Office of Audit
Fiscal Year 2016 Review of Compliance With Legal Guidelines When Conducting Seizures of Taxpayers’ Property
Final Report issued on August 31, 2016
Highlights of Reference Number: 2016-30-074 to the Internal Revenue Service Commissioner for the Small Business/Self-Employed Division.
IMPACT ON TAXPAYERS
Taking a taxpayer’s property for unpaid tax is commonly referred to as a seizure. To ensure that taxpayers’ rights are protected, the IRS Restructuring and Reform Act of 1998 amended the seizure provisions in Internal Revenue Code (I.R.C.) Sections (§§) 6330 through 6344. These provisions govern many aspects of the seizure process, from notification of the taxpayer through sale or redemption of the property.
WHY TIGTA DID THE AUDIT
I.R.C. § 7803(d)(1)(A)(iv) requires TIGTA to annually evaluate the IRS’s compliance with legal seizure provisions to ensure that taxpayers’ rights were not violated while seizures were being conducted. The overall objective of this review was to determine whether seizures conducted by the IRS complied with legal provisions set forth in I.R.C. §§ 6330 through 6344 and with the IRS’s own internal procedures.
WHAT TIGTA FOUND
TIGTA reviewed a random sample of 50 of the 428 seizures conducted from July 1, 2014, through June 30, 2015, to determine whether the IRS complied with up to 59 legal and internal guidelines related to each seizure. The IRS followed most of the procedures in the seizures we reviewed. For example, for all reviewed cases, the IRS obtained the required approvals prior to the seizure, did not seize any exempt items, and only authorized IRS staff participated in the seizure and sale of the seized property.
However, TIGTA identified 18 instances in which the IRS did not comply with a particular I.R.C. section or the related Internal Revenue Manual requirement. For example:
· The sale of seized property was not always properly advertised.
· The amount of the liability for which seizure was made was not always correct on the notice of seizure provided to the taxpayers.
· The expenses or proceeds from seizures were not always properly applied to taxpayers’ accounts.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the IRS update the advertisement publishing instructions in Letter 5746 to include that the check or money order should be payable to the United States Treasury.
In response to the report, IRS officials agreed with the recommendation and are currently updating Letter 5746 to include a statement that the check or money order should be payable to the United States Treasury.
READ THE FULL REPORT
To view the report, including the scope, methodology, and full IRS response, go to:
Phone Number / 202-622-6500
E-mail Address / TIGTACommunications@tigta.treas.gov
Website / https://www.treasury.gov/tigta