The Internal Revenue Service did not always follow all the legal requirements when conducting seizures of taxpayer property, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, reviewed a random sample of 50 of the 580 seizures conducted from July 1, 2012, through June 30, 2013, to determine whether the IRS complied with legal and internal guidelines when conducting each seizure as part of an annual review process. TIGTA is required to annually evaluate the IRS’s compliance with the legal seizure provisions to ensure that taxpayers’ rights were not violated while seizures were being conducted.

In the majority of the seizures reviewed, TIGTA noted that the IRS followed all the guidelines.

However, in 14 of the 50 seizures reviewed, TIGTA identified 19 instances in which the IRS did not comply with a particular Tax Code requirement.  Specifically, TIGTA found instances in which the sale of the seized property was not properly advertised; the balance-due letter sent to the taxpayer after the sale proceeds were applied to the taxpayer’s account did not show the correct remaining balance; the amount of the liability for which the seizure was made was not correct on the notice of seizure provided to the taxpayer; and the notice of the intent to levy and the notice of right to a hearing before the levy was not provided for each tax period listed on Form 668-B, “Levy.” 

When legal and internal guidelines are not followed, TIGTA cautioned, it could result in the abuse of taxpayers’ rights. However, in the instances noted in the report, TIGTA said it did not identify any in which the taxpayers were adversely affected.

In addition, internal procedures do not require the IRS to retain a copy of all seizure sale advertisements, which would help them verify that their actions conformed with statutes, regulations and Internal Revenue Manual procedural guidelines.

TIGTA recommended that the director of collection policy in the IRS’s Small Business/Self-Employed Division include an instruction in the Internal Revenue Manual that requires the Property Appraisal and Liquidation Specialist to retain a file copy of all print advertisements, a copy of any Internet advertisements and mail-in bid forms, and a text copy of information provided in any radio and television advertisements of seizure sales.

In response to the report, the IRS agreed with the recommendation and plans to take appropriate corrective action.

“We agree with your recommendation and appreciate your acknowledgment that no taxpayers were adversely affected by any of the procedural errors that you observed,” wrote Karen Schiller, commissioner of the IRS’s Small Business/Self-Employed Division. “This is the 16th consecutive year that TIGTA has evaluated our compliance with the Internal Revenue Code provisions and internal guidance related to seizures. There are more than 50 requirements, legal or internal, that our employees must follow when conducting a seizure. Consistent with the results of the evaluations in previous years, you found that our employees followed all applicable legal and internal guidelines in the majority of seizures you reviewed. During your review, you looked at 50 seizures to determine whether all 58 requirements were completed.  Out of the 2900 potential findings (58 requirements for each of 50 seizures), you found only 19 instances where we did not complete the requirement. We are proud of this record of success and we appreciate your acknowledgment that we generally followed all legal and internal guidelines.”

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