Treasury Inspector General for Tax Administration

Office of Audit

OVERSIGHT OF REVENUE OFFICER CASE ACTIONS CAN BE IMPROVED

Issued on May 8, 2013

Highlights

Highlights of Report Number:  2013-30-043 to the Internal Revenue Service Commissioner for the Small Business/Self-Employed Division.

IMPACT ON TAXPAYERS

Actions taken by revenue officers (RO) to collect Federal taxes are designed to move cases toward resolution and include analysis prior to contacting the taxpayer (precontact analysis), initial contact, and timely follow-up actions.  However, management controls are not effective to ensure that RO case actions are always performed timely.  As a result, the potential exists for the inconsistent treatment of taxpayers when some ROs perform case actions timely and appropriately while others do not.

WHY TIGTA DID THE AUDIT

National Quality Review System reports over the past five years have repeatedly identified some problems with the timeliness of follow-up actions and initial contacts.  This audit was initiated to determine whether ROs in the Collection Field function were following all required case processing procedures.

WHAT TIGTA FOUND

Before making initial contact with the taxpayer, IRS procedures require ROs to conduct precontact analysis.  However, the procedures do not provide specific time periods, except to state that the precontact analysis should be performed upon assignment.  TIGTA reviewed a random sample of 139 cases and determined that ROs waited an average of 16 calendar days to conduct precontact analysis on cases with a 30-calendar‑day initial contact requirement and 22 calendar days on cases with a 45-calendar-day initial contact requirement.  Furthermore, in eight (6 percent) of the 139 cases, the precontact analysis was either not completed or was completed after the RO contacted the taxpayer.

IRS procedures are specific about how much time an RO has to contact a taxpayer after being assigned a case.  TIGTA determined that the majority of the maximum time allowed had elapsed before ROs attempted contact, and they made untimely contact in 26 (19 percent) of 134 sampled cases in which initial contact was required.  Furthermore, in 82 (61 percent) of 134 cases, the taxpayers were not contacted when the ROs attempted initial contact.  Finally, ROs did not take timely follow-up actions in 55 (42 percent) of 130 cases requiring action.

TIGTA determined that controls to ensure that ROs take timely case actions were not completely effective.  Specifically, the Integrated Collection System does not generate reports that allow group managers to proactively monitor RO case actions.  In addition, ROs are not required to use the Integrated Collection System electronic calendar, which allows group manager access and can help ROs meet deadlines.

In June 2011, IRS management increased the maximum time allowed for initial contact to 45 days for 30-day initial contact cases.  This change represents a 50 percent increase in the time allowed to make an initial contact and will result in most of the cases assigned to ROs having a 45-day initial contact requirement.  In addition to this change, procedures were also implemented to reduce RO inventories to 85 percent of their previous inventory levels and to extend the time period for follow-up actions from 10 calendar days to 15 calendar days.  These changes were implemented without assessing the impact they would have on inventory, workload, or revenue.

WHAT TIGTA RECOMMENDED

TIGTA made several recommendations to improve the timeliness of RO case actions and also recommended that management assess the impact of the procedural change that extended the time periods for RO case resolutions.

IRS management agreed with most of our recommendations and plans to take corrective actions.  However, management did not agree that additional controls were necessary to ensure that ROs perform precontact analysis prior to making contact with taxpayers.  Instead, they plan to issue a reminder notice to employees.

Existing controls were insufficient to detect or prevent the errors identified in this audit.  While TIGTA agrees that reminding ROs of the importance of this requirement can be beneficial, establishing controls that ensure compliance with IRS regulations and consistent taxpayer treatment is more effective. 

READ THE FULL REPORT

To view the report, including the scope, methodology, and full IRS response, go to:

http://www.treas.gov/tigta/auditreports/2013reports/201330043fr.html

E-mail Address:   TIGTACommunications@tigta.treas.gov

Phone Number:   202-622-6500

Website:   http://www.treasury.gov/tigta