
regarding the IRS’ compliance with this provision.[1]
Impact on the Taxpayer
The IRS is required to notify taxpayers of their rights
when requesting an extension of the statute of limitations for assessing
additional taxes and penalties. In
passing this law, Congress expressed concern that taxpayers were not being
advised adequately of their rights to refuse to extend the statute of
limitations or to request that a statute extension be limited to specific
issues or a specific period of time. Based
on the results of our review, we believe that the IRS is complying with the
intent of the statute. However, there
were still some instances in which IRS employees did not document whether
taxpayers or their representatives were advised of these rights.
Synopsis
Cases without documentation that taxpayers were informed of their rights decreased from 21 percent in Fiscal Year 2004 to 6 percent in Fiscal Year 2008.
The IRS has shown improvement over prior years when documenting that taxpayers were informed of their rights. The percentage of case files without documentation has steadily decreased over the last 5 years. However, there were still instances in which there was no documentation in the related case files to show that taxpayers were advised of their rights regarding assessment statute extensions. In our statistical sample of 139 tax returns, 8 (6 percent) of the related case files reviewed did not adequately document that the taxpayers had been advised of their rights regarding assessment statute extensions. This sample included 109 case files with authorizations for third-party representation. We found that 9 (8 percent) of the 109 files did not document that the taxpayers’ representatives were provided with the required notifications.
Our discussions with employees who worked these exception cases determined that some employees overlooked the fact that the required information was not documented in the case file. Other employees indicated that when a taxpayer asked them to deal directly with his or her representative, the employees did so exclusively. Because the taxpayer did not want to be involved in the audit process, the employees informed only the representative of the taxpayer’s rights. This is consistent with the IRS’ position that informing a taxpayer’s representative meets the requirement that the taxpayer be informed.
Response
We made no recommendations in this
report. However, key IRS management
officials reviewed it prior to issuance and agreed with the facts and the
presentation of the difference in the interpretation of the law as to whether
informing a taxpayer’s representative meets the requirement that the taxpayer
be informed. Because of the difference
in the interpretation of the law, the IRS disagrees with our outcome measure
involving the protection of taxpayer rights and entitlements for taxpayers
whose related case files did not adequately document that
the taxpayers were advised of their rights when assessment statutes were
extended.
However,
we believe that taxpayer rights could be negatively affected if the IRS does not
comply with statutory and regulatory provisions and its own procedures and
publications requiring that taxpayers be directly notified of their rights
related to extensions to the assessment statute of limitations.
Please contact me at (202) 622-6510 if you have
questions or Michael E. McKenney, Assistant Inspector General for Audit (Wage
and Investment Income Programs), at (202) 622-5916.
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – Outcome Measures
Appendix V –
Prior Audit Reports
Appendix VI –
Case Review Results by Division
Abbreviations
|
I.R.C. |
Internal Revenue Code |
|
IRS |
Internal Revenue Service |
|
RRA 98 |
Restructuring and Reform Act of 1998 |
The IRS is
required to advise taxpayers of their rights when requesting an extension of
the statute of limitations for the assessment of additional taxes and
penalties.
The Internal Revenue Service (IRS) is required by the IRS Restructuring and Reform Act of 1998 (RRA 98)[2] and the Internal Revenue Code (I.R.C.)[3] to advise taxpayers of their rights when requesting an extension of the statute of limitations for the assessment of additional taxes and penalties. When the IRS audits a tax return and determines that there is an additional tax liability, the additional tax assessment must generally be processed within 3 years from the date the return was due or from the date on which the return was actually filed, whichever is later. This 3-year assessment statute of limitations normally cannot be extended without the taxpayer’s written consent.[4] To extend the statute, the IRS generally requests that the taxpayer(s) provide a signed consent form, either Consent to Extend the Time to Assess Tax (Form 872) or Consent to Extend the Time to Assess Employment Taxes (Form SS-10).[5]
These consents extend the assessment statute of limitations to either a specific period of time or an unlimited, indefinite period. The statute is usually extended for a period that both the IRS and the taxpayer agree is reasonable to complete the examination. The consent can also be negotiated to apply only to certain audit issues.
In passing the RRA 98, Congress expressed concern that taxpayers had not always been fully aware of their rights to refuse to extend the statute of limitations or to request that a statute extension be limited to specific issues or a specific period of time. Some taxpayers might believe that they are required to agree to an extension upon the request of the IRS. Congress wanted to ensure that taxpayers were informed of their rights to refuse the proposed statute extension or to have it limited.
A taxpayer might agree to extend the assessment statute of limitations for the following reasons:
· The taxpayer might want to pursue additional audit issues that are in the taxpayer’s favor in offsetting a proposed tax assessment or that might allow for a tax refund.
· If the remaining time before the statute expires is too short, the IRS might have to prematurely stop the audit process and issue a notice of deficiency that limits the time for the normal appeals process before the taxpayer must file a petition with the United States Tax Court.
A taxpayer might decide to limit or refuse to extend the assessment statute of limitations because:
· The taxpayer might not want to provide the IRS more time to consider additional audit issues.
· The taxpayer might not want to allow the IRS the opportunity to further develop audit issues already under consideration after the normal statute period has expired.
The RRA 98
requires taxpayers to be informed of their rights to refuse to extend the
period of limitations or to limit the extension to specific issues or a period
of time.
RRA 98 Section (§) 3461 (b)(2)(B) requires the IRS to “. . . notify the taxpayer of the taxpayer’s right to refuse to extend the period of limitations, or to limit such extension to particular issues or to a particular period of time, on each occasion when the taxpayer is requested to provide such consent.” To implement this statutory requirement, the IRS revised its procedures to direct IRS employees to provide the taxpayer with a Request to Extend Assessment Statute (Letter 907) or Letter Transmitting Consent Extending Period of Limitation (Letter 967). Included with these Letters should be the actual consent forms to be signed and Extending the Tax Assessment Period (Publication 1035). In addition, Federal regulations require that any notice or other written communication required to be given to a taxpayer in any matter before the IRS also be given to the taxpayer’s representative (unless restricted by the taxpayer).[6] IRS employees are instructed to document in their case file activity log whether the taxpayer was notified of his or her rights each time the IRS requested an assessment statute extension.
The Treasury Inspector General for Tax Administration is required by the RRA 98 to provide information annually regarding the IRS’ compliance with I.R.C. § 6501(c)(4)(B). This report presents the results of our ninth annual review of the IRS’ compliance with the statute extension provisions of the law.[7] In the previous eight reports, we continued to identify noncompliance with procedures because documentation was not adequate to support that taxpayers were advised of their rights. However, compliance has improved since the IRS revised the various consent forms and incorporated them into guidelines, in response to our Fiscal Year 2004 report.[8]
The consent forms were revised to include a prominent statement informing taxpayers of their rights regarding assessment statute extensions and to provide information about Publication 1035. In addition, the revised consent forms include a statement for the taxpayers’ representatives to sign, confirming that they were notified of their rights regarding assessment statute extensions and that the taxpayers were made aware of the same rights. See Figure 1.
Figure 1: Excerpt From Form 872
Figure 1 was removed
due to its size. To see Figure 1, please
go to the Adobe PDF version of the report on the TIGTA Public Web Page.
This review was performed at the Office of Appeals
Headquarters, Large and Mid-Size Business Division Headquarters, Small
Business/Self-Employed Division Headquarters, and Tax Exempt and Government
Entities Division Headquarters in
The Internal Revenue Service Has Shown Improvement in Documenting That Taxpayers Were Informed of Their Rights
Overall, the IRS continues to improve its compliance with requirements for documenting that taxpayers were informed of their rights to refuse to extend the period of limitations or to limit such extension to particular issues or to a particular period of time. Specifically, the percentage of case files without required documentation has steadily decreased over the last 5 years, as shown in Figure 2.
Figure
2: Error Rate – No Documentation That Taxpayer
Was Informed
Figure 2 was removed due to its size. To see Figure 2, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
For Fiscal Year 2008, 8 (6 percent) of the 139 case files in our statistical sample did not contain sufficient documentation to indicate whether taxpayers were advised of their rights before consenting to extend the time to assess tax. In all eight cases, the taxpayer’s representative signed Form 872 or Form SS-10, both of which contain a statement detailing the taxpayer’s rights regarding extending the assessment statute of limitation. However, there was no evidence in the case files documenting that the taxpayers themselves were advised of their rights. Discussions with responsible employees who worked the cases for which documentation was not located identified that:
· Employees simply overlooked the fact that the required information was not documented in the case file.
· Employees complied with the requests of the taxpayer to deal directly with his or her representative. Because the taxpayer did not want to be involved in the audit process, the employees informed only the representative of the taxpayer’s rights. This is consistent with the IRS’ position that informing a taxpayer’s representative meets the requirement that the taxpayer be informed.
Based on our sample results, from the population of 9,183 audits with statute extensions closed during the first 6 months of Calendar Year 2007, we project that documentation in 551[9] cases was not adequate to show that taxpayers were advised of their rights.[10] We considered that employees had advised taxpayers of their rights if any of the required documentation appeared to have been given to the taxpayers or a log entry to that effect was found in the related case files. The fact that we could not identify the required documentation in the case file does not mean the taxpayer was not informed of his or her rights. It means that, from the information available to us, we could not determine if the taxpayer was informed.
The
IRS takes the position that informing only representatives of the taxpayers’
rights meets the intent of the statute
The IRS did not agree with our eight exception cases. IRS management considers that the requirement was met because in each of the eight cases the taxpayer’s representative was informed of the taxpayer’s rights. In prior reviews, the IRS has taken the position that notifying a taxpayer’s representative satisfies the requirement to notify the taxpayer. In response to our Fiscal Year 2007 report,[11] IRS management stated that:
The
law governing principals and agents provides that the authorized representative
acts for the principal based on the authority vested in the agent by the
principal. Therefore, we believe the IRS
complies with its statutory obligation if we provide notice to either the
taxpayer or the taxpayer’s authorized representative.
We believe that the language of the statute and the RRA 98 Congressional Committee report indicate that the taxpayer must be notified directly. In the Committee Report, Congress emphasized the need for taxpayers to be fully informed of their statute extension rights, stating that “The Committee is concerned that in some cases taxpayer(s) have not been fully aware of their rights to refuse to extend the statute of limitations, and have felt that they had no choice but to agree to extend the statute of limitations upon the request of the IRS.”
As a result, RRA 98 § 3461 (b)(2)(B) emphasized that the IRS “. . . shall notify the taxpayer. . . of their rights regarding assessment statute extensions.” This wording was carried over in I.R.C. § 6501(c)(4)(B), which stated that the “. . . Secretary shall notify the taxpayer of the taxpayer’s right . . .” to refuse or limit extensions. The Internal Revenue Manual states that “. . . notification must be made to the taxpayer. . . and the taxpayer’s representative . . .”
The notification process is also explained in Practice Before the IRS and Power of Attorney (Publication 947), in which the IRS informs the taxpayer:
If
you have a recognized representative, you and the representative will receive
notices and other correspondence from the IRS. . . . the IRS will send your representative(s)
a duplicate of all computer-generated correspondence that is sent to you. The IRS employee handling the case is
responsible for ensuring that the original and any requested copies of each
manually-generated [sic] correspondence are sent to you and your
representative(s) in accordance with your authorization.
From the statute, regulations, and IRS procedures and publications, it is clear that the expectation is for both the taxpayer and the taxpayer’s representative to receive notices, including notification of the taxpayer’s rights. Although a taxpayer may permit an authorized representative to receive notification in addition to that provided to the taxpayer, we found no statutory or regulatory provisions allowing the taxpayer to designate certain individuals to receive notification instead of the taxpayer.
Taxpayer rights could be negatively affected if the IRS does not comply with the RRA 98 and follow regulations and IRS procedures requiring that taxpayers be directly notified of their rights related to extensions to the assessment statute of limitations. However, while we still have a difference of legal opinion, we are making no recommendation.
Some Case Files Did Not Have Documentation That Taxpayers’ Representatives Were Provided With the Required Copies of the Consent Forms
The IRS has also improved in documenting that taxpayers’ representatives were informed of the taxpayers’ rights to refuse to extend the statute or to limit it, as shown in Figure 3. However, there are still some instances in which IRS employees did not document that the taxpayer’s representative was properly advised of the taxpayer’s rights, even though the employee had documented that the taxpayer was informed.
Figure 3: Error Rate – No Documentation That Representative Was Informed[12]
Figure 3 was removed due to its
size. To see Figure 3, please go to the
Adobe PDF version of the report on the TIGTA Public Web Page.
In our sample of 139 cases, 109 contained authorizations for third parties to represent the taxpayers before the IRS. Of these 109 cases, 9 (8 percent) did not contain any documentation supporting that the taxpayers’ representatives were provided with the required notifications. We estimate from our population of 5,418 cases with authorized representatives that 433[13] were not adequately documented to show the representatives were given copies of written communications advising taxpayers of their rights.[14] Our discussions with employees who worked the cases in which documentation was not located determined that the employees simply overlooked the fact that the required information was not documented in the case files.
IRS regulations require that once a taxpayer representative has been recognized as such, he or she must be given copies of all correspondence issued to the taxpayer. This applies to all computer-generated or manually generated notices or other written communications. Without the required documentation, we could not determine if the IRS properly notified the taxpayers’ representatives in these nine cases. Taxpayers might be adversely affected if the IRS does not follow requirements to notify both the taxpayers and their representatives of the taxpayers’ rights related to statute extensions.
Appendix I
Detailed Objective, Scope, and Methodology
Our overall audit objective was to determine
whether the IRS was complying with I.R.C. § 6501(c)(4)(B), which
requires that the IRS provide notice to
taxpayers of their rights to decline to extend the assessment statute of
limitations or to request that any extension be limited to specific issues or a
specific period of time. To accomplish
this objective, we:
I. Determined whether taxpayers were being advised of their rights when the IRS requested an extension of the assessment statute.
A. Reviewed Internal Revenue Manual memoranda, IRS Office of Chief Counsel Opinions, and Appeals guidelines to determine whether there had been any changes to existing policies and procedures for processing requests to extend the assessment statute of limitations since our last audit.
B. Identified a population of 9,183 Business Master File and Individual Master File[15] closed examination cases with taxpayer consents to extend the assessment statute of limitations processed from January 1 through June 30, 2007. We validated the Business Master File and Individual Master File data by examining a random sample of 50 (25 from each Master File extract) of the 9,183 records. This random sample was used for data validation and not for projecting or reporting results.
The validation test results demonstrated that the data were reliable and could be used to meet the objective of this audit. We developed a statistical sampling plan using a 95 percent confidence level, an expected error rate of 10 percent, and a precision of ±5 percent, which resulted in a minimum sample size of 137 tax returns (closed cases). A statistical sample was taken because we wanted to estimate the number of tax returns in the population for which taxpayer rights were potentially affected.
C. Randomly selected a sample of 139[16] closed cases from the population identified in Step I.B. We met our sample size of 139 cases after ordering 624 tax returns and related case files and eliminating 485 tax returns that either did not meet our criteria[17] or for which we did not receive all the requested tax returns and related case files. In our sample of 139 cases, 109 had authorizations for third parties to represent the taxpayers before the IRS.
D. Reviewed the 139 selected tax returns and related case files for the necessary documentation to verify whether taxpayers and their representatives, if applicable, were properly advised of their rights regarding assessment statute extensions and whether the revised consent forms were used in the process.
E. Discussed exceptions identified with the IRS business unit or function that had requested the extension for concurrence or an explanation of why the IRS believed that proper procedures were followed. We also discussed the exceptions with the employees who had worked the cases to determine the root cause of why procedures were not followed.
Appendix II
Major Contributors to This Report
Michael
E. McKenney, Assistant Inspector General for Audit (Wage and Investment Income
Program)
Scott
Macfarlane, Director
Russell
Martin, Director
Richard
Calderon, Audit Manager
Steven
Stephens, Lead Auditor
Karen
Fulte, Senior Auditor
Jennie
Choo, Auditor
Jane
Lee, Auditor
Appendix III
Commissioner C
Office
of the Commissioner – Attn: Chief of
Staff C
Commissioner,
Large and Mid-Size Business Division
SE:LM
Commissioner,
Small Business/Self-Employed Division
SE:S
Commissioner,
Tax Exempt and Government Entities Division
SE:T
Chief,
Appeals AP
Chief Counsel CC
National Taxpayer Advocate TA
Deputy
Commissioner, Large and Mid-Size Business Division SE:LM
Deputy
Commissioner, Small Business/Self-Employed Division SE:S
Deputy
Commissioner, Tax Exempt and Government Entities Division SE:T
Director,
Communications and Liaison, Tax Exempt and Government Entities Division SE:T:CL
Director,
Communications, Liaison, and Disclosure, Small Business/Self-Employed
Division SE:S:CLD
Director,
Examination, Small Business/Self-Employed Division SE:S:E
Director,
Exempt Organizations, Tax Exempt and Government Entities Division SE:T:EO
Director,
Field Specialists, Large and Mid-Size Business Division SE:LM:FS
Director,
Communication and Liaison, Large and Mid-Size Business Division SE:LM:M:CL
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:
Commissioner, Large and Mid-Size Business
Division SE:LM:CL
Commissioner, Small
Business/Self-Employed Division SE:S:COM
Commissioner, Tax Exempt and Government
Entities Division SE:T:CL
Chief, Appeals AP:TP:SS
Appendix IV
This appendix presents detailed information on the measurable impact that our prior recommendations will have on tax administration (these prior recommendations continue to provide benefits). These benefits will be incorporated into our Semiannual Report to Congress.
Type and Value of Outcome Measure:
· Taxpayer Rights and Entitlements – Potential; 551 taxpayers whose related case files did not contain adequate documentation to show that the taxpayers were advised of their rights when assessment statutes were extended (see page 4).
Methodology Used to Measure the Reported Benefit:
To determine the number of taxpayers for which documentation was not adequate to support that the taxpayers were advised of their rights, we electronically identified 9,183 tax returns from the universe of Business Master File and Individual Master File[18] tax returns (processed from January 1 through June 30, 2007) for which the assessment statute was extended. Because of the difficulty we encountered with obtaining the associated case files for some of these returns, we requested a total of 624 tax returns for which the assessment statute was extended. We met our sample size of 139 cases after ordering 624 tax returns and related case files and eliminating 485 tax returns that either did not meet our criteria[19] or for which we did not receive all the requested tax returns and related case files. We reviewed the sample of 139 tax returns to determine if taxpayers were advised of their rights and identified 8 taxpayers (6 percent) for whom the required documentation was not found. We then multiplied this exception percentage by the population to project the total number of taxpayers whose case files did not have sufficient documentation (9,183 * 6 percent = 551 taxpayers). This projection is a simple average of the exception cases. The actual number is 551 ± 358 (based on actual precision of 3.9 percent) with a 95 percent confidence level.
Type and Value of Outcome Measure:
· Taxpayer Rights and Entitlements – Potential; 433 taxpayers whose related case files were not documented to show that the taxpayers’ representatives were given copies of the written communications advising taxpayers of their rights regarding assessment statute extensions (see page 6).
Methodology Used to Measure the Reported Benefit:
To determine the number of taxpayers for which documentation was not adequate to support that the taxpayers’ representatives were advised of the taxpayers’ rights, we used the same sample of 139 tax returns and identified 109 files that contained an authorization for a third party to represent the taxpayer before the IRS. In 9 (8 percent) of the 109 case files, there was no documentation that employees provided the representatives with a copy of the written communications provided to the taxpayers. We then determined the number of taxpayers in the population that had authorizations to represent the taxpayers (5,418), and multiplied the exception percentage by that population to project the total number of taxpayers whose case files did not have sufficient documentation to indicate that the representative was informed (5,418 * 8 percent = 433 taxpayers). This projection is a simple average of the exception cases. The actual number is 433 ± 271 (based on the actual precision of 5 percent) with a 95 percent confidence level.
Appendix V
The Treasury Inspector General for Tax Administration has previously performed eight mandatory audits in this subject area. These audits were:
Fiscal Year 2007
Statutory Audit of Compliance With Notifying Taxpayers of Their Rights When
Requested to Extend the Assessment Statute (Reference Number 2007-40-167,
dated August 31, 2007).
Fiscal Year 2006
Statutory Audit of Compliance With Notifying Taxpayers of Their Rights When
Requested to Extend the Assessment Statute (Reference Number 2006-40-163,
dated September 21, 2006).
Fiscal
Year 2005 Statutory Audit of Compliance With Notifying Taxpayers of Their
Rights When Requested to Extend the Assessment Statute (Reference Number 2005-40-112, dated July
2005).
Fiscal
Year 2004 Statutory Audit of Compliance With Notifying Taxpayers of Their
Rights When Requested to Extend the Assessment Statute (Reference Number 2004-40-108, dated June
2004).
Fiscal
Year 2003 Statutory Audit of Compliance With Notifying Taxpayers of Their
Rights When Requested to Extend the Assessment Statute (Reference Number 2003-40-193, dated September
2003).
Improved
Documentation Is Needed to Ensure Taxpayers Are Informed of Their Rights When
Requested to Extend the Assessment Statute (Reference Number 2002-40-175, dated September 2002).
Most
Taxpayers Are Advised of Their Rights Before Signing an Agreement to Extend the
Assessment Statute of Limitations (Reference Number 2001-10-157, dated September 2001).
Information Provided to Taxpayers When Requesting
Extensions of the Assessment Statute of Limitations Can Be Improved (Reference Number 2000-10-142, dated
September 2000).
Appendix VI
Case Review Results by Division
|
Compliance With Requirement to |
Division[20]
|
Totals |
|||
Appeals
|
LMSB
|
SB/SE
|
TE/GE[21]
|
||
|
Number of Tax Return Files That Did Not Contain
Adequate Documentation That Taxpayers Were Informed of Their Rights |
****1**** |
****1**** |
****1**** |
****1**** |
8 |
|
Number of Tax Return Files Reviewed: |
11 |
26 |
89 |
13 |
139 |
|
Compliance With Requirement to |
Division
|
Totals |
|||
Appeals
|
LMSB
|
SB/SE
|
TE/GE
|
||
|
Number of Tax Return Files That Did Not Contain
Adequate Documentation That Taxpayer’s Representatives Were Informed of the
Taxpayer’s Rights |
0 |
3 |
3 |
3 |
9 |
|
Number of Tax Return Files Reviewed: |
11 |
19 |
67 |
12 |
109 |
[1] Internal Revenue Code Section 7803(d)(1)(c) (2000 Suppl. 2).
[2] RRA 98 Section (§) 3461 (b)(2)(B), 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] I.R.C. § 6501(c)(4)(B).
[4] There are some exceptions to the 3-year statute of limitations. For example, I.R.C. § 6501(c)(1) extends the assessment statute indefinitely when false or fraudulent returns are filed.
[5] IRS employees who most often request assessment statute extensions are examiners in the various Examination functions of the business operating divisions and appeals officers in the Office of Appeals.
[6] 26 C.F.R. § 601.506 (2002).
[7] Appendix V presents a list of our prior reports.
[8] Fiscal Year 2004 Statutory Audit of Compliance With Notifying Taxpayers of Their Rights When Requested to Extend the Assessment Statute (Reference Number 2004-40-108, dated June 2004).
[9] This projection is a simple average of the exception cases. The actual number is 551 ± 358 (based on actual precision of 3.9 percent) with a 95 percent confidence level.
[10] See Appendix IV for details.
[11] Fiscal Year 2007 Statutory Audit of Compliance With Notifying Taxpayers of Their Rights When Requested to Extend the Assessment Statute (Reference Number 2007-40-167, dated August 31, 2007).
[12] Our 2004 report did not state the exact number of exceptions for this category. Therefore, the 2004 results could include some cases in which representatives were actually informed.
[13] This projection is a simple average of the exception cases. The actual number is 433 ± 271 (based on the actual precision of 5 percent) with a 95% confidence level.
[14] See Appendix IV for details.
[15] The Business Master File is the IRS database that consists of Federal tax-related transactions and accounts for businesses. These include employment taxes, income taxes on businesses, and excise taxes. The Individual Master File is the IRS database that maintains transactions or records of individual tax accounts.
[16] The actual sample size differs from the minimum because we oversampled by two cases.
[17] No consent form is required for a return that has the statute date extended for procedural issues. Our criteria required a signed consent form to be a valid sample case.
[18] The Business Master File is the IRS database that consists of Federal tax-related transactions and accounts for businesses. These include employment taxes, income taxes on businesses, and excise taxes. The Individual Master File is the IRS database that maintains transactions or records of individual tax accounts.
[19] No consent form is required for a return that has the statute date extended for procedural issues. Our criteria required a signed consent form to be a valid sample case.
[20] No cases from the Wage and Investment Division occurred in our sample.
[21] Office of Appeals, Large and Mid-Size Business Division (LMSB), Small Business/Self-Employed Division (SB/SE), and Tax Exempt and Government Entities Division (TE/GE).