Better oversight of IRS revenue officers who are assigned to collect overdue taxes is needed to ensure their actions are completed on a timely basis, according to a new government report.
The report, released publicly Tuesday by the Treasury Inspector General for Tax Administration reviewed a sample of cases closed by revenue officers in the IRS’s Small Business/Self-Employed Division Collection Field function and found that IRS revenue officers were not always timely when performing analysis prior to making initial contact with a taxpayer or when taking follow-up actions in 44 percent of the cases that required action.
“When some revenue officers perform case actions timely and appropriately while others do not, the potential exists for inconsistent treatment of taxpayers and ineffective collection of revenues," said Inspector General J. Russell George in a statement. “The more time that passes before taxpayers make at least one payment, it becomes less likely that they will do so at a later date. Meanwhile, taxpayers who are not contacted timely may accrue more interest and penalties compared with taxpayers who are promptly contacted.”
IRS procedures require revenue officers to conduct analysis before making initial contact with a taxpayer, but do not provide specific time periods. TIGTA reviewed a random sample of 139 cases and found that in eight of the 139 cases (or 6 percent), the analysis required prior to making initial contact was either not completed or was completed after the revenue officer contacted the taxpayer.
In addition, IRS procedures are specific about how much time a revenue officer has to contact a taxpayer after being assigned a case. TIGTA determined that, in the cases it reviewed, the majority of the maximum time allowed had elapsed before revenue officers attempted contact, and they made untimely contact in 26 of 134 sampled cases (19 percent) in which initial contact was required. In addition, in 82 of the sampled cases (61 percent) in which initial contact was required, the revenue officers were unsuccessful in making initial contact with taxpayers when they attempted to do so. Finally, revenue officers did not take timely follow-up actions in 55 (42 percent) of 130 cases requiring action.
TIGTA’s audit report determined that IRS management controls to ensure that revenue officers take timely case actions were not completely effective. TIGTA also determined that, in June 2011, IRS management increased the maximum time allowed for initial contacts, without assessing the impact such an increase would have on inventory, workload, or revenue.
TIGTA made several recommendations to improve the timeliness of revenue officer case actions and also recommended that management assess the impact of the procedural change that increased the maximum time allowed for initial contacts.
IRS management agreed with most of TIGTA’s recommendations and stated that they plan to take corrective action. Management did not agree that additional controls were necessary to ensure that revenue officers perform analysis prior to making initial contact with taxpayers, but did agree to issue a reminder notice to employees.
“We continually strive to identify and implement measures designed to demonstrably improve our operations, many impacting the areas targeted in this review,” wrote Faris R. Fink, commissioner of the IRS’s Small Business/Self-Employed Division, in response to the report. “As noted in your report, we have taken steps to improve the effectiveness of initial case actions through the implementation of our Planned Field Call Initiative which gives taxpayers and their representatives the opportunity to gather required documents and prepare for the initial contact with Collection personnel.”