Office of Audit
FISCAL YEAR 2016 STATUTORY AUDIT OF COMPLIANCE WITH
NOTIFYING TAXPAYERS OF
THEIR RIGHTS WHEN REQUESTED TO EXTEND THE ASSESSMENT STATUTE
Final Report issued on August 31, 2016
Highlights of Reference Number: 2016-30-081 to the Internal Revenue Service Deputy Commissioner for Services and Enforcement.
IMPACT ON TAXPAYERS
The IRS is required by law to notify taxpayers of their rights when requesting an extension of the statute of limitations for assessing additional taxes and penalties. Taxpayers might be adversely affected if the IRS does not follow the requirements to notify both the taxpayers and their representatives of the taxpayers’ rights related to assessment statute extensions.
WHY TIGTA DID THE AUDIT
TIGTA is required by law to annually determine whether the IRS complied with Internal Revenue Code Section 6501(c)(4)(B), which requires that the IRS provide notice to taxpayers of their rights to decline to extend the assessment statute of limitations or to request that any extension be limited to a specific period of time or specific issues.
WHAT TIGTA FOUND
TIGTA’s review of a statistical sample of 60 closed taxpayer audit files with assessment statute extensions found that the IRS was compliant with Section 6501(c)(4)(B). However, nine of the taxpayer audit files did not contain documentation to indicate whether taxpayers were properly notified of their rights as required by the IRS’s internal procedures. In addition, TIGTA found nine instances in which the audit files lacked documentation to support that the IRS complied with procedures requiring the notification of a taxpayer’s representative when an authorization for third-party representation exists.
WHAT TIGTA RECOMMENDED
TIGTA did not make any recommendations in this report because the IRS has taken sufficient actions to remind employees of their responsibilities to properly notify taxpayers and their representatives.
IRS officials were provided an opportunity to review the draft report and did not provide any comments.
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