Collection Employees Adhered to Fair Tax Collection Practices From January 2009 Through September 2009
March 17, 2010
Reference Number: 2010-10-037
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 |
202-622-6500
Email Address | inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
HIGHLIGHTS
COLLECTION
EMPLOYEES ADHERED TO FAIR TAX COLLECTION PRACTICES FROM JANUARY 2009 THROUGH
SEPTEMBER 2009
Highlights
Final
Report issued on March xx, 2010
Highlights of Report
Number: 2010-10-037 to the Internal
Revenue Service Chief Counsel and the Human Capital Officer.
IMPACT ON TAXPAYERS
The abuse or
harassment of taxpayers by Internal Revenue Service (IRS) employees while
attempting to collect taxes reflects poorly on the IRS and can have a negative
impact on voluntary compliance. It can
also result in civil damages against the Federal Government when Fair Tax Collection Practices (FTCP) are
violated. From January through September
2009, there were no cases involving FTCP violations for which an employee
received administrative disciplinary action and there were no taxpayers who
received civil damages for an FTCP violation. As a result, taxpayers have reasonable
assurance that communications with the IRS in connection with
the collection of unpaid taxes generally did not violate the FTCP statute.
WHY TIGTA DID THE AUDIT
The overall
objective of this review was to obtain
information on IRS administrative or
civil actions resulting from FTCP violations
by IRS employees. Section 1102(d)(1)(G)
of the IRS Restructuring and Reform Act of 1998 requires TIGTA to include
in one of its Semiannual Reports to Congress information regarding
administrative or civil actions related to FTCP violations. This audit was conducted as part of the TIGTA Fiscal
Year 2010 Annual Audit Plan and addresses the major management challenge
of Taxpayer Protection and Rights.
WHAT
TIGTA FOUND
The FTCP provisions of Internal Revenue Code Section 6304
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. From January
through September 2009, IRS collection employees did not violate the FTCP
statute. The IRS coded only
three cases as FTCP complaints; however, two cases were not
substantiated as FTCP violations and the other was improperly coded as an
FTCP case. TIGTA recommended the
miscoding be fixed during the audit and the IRS corrected the miscoding. In addition, there were no civil actions
resulting in monetary settlements being paid to taxpayers because of an FTCP violation.
WHAT TIGTA RECOMMENDED
TIGTA made no recommendations in this report. However, key IRS management officials
reviewed the report prior to issuance and agreed with the facts and conclusions
presented.
March 17, 2010
MEMORANDUM
FOR CHIEF COUNSEL
INTERNAL REVENUE SERVICE HUMAN CAPITAL OFFICER
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Collection Employees Adhered to Fair Tax Collection Practices From January 2009 Through September 2009 (Audit # 201010007)
This report presents the results of our review of Fair Tax
Collection Practices[1]
(FTCP) violations from January through September 2009. The overall objective of this review was to obtain information on Internal Revenue
Service (IRS) administrative or civil
actions resulting from 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.
This audit is included in our Fiscal Year 2010 Annual Audit Plan and
addresses the major management challenge of Taxpayer Protection and Rights.
We made no
recommendations in this report. However,
key IRS management officials reviewed the report prior to issuance and agreed
with the facts and conclusions presented.
Copies of this report are also being sent to the IRS managers affected by the report results. Please contact me at (202) 622-6510 if you have questions or Nancy A. Nakamura, Assistant Inspector General for Audit (Management Services and Exempt Organizations), at (202) 622-8500.
No Fair Tax Collection Practices Violations Were Identified
No Fair Tax Collection Practices Violations Resulted in Civil Damages
(Monetary Awards) 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 Practices Violation Issue Codes
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[3] 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.[4] 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[5] included provisions that prohibit various collection
abuses and harassment in the private sector.
The restrictions did not apply to Federal Government practices. However, Congress believed that it was
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. The IRS Restructuring and Reform Act of
1998 § 3466 requires that the IRS follow FTCP provisions that are similar
to the Fair Debt Collection Practices Act provisions.[6]
Violations of the FTCP and related disciplinary actions are tracked on the IRS Human Capital Officer Workforce Relations’ Automated Labor and Employee Relations Tracking System (ALERTS). For this review, we analyzed cases closed from January 1 through September 30, 2009, on the ALERTS to identify violations of the FTCP.[7] 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.
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.
In
addition, taxpayer civil actions are tracked on the Office of Chief Counsel’s
Counsel Automated System Environment. We
also determined whether there were any FTCP violation cases that resulted in
judgments or awards granted on the Counsel Automated System Environment from
January 1 through September 30, 2009.
This
review was performed at the offices of the IRS Human Capital Officer and the Chief
Counsel in the IRS National Headquarters in
No Fair Tax Collection
Practices Violations Were Identified
We did not identify any FTCP violations during the audit period. As such, taxpayers have reasonable assurance that communications with the IRS in connection with the collection of unpaid taxes generally did not violate the FTCP statute.
Although we did not identify any FTCP violations, three cases
were coded as FTCP complaints and closed on the ALERTS from January 1 through
September 30, 2009. Specifically,
two cases involved potential FTCP violations that were unsubstantiated and one case
was miscoded. The miscoded case was not
an FTCP violation because it involved improper disclosure of taxpayer
information and unprofessional conduct and not the use of obscene/profane
language as coded. During the audit,
we recommended that the miscoding be corrected, and the Workforce Relations function staff
corrected the miscoding by amending the case to reflect the appropriate issue
codes instead of the FTCP violation issue code.[8]
In our previous reports,[9]
we have noted the miscoding of a significant number of cases. As a result, we previously recommended that
improvements be made to ensure cases are coded correctly. In
addressing our prior recommendation, IRS management implemented a hard-code
validation[10] of the ALERTS in January 2009. However, the hard-code validation would not
have prevented the one miscoded case identified above.
To determine whether
other types of cases were miscoded, we also reviewed 615 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 whether any of the cases should have been coded as FTCP violations. 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. In addition, the
ALERTS is the data source for reports provided to a number of other offices and
at times is the basis for information provided to Congress on legislation
affecting the IRS. We concluded
that the IRS had improved its coding process because we did not identify any
additional cases that should have been coded as an FTCP violation from the cases we reviewed in the six other
categories.
No Fair
Tax Collection Practices Violations Resulted in Civil Damages (Monetary Awards)
to Taxpayers
There were no cases closed on the Counsel Automated System Environment from January 1 through September 30, 2009, for which the IRS paid civil damages to taxpayers resulting from 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 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 of
any cases opened after July 22, 1998, with an issue code of 141 to
147,[11] and closed during the period January 1 through
September 30, 2009. Due to time
constraints, we did not conduct validation tests of this system.
B.
Determined whether any cases in the extract involved
FTCP violations that 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 September 30, 2009, 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 whether any of the cases in these categories were miscoded and should have been coded as FTCP violations.
II.
Determined whether
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 database
that had been opened after July 22, 1998, and closed during the period January
1 through September 30, 2009. Due
to time constraints, we did not conduct validation tests of this system. The data for January 1 through September 30,
2009, were consistent with those of past years, and there is less risk that
cases were misclassified because qualified attorneys were deciding whether 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.
Internal controls methodology
Internal controls
relate to management’s plans, methods, and procedures used to meet its mission,
goals, and objectives. Internal controls
include the processes and procedures for planning, organizing, directing, and
controlling program operations. They
include the systems for measuring, reporting, and monitoring program
performance. For this audit, we
determined that internal controls related to the reliability of information
were relevant to our audit objective. We
evaluated these controls by reviewing cases and discussing any potentially
miscoded cases with management.
Appendix II
Major Contributors to This Report
Nancy A.
Nakamura, Assistant Inspector General for Audit (Management Services and
Exempt Organizations)
Troy
D. Paterson, Director
Thomas
F. Seidell, Audit Manager
William
Simmons, Lead Auditor
Stephen
A. Elix, Auditor
Appendix III
Commissioner C
Office of the Commissioner –
Attn: Chief of Staff C
Deputy Commissioner for
Operations Support OS
Director, Workforce Relations,
IRS Human Capital Officer 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; one ALERTS[12] record (see page 3).
Methodology Used to Measure the Reported Benefit:
We reviewed the three FTCP complaints closed on ALERTS from January 1 through September 30, 2009, and determined that one of the cases was incorrectly coded as an FTCP violation. The miscoded case was not an FTCP violation because it involved improper disclosure of taxpayer information and unprofessional conduct, and not the use of obscene/profane language as coded. During the audit, we recommended that the miscoding be corrected, and the Workforce Relations function staff corrected the miscoding by amending the case to reflect the appropriate issue codes instead of the FTCP violation issue code.
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[13] requires the IRS to comply with certain provisions of the Fair Debt Collection Practices Act.[14] 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 VI
Fair Tax Collection
Practices Violation Issue Codes
|
Issue Code |
Description |
|
141 |
CONTACT
TAXPAYER UNUSUAL TIME/PLACE – 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 |
CONTACT
TAXPAYER WITHOUT REPRESENTATIVE – 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 his or her place
of employment when it is known or should be known that the taxpayer’s
employer prohibits the taxpayer from receiving such communication. |
|
144 |
USE/THREAT
OF PHYSICAL HARM – 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 Guide (January 2008).
[1] 26
U.S.C. Section 6304 (2007).
[2]
Pub. L. No. 105-206, 112 Stat. 702-703.
[3] Pub. L. No. 105-206, 112 Stat 702-703.
[4] 26 U.S.C. § 6304 (2007).
[5] 15 U.S.C. §§ 1601 note, 1692-1692o (2006).
[6] See Appendix V for a detailed description of FTCP provisions.
[7] We could not validate that the cases recorded on the ALERTS constitute all FTCP violations. There was no way to determine if any potential violations were reported but not recorded on the ALERTS.
[8] See Appendix IV for additional details.
[9] Collection Employees Adhered to Fair Tax Collection Practices in Calendar Year 2008 (Reference Number 2009-10-101, dated July 23, 2009) and Five Fair Tax Collection Practices Violations Resulted in Administrative Actions in Calendar Year 2007 (Reference Number 2008-10-162, dated September 5, 2008).
[10] An enhancement to an ALERTS software program that only allows FTCP violation issue codes on cases for which the affected party was a taxpayer/taxpayer representative and the case involved an employee performing specific collection‑related activities.
[11] See Appendix VI for additional information.
[12] The Office of Workforce Relations’ ALERTS generally tracks employee behavior that may warrant IRS management administrative actions.
[13] Pub. L. No. 105-206, 112 Stat. 768-769.
[14] 15 U.S.C. Sections 1601 note, 1692-1692p (2006).