TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Office of Audit

Highlights

Fiscal Year 2019 STATUTORY Review of Disclosure of Collection Activities on Joint Returns

Final Report issued on September 4, 2019

Highlights of Reference Number:  2019-30-059 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.  I.R.C. § 6103(e)(7) allows authorized representatives of the joint filers to also receive the same collection information requested under I.R.C. § 6103(e)(8).  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

TIGTA’s review of computer system history files and employee interviews showed that employees were not always aware of the disclosure requirements for joint filer taxpayer contacts.  TIGTA’s review of computer system history files found that the I.R.C. joint filer disclosure requirements were not followed in 22 (73 percent) of 30 Integrated Collection System history files and 17 (57 percent) of 30 Account Management Services history files.  In interviews that TIGTA conducted of a judgmental sample of 30 employees (15 revenue officers and 15 Automated Collection System function customer service representatives), revenue officers answered 31 percent of the questions incorrectly and customer service representatives answered 46 percent incorrectly.

After the addition of I.R.C. § 6103(e)(8), the IRS updated Internal Revenue Manual sections to provide employees with guidance on responding to joint filer requests to comply with the law.  However, the lack of a detailed list of what employees can disclose for joint filer requests in the various Internal Revenue Manuals and incomplete and inconsistent training between the various employees who provide collection information to taxpayers may be contributing to employees’ hesitation to disclose information.

WHAT TIGTA RECOMMENDED

TIGTA recommended that the IRS:  1) produce a detailed but simple-to-understand list of information that must be provided to IRS employees so that they understand the type of information that must be provided to joint filers seeking collection information (as well as the type of information that must not be provided to joint filers seeking collection information) and encourage employees who are still confused about their legal obligations to contact the Disclosure Help Desk, and 2) require I.R.C. §§ 6103(e)(7) and (e)(8) training for all employees with taxpayer contact regarding balance due or collection issues to remind them of the requirements to disclose tax return and collection activity on jointly filed returns when requested by the joint spouse.

IRS officials partially agreed with the recommendations and plan to take corrective actions.  The IRS plans to update guidance with common joint filer scenarios and consider training for Collection function employees; however, TIGTA believes the updated guidance should include a simple list for quick reference and training should be provided to all employees with taxpayer contact regarding balance due or collection issues so they are aware of what information they are required to provide to taxpayers under I.R.C. §§ 6103(e)(7) and (e)(8).

READ THE FULL REPORT

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

https://www.treasury.gov/tigta/auditreports/2019reports/201930059fr.pdf.

 

Phone Number   /  202-622-6500

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

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