Office of Audit
Highlights
READ THE FULL REPORT
Fiscal Year 2018 Statutory Review of Disclosure of Collection Activities on Joint Returns
Final Report issued on July 25, 2018
Highlights of Reference Number: 2018-30-053 to the Commissioner of Internal Revenue.
IMPACT ON TAXPAYERS
Internal Revenue Code (I.R.C.) Section (§) 6103(e)(8) requires the IRS to disclose efforts to collect delinquent taxes on joint tax liabilities when requested by taxpayers who are no longer married or no longer reside in the same household. If the IRS does not provide employees sufficient guidance for handling those requests, taxpayer rights could potentially be violated.
WHY TIGTA DID THE AUDIT
This audit was initiated because the IRS Restructuring and Reform Act of 1998 added I.R.C. § 7803(d)(1)(B), which requires TIGTA to annually review and certify the IRS’s compliance with I.R.C. § 6103(e)(8). The objective of this review was to determine whether the IRS is complying with the provisions of I.R.C. § 6103(e)(8) as related to the disclosure of collection activities with respect to joint filers.
WHAT TIGTA FOUND
IRS employees are not required to record or monitor joint filer requests for information on collection activities, systems have not been designed to specifically capture such information, and there is no legal requirement for the IRS to do so. While TIGTA does not recommend the creation of a separate tracking system, it determined that improvements can be made to the Internal Revenue Manual (IRM) sections and training materials regarding what the law requires and allows when receiving requests for disclosure of collection information pursuant to either I.R.C. § 6103(e)(7) or § 6103(e)(8).
TIGTA reviewed a sample of IRS system case history files and interviewed employees from the Accounts Management function, Taxpayer Assistance Centers, and the Taxpayer Advocate Service to determine how employees responded or would respond to taxpayer requests for information from a jointly filed return if the individuals filing the return are no longer married or no longer reside in the same household. Both the sampled case reviews and interviews showed that employees are not always aware of the disclosure requirements for joint filer taxpayer contacts.
Inconsistent guidance and the lack of training on the appropriate response to these inquiries are contributing to employee misunderstanding. Instead of having several sources for employees to research to determine the correct response to joint filer requests, there should be one source with detailed guidance so employees can consistently provide the correct response.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the IRS update all IRM sections used as disclosure guidance for taxpayer inquiries of collection activities of joint returns by replacing them with a referral to the Disclosure IRM; update the Disclosure IRM to include details and examples of collection activity and mirrored account information that may be disclosed; and update training materials so employees are aware of these type of inquiries and the appropriate responses.
In response to the report, IRS officials agreed with two of the four recommendations and plan corrective actions. However, the IRS disagreed on updating the IRM sections to refer employees to the Disclosure IRM and updating the Disclosure IRM sections. TIGTA believes the Disclosure Office should ensure that IRS employees have sufficient and accurate guidance related to taxpayers’ disclosure-related inquiries, since the purpose of the Disclosure IRM is to provide instructions, guidelines, and procedures necessary to fulfill IRS employees’ obligations under the disclosure laws.To view the report, including the scope, methodology, and full IRS response, go to:
https://www.treasury.gov/tigta/auditreports/2018reports/201830053fr.pdf.
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E-mail Address / TIGTACommunications@tigta.treas.gov
Website / http://www.treasury.gov/tigta