TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Office of Audit

Highlights

FISCAL YEAR 2016 STATUTORY AUDIT OF COMPLIANCE WITH LEGAL GUIDELINES PROHIBITING
THE USE OF ILLEGAL TAX PROTESTER AND SIMILAR DESIGNATIONS

Final Report issued on September 14, 2016

Highlights of Reference Number:  2016-30-087 to the Internal Revenue Service Deputy Commissioner for Services and Enforcement and Deputy Commissioner for Operations Support.

IMPACT ON TAXPAYERS

Congress enacted the IRS Restructuring and Reform Act of 1998 (RRA 98) Section 3707 to prohibit the IRS from labeling taxpayers as Illegal Tax Protesters or any similar designations.  Using Illegal Tax Protester or other similar designations may stigmatize taxpayers and may cause employee bias in future contacts with these taxpayers.

WHY TIGTA DID THE AUDIT

Congress enacted the prohibition against Illegal Tax Protester designations because it was concerned that some taxpayers were being permanently labeled as Illegal Tax Protesters even though they had subsequently become compliant with the tax laws.  TIGTA is required to annually evaluate IRS compliance with the prohibition against using Illegal Tax Protester or similar designations.

The purpose of this audit was to determine whether the IRS complied with RRA 98 Section 3707 and its own internal guidelines that prohibit IRS officers and employees from referring to taxpayers as Illegal Tax Protesters or any similar designations.

WHAT TIGTA FOUND

The IRS has not reintroduced past Illegal Tax Protester codes or similar designations on taxpayer accounts.  However, TIGTA found that out of approximately 16.6 million records, there were seven instances in which employees referred to taxpayers as “Tax Protester/Protestor” or ”Defier” in case narratives in the Correspondence Examination Automation Support system.

WHAT TIGTA RECOMMENDED

TIGTA recommended that IRS management emphasize to all examination employees the importance of compliance with RRA 98 Section 3707 and reinforce that taxpayers are not to be referred to as Illegal Tax Protesters or any other similar designations.  This may include, but is not limited to, updating examination procedures, issuing a memorandum, or adding a module to an existing training course.

In their response, IRS management agreed with TIGTA’s recommendation and plans to implement corrective actions.

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/201630087fr.pdf.

 

Phone Number   /  202-622-6500

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

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