TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Office of Audit

Highlights

PROGRAMMING CHANGES WOULD ALLOW MORE ACCURATE TRACKING OF FAIR TAX COLLECTION PRACTICES VIOLATIONS

Final Report issued on September 14, 2016

Highlights of Reference Number:  2016-10-068 to the Internal Revenue Service Chief Counsel and the Internal Revenue Service Human Capital Officer. 

IMPACT ON TAXPAYERS

The abuse and harassment of taxpayers by IRS employees while attempting to collect taxes reflects poorly on the IRS and can have a negative impact on voluntary compliance.  It is important that taxpayers receive fair and balanced treatment from IRS employees when they attempt to collect taxes. 

WHY TIGTA DID THE AUDIT

The overall objective of this review was to obtain information on any reported IRS administrative or civil actions resulting from violations of Fair Tax Collection Practices (FTCP) (Internal Revenue Code Section 6304) for cases opened after July 22, 1998, and closed during Fiscal Year 2015.  This information will be used to comply with the IRS Restructuring and Reform Act of 1998 requirement that TIGTA include in one of its Semiannual Reports to Congress information regarding administrative or civil actions related to FTCP violations.

WHAT TIGTA FOUND

The IRS recorded two FTCP violations in Fiscal Year 2015 that resulted in administrative actions for revenue officers who contacted taxpayers directly without the required consent of the taxpayers’ power of attorney. 

TIGTA also determined that 12 cases were not tracked by the IRS as potential FTCP violations.  These 12 cases consisted of one investigation and 11 complaints.

TIGTA identified one investigation that was not correctly coded with the FTCP issue code on the Automated Labor and Employee Relations Tracking System (ALERTS), which the IRS uses to track disciplinary action.  This occurred because the ALERTS can only receive three violation codes electronically and the investigation case contained five violation codes.

TIGTA identified 11 complaints that included potential FTCP issues that were either not entered into the ALERTS or were entered without the associated FTCP issue code.  This occurred due to a combination of factors.  Unlike investigations, complaints are transferred to the IRS using paper forms and manually entered into a separate tracking system.  These forms contain a narrative explaining the potential violation(s) but do not include the specific violation code(s) related to the complaint.  In addition, guidance does not clearly identify who is responsible for entering these complaints into the ALERTS after IRS management completes an inquiry.

There were no civil actions resulting in monetary awards for damages to taxpayers because of an FTCP violation.  However, one case related to an offer in compromise was miscoded as an FTCP case.  The IRS corrected this data entry error during the audit.

WHAT TIGTA RECOMMENDED

TIGTA recommended that the IRS Human Capital Officer:  1) take action to update programming to allow all potential FTCP violation codes to be transmitted electronically to the ALERTS, 2) review the 12 cases not properly coded or entered into the ALERTS to determine whether potential FTCP violations were addressed, and 3) improve guidance to clearly identify responsibility for manually entering complaints on the ALERTS.

In its response, the IRS agreed with TIGTA’s recommendations.  The IRS plans to update programming and revise guidance.  In addition, the IRS stated that it has reviewed the 12 cases TIGTA concluded were not properly coded or entered into the ALERTS and determined that FTCP issues were adequately addressed.

READ THE FULL REPORT

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

http://www.treasury.gov/tigta/auditreports/2016reports/201610068fr.pdf.

 

Phone Number   /  202-622-6500

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

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