The Internal Revenue Service’s computer systems are failing to send some taxpayers notices of additional tax levies, according to a new report.

The report, from the Treasury Inspector General of Tax Administration noted that the IRS has the authority to work directly with financial institutions and other third parties to seize taxpayers’ assets when taxpayers do not pay delinquent taxes. This action is commonly referred to as a “levy.” The law requires the IRS to notify taxpayers at least 30 calendar days prior to the issuance of a levy and allows taxpayers the opportunity to request a Collection Due Process hearing prior to the first levy on a delinquent account.

The report found that the IRS is generally protecting taxpayers’ rights when issuing systemic and manual levies in cases for which additional assessments were not included in the levy. TIGTA reviewed statistical samples of systemic and manual levies issued by the Automated Collection System and the Integrated Collection System and determined that controls ensured that most taxpayers were given notice of their Collection Due Process rights at least 30 calendar days prior to the issuance of the levies.

However, an additional review of statistical samples of taxpayers’ cases that were worked on in the Automated Collection System and that had additional tax assessed included in the systemic (30 taxpayers) and manual (30 taxpayers) levies determined that 12 of the 30 taxpayers with systemic levies, or 40 percent, did not receive a new notice of intent to levy after an additional assessment was made on a tax period listed on the levy. In addition, six of the 30 taxpayers with manual levies, or 20 percent, did not receive a new notice of intent to levy after an additional assessment was made on a tax period listed on the levy. 

IRS management advised TIGTA that they had made computer programming changes to correct this problem for fiscal year 2014 levies. However, TIGTA’s review helped identify other systemic problems management was not aware of. TIGTA said management is currently working with IRS programmers to isolate the problems and resolve them.

In addition, a review of a statistical sample of the delinquent accounts of 30 taxpayers whose cases were worked in Field Collection and who had additional assessments included in the systemic levies determined that there were 24 taxpayers, or 80 percent, who did not receive a new notice of intent to levy after an additional assessment was made on a tax period listed on the levy. Management implemented a computer programming change to correct this problem after TIGTA selected the sample. TIGTA said it will test the effectiveness of this corrective action in next year’s review.

Because IRS management has identified the problems and is taking corrective actions, TIGTA did not make any recommendations. TIGTA said IRS officials were provided with an opportunity to review the draft report but did not provide any report comments.

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