Treasury
Inspector General for Tax Administration
Office of Audit
ENFORCEMENT ACTIONS WERE NOT ALWAYS
TIMELY INITIATED WHEN TAXPAYERS DID NOT RESPOND TO CONTACT ATTEMPTS OR MISSED
DEADLINES
Issued
on June 10, 2009
Highlights
Highlights of
Report Number: 2009-30-081 to the
Internal Revenue Service Commissioner for the Small Business/Self-Employed
Division.
IMPACT ON TAXPAYERS
The Internal Revenue Service (IRS) has the authority to file
liens to protect the Federal Government’s interest when taxpayers have unpaid
tax liabilities and to levy or seize taxpayers’ income or assets in an effort
to collect unpaid tax liabilities. These
collection tools were not always used or used timely in balance due cases. Not using collection tools to secure the
Federal Government’s interest or collect balance due amounts could result in
inequitable treatment of taxpayers and loss of revenue to the Federal
Government.
WHY TIGTA DID THE AUDIT
This audit was initiated to determine whether revenue officers
take appropriate enforcement actions (liens, levies, or seizures) when
warranted to resolve balance due accounts.
This audit was included as part of our Fiscal Year 2008 Annual
Audit Plan under the major management challenge of Tax Compliance Initiatives.
WHAT
TIGTA FOUND
While the use
of collection enforcement tools has been emphasized and use of liens and levies
has increased in recent years, enforcement tools were not used or were not used
soon enough in 15 (21 percent) of the 70 cases reviewed. Lien, levy, and/or seizure action should have
been pursued when taxpayers missed specific deadlines or did not respond to
letters or messages for the taxpayers to contact the revenue officers.
These
instances occurred in part because the revenue officers were not always
following up in a timely manner when taxpayers missed deadlines to provide
information needed to resolve the case.
In addition, in some cases revenue officers appeared to be hesitant to
take enforcement actions when deadlines were missed. Further, in some cases, the revenue officers
initiated
followup
contacts with the taxpayers after the missed deadlines rather than take
enforcement actions.
The IRS is implementing new procedures and processes to
allow greater flexibility for dealing with taxpayers who become delinquent due
to current economic conditions. However,
TIGTA does not believe these procedures would have had a great impact on how
the cases in our review should have been worked. These cases involved taxpayers who were not
demonstrating good faith efforts to resolve their liabilities and comply with
tax laws.
WHAT TIGTA RECOMMENDED
TIGTA
recommended that the Director, Collection, Small Business/Self-Employed
Division, reemphasize the IRS policy for timely and effective followup contacts
to deadlines established for taxpayers, and specifically include an assessment
of the adequacy of enforcement actions in case reviews conducted as part of
operational reviews.
In
their response to the report, IRS officials stated that they issued a
memorandum on March 17, 2009, that emphasized key points regarding appropriate
use of enforcement action. IRS
management also developed several training courses designed to reinforce the
importance of timely and effective case actions including enforcement action
when appropriate that will be provided to revenue officers during Fiscal Year
2009. IRS management has also included
an assessment of the use of appropriate enforcement actions in operational
reviews, and plans to prepare a summary rollup of the case review findings,
trends, and related recommendations which will be provided to the Director,
Collection, Small Business/Self-Employed Division.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2009reports/200930081fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov