The Internal Revenue Service did not always issue a notice of its intent to issue a levy on taxpayer assets, according to a new report.
The report, from the Treasury Inspector General for Tax Administration, reviewed a statistical sample of 30 Automated Collection System taxpayers with additional assessments included in the systemic and manual levies and determined that 27 of the taxpayers (or 90 percent of them) 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 told TIGTA they have since made computer programming changes to correct this problem.
In addition, a review of a statistical sample of 30 Integrated Collection System taxpayers with additional assessments included in the systemic levies determined that there were 18 taxpayers (or 60 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.
When taxpayers do not pay delinquent taxes, the IRS has the authority to work directly with financial institutions and other third parties to seize taxpayers’ assets. 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.
TIGTA is responsible for annually determining whether the IRS complied with the IRS Restructuring and Reform Act of 1998 requirement to notify taxpayers prior to issuing levies. The overall objective of its review was to determine whether the IRS has complied with the legal requirement to timely notify taxpayers prior to issuing levies per Internal Revenue Code Section 6330, Notice and Opportunity for Hearing Before Levy.
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 taxpayers were given notice of their appeal rights at least 30 calendar days prior to the issuance of the levies.
TIGTA recommended that the IRS issue interim guidance and retrain revenue officers to exclude from levies additional assessments for which taxpayers have not been given 30 calendar days’ notice.
In response to the report, IRS management agreed with the recommendation. They plan to issue guidance to the Field Collection group managers and update fiscal year 2015 continuing professional education for revenue officers to emphasize the requirement that levies not include periods for which an additional assessment was made but a new Letter 1058, Final Notice of Intent to Levy and Notice of Your Right to a Hearing, has not been sent to the taxpayer.
“This is the sixteenth consecutive year that you have reviewed our compliance with statutory and internal guidelines when levies are issued,” wrote Karen Schiller, commissioner of the IRS’s Small Business/Self-Employed Division. “Since 2005, you have found that we have proper controls in place to ensure statutory and internal guidelines are followed when levies are issued. Over that same period, you found that we are notifying taxpayers of their right to a hearing when we issue a levy. Our record of compliance generally remained intact in Fiscal Year 2013 and we are proud of this record of compliance.”
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