The Internal Revenue Service’s Office of Appeals has improved its compliance within its Collection Due Process program, although some taxpayers are still misclassified and receive the wrong type of hearing, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, examined the IRS’s Collection Due Process Program, which gives taxpayers a chance for an independent review to ensure a tax levy or lien is warranted and appropriate and that the statutory requirements are met and taxpayers’ rights are protected.

TIGTA regularly reviews the effectiveness of the program. During this year’s audit, TIGTA found the Office of Appeals made improvements in the overall compliance of the program. However, TIGTA found similar deficiencies in the IRS’s processing of Collection Due Process cases as in its previous report. For example, the Office of Appeals did not always classify taxpayer requests properly and, as a result, some taxpayers received the wrong type of hearing. The latest report is partially redacted in the version released to the public. In two statistical samples of appeals cases, TIGTA identified a redacted number of taxpayer cases that were misclassified. However, the number represented a decrease from the nine misclassified taxpayer cases identified in last year’s review.

In addition, TIGTA said it continued to identify errors related to the determination of the Collection Statute Expiration Date on taxpayer accounts. From statistically valid samples, TIGTA found a redacted number of taxpayer cases that had an incorrect Collection Statute Expiration Date. For those cases, the IRS incorrectly extended the time period in a redacted number of the taxpayer cases, allowing the IRS additional time it should not have had to collect the delinquent taxes. In the remaining cases, the IRS incorrectly decreased the time to collect the delinquent taxes. 

TIGTA recommended the chief of the IRS’s Appeals office correct the taxpayer accounts that were identified with Collection Statute Expiration Date errors.

In response, IRS Appeals Chief Kirsten B. Wielobob agreed with TIGTA’s recommendation and plans to review and correct the taxpayer accounts identified by TIGTA. “Appeals has reviewed the 10 taxpayer accounts identified in this report and has initiated the necessary corrective actions,” she wrote.

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