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IRS Collectors Not Aggressive Enough, Says Report

Washington, D.C. (June 18, 2009)

The IRS is not using collection tools, including tax liens, levies and property seizures, soon enough in many instances, according to a new report from a Treasury Department watchdog.

The report, from the Treasury Inspector General for Tax Administration, found that the IRS’s collection function did not use these tools at all, or did not use them soon enough, in 15 of the 70 cases reviewed by TIGTA auditors. “Lien, levy or seizure actions should have been pursued when taxpayers missed specific deadlines or did not respond to letters or messages for the taxpayers to contact the revenue officers,” said TIGTA. Specifically, the TIGTA auditors found that liens should have been filed in four of the cases reviewed, levies should have been issued earlier in nine of the cases, and seizure consideration would have been appropriate in five of the cases reviewed. The report estimates that collection enforcement tools were not used, or were not used soon enough, in approximately 4,250 taxpayer cases in fiscal year 2008.

TIGTA said the instances occurred in part because the revenue officers were not always following up in a timely manner when taxpayers missed deadlines to provide information needed to resolve the case. In addition, in some cases, revenue officers appeared to be hesitant to take enforcement actions when deadlines were missed. Further, in some cases, the revenue officers initiated follow-up contacts with the taxpayers after the missed deadlines, rather than take enforcement actions.

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The IRS is implementing new procedures and processes to allow greater flexibility for dealing with taxpayers who become delinquent due to current economic conditions. However, TIGTA said it does not believe these procedures would have had a great impact on how the cases it reviewed should have been worked. These cases involved taxpayers who were not demonstrating good-faith efforts to resolve their liabilities and comply with tax laws.

TIGTA recommended that the collection director in the IRS’s Small Business/Self-Employed Division re-emphasize the IRS policy for timely and effective follow-up contacts to deadlines established for taxpayers, and specifically include an assessment of the adequacy of enforcement actions in case reviews conducted as part of operational reviews.

In response, IRS officials noted that they issued a memorandum in March that emphasized key points regarding the appropriate use of enforcement action. IRS management has also developed several training courses that reinforce the importance of timely and effective case actions, including enforcement action when appropriate, that will be provided to revenue officers during fiscal year 2009. IRS management has also included an assessment of the use of appropriate enforcement actions in operational reviews, and plans to prepare a summary rollup of the case review findings, trends and related recommendations to the collection director.

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