TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
THE INTERNAL REVENUE SERVICE'S PROCEDURES FOR
RESPONDING TO WRITTEN REQUESTS FOR COLLECTION
ACTIVITY FOR JOINT RETURN FILERS VARY FROM
Reference No. 199910077
The Taxpayer Bill of Rights 2 (referred to as TBOR 2), Pub. L. No. 104-168, 110 Stat. 1452 (1996) added 26 U.S.C. § 6103 (e) (8) (1986), which gave divorced or separated taxpayers the right to receive information regarding the Internal Revenue Service’s (IRS) efforts to collect delinquent taxes on joint return liabilities. The IRS Restructuring and Reform Act, Pub. L. No. 105-206, 112 Stat. 685 (1998) (referred to as RRA 98), amended 26 U.S.C. § 6103 (e) (6) (1986) to allow authorized representatives of the joint filers to receive the same collection information requested under 26 U.S.C. § 6103 (e) (8) (1986). IRS employees are required to provide the information, in writing, if these taxpayers or their representatives send in a written request.
The RRA 98 added 26 U.S.C. § 7803 (d) (1) (B) (1986), which requires the Treasury Inspector General for Tax Administration to determine if the IRS is complying with the requirements stated above to disclose tax collection information to joint filers or their representatives when they send in a written request.
To comply with the statutory requirements stated above, the IRS developed procedures for responding to taxpayers who file jointly and submit written requests for information on the IRS’ collection activity. However, these procedures allow IRS employees to provide both oral and written responses to taxpayers. This is different from the statutory requirements, which require the IRS to provide written responses if taxpayers or their representatives send in a written request.
The IRS controls general correspondence from taxpayers but is not required to maintain separate records of the joint filer requests. The IRS also does not have a process to ensure that employees are following procedures for responding to the joint filer requests. Therefore, we could not determine if the IRS is complying with the statutory requirements and protecting taxpayer rights because we could not readily identify any joint filer requests from taxpayers in IRS’ records or verify whether the IRS properly answered the joint filer requests.
The Internal Revenue Service’s Procedures for Responding to Written Requests for Collection Activity on Joint Returns Vary From Statutory Requirements
After passage of TBOR 2, the IRS Disclosure Office issued procedures for all IRS employees to follow regarding written requests, including those for joint filer tax return information. These procedures require IRS employees to respond in writing only when taxpayers specifically cite "(e) (8)" as their authority for making written requests for collection information on joint return liabilities (cite is 26 U.S.C. § 6103 (e) (8) (1986)). If this provision is not cited, the IRS has interpreted the provision to allow for either oral or written responses. The IRS believes oral responses provide good customer service to taxpayers because the taxpayer gets an answer immediately. However, 26 U.S.C. § 6103 (e) (8) (1986) does not state that the specific section has to be cited in the request to receive a written response, only that the IRS must respond, in writing, if the taxpayer submits a written request. Therefore, the IRS is not complying with the statutory requirements of 26 U.S.C. § 6103 (e) (8) (1986).
IRS Disclosure procedures properly instruct IRS employees to disclose whether any attempts have been made to collect the tax due from either one of the joint filers, the general nature of any collection activity, and the amount collected. In addition to the general Disclosure procedures, other IRS divisions began drafting more detailed procedures for their employees to follow. However, these draft procedures will still contain the option of oral or written responses to joint filer requests.
The Internal Revenue Service Has Procedures Designed for Controlling General Correspondence, but Does Not Have Controls to Ensure Employees Are Properly Responding in Writing to Joint Filers
The IRS has procedures designed to control and respond to general correspondence received from taxpayers. We conducted a limited test of these procedures in three types of IRS field offices - a service center, a customer service center, and a district office. A service center and customer service center process tax-related information (such as tax returns and tax payments) and respond to large volumes of taxpayer correspondence (such as letters from joint filers). District offices generally do not receive the large volume of taxpayer correspondence that a service center or customer service center may receive; however, they could receive some of the joint filer requests.
Our limited test showed that in one service center and one customer service center, correspondence from taxpayers is grouped in batches ranging from 20 to 50 documents. The batches are assigned to employees for processing. This process is intended to ensure all correspondence is worked. However, only the batches are tracked, not each piece of correspondence or letter. As a result, individual written requests for joint filer collection activity are not tracked separately on any IRS management information system. In addition, the IRS cannot determine how often these requests are received and whether IRS employees are protecting the taxpayers’ right to obtain a written response regarding collection information on their joint return liabilities.
We attempted to identify whether the IRS had received any taxpayer complaints regarding this issue. Our interviews of a limited sample of IRS managers and employees in eight IRS field offices indicated that none of the employees had received any taxpayer complaints regarding the joint filer provision. While this could indicate that the IRS is properly answering taxpayers’ written requests for joint return collection activity, we cannot be sure unless we identify and review actual requests from joint filers.
Summary of Recommendations
We recommend the IRS confirm with the Congressional legislative committees that the IRS is in compliance with the statutory requirements when it allows oral responses to written joint filer requests. In addition, IRS should conduct an analysis to determine the volume of written joint filer requests and whether IRS employees are properly responding to taxpayers.
Management’s Response: IRS management agreed to contact the appropriate Congressional legislative committees to ensure compliance with Congressional intent. Also, the IRS will conduct an analysis of the volume of written joint filer requests. Management’s complete response to the draft report is included as Appendix IV.
We will follow up on whether the IRS is properly responding to taxpayers during future reviews of this area.