The Internal Revenue Service’s field workload selection process is not designed to ensure cases with the highest collection potential are identified, selected and assigned to be worked, according to a new report released by the Treasury Inspector General for Tax Administration.
The IRS collected more than $3 billion from delinquent taxpayers in Fiscal Year 2013 but wrote off as much as $16 billion in taxes owed as not collectible, according to TIGTA.
"The IRS has a large inventory of taxpayer delinquent accounts, but limited resources to collect the unpaid taxes," stated J. Russell George, Treasury Inspector General for Tax Administration. "By making better use of its limited collection resources and working these cases strategically, the IRS could successfully collect more taxes and further shrink the Tax Gap."
While the field collects billions of dollars from delinquent taxpayers, the decline of resources and closure of balance-due modules as currently not collectible led TIGTA to perform this audit. They wanted to determine whether the IRS’s workload identification, selection and assignment practices ensure cases with the greatest collection potential are worked in the field.
In Fiscal Year 2013, 40 percent of the taxpayer delinquent accounts closed by the field were written off as currently not collectible, with several factors identified by TIGTA as limiting the effectiveness of these efforts:
- The IRS does not measure productivity or establish specific goals to evaluate case selection criteria.
- Information systems do not track case source data, so management cannot fully assess the effectiveness of field case selection criteria.
- Case selection criteria do not consider the age of associated delinquencies, so many assigned cases include older delinquencies that will not likely be collected.
- Case selection criteria do not consider the financial condition (such as income) of the delinquent taxpayers, so many of the assigned cases involve taxpayers with no ability to make payments.
- Case selection criteria do not consider unsuccessful prior attempts to contact or locate the taxpayers.
While management has begun initiatives designed to improve the workload selection process, TIGTA recommends further action. Specifically:
1) Reexamine the field case selection criteria and strategy
2) Ensure that field personnel are aware of the new strategy
3) Establish a method to measure the effectiveness of the field case selection criteria
4) Conduct a study of the cases routed to the Automated Collection System to determine whether there are certain types of cases that should instead be routed directly to the queue or the field
IRS officials responded to the report by generally agreeing with the recommendations, and plans to incorporate the corrective actions as part of a new concept of operations in the creation of a single Collection organization, as part of a realignment of IRS compliance programs.
