IRS Doesn't Comply with Legal Guidelines when Seizing Taxpayer Property

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The Internal Revenue did not always comply with legal guidelines when conducting seizures of taxpayers’ property, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, found that the IRS did not always comply with certain statutory requirements in the IRS Restructuring and Reform Act of 1998. Taking a taxpayer’s property for unpaid tax is commonly referred to as a “seizure.”  To ensure that taxpayers’ rights are protected in this process, the IRS Restructuring and Reform Act of 1998 amended the seizure provisions in the Internal Revenue Code. The TIGTA report pointed out that noncompliance with these requirements could result in abuses of taxpayers’ rights. TIGTA is required to evaluate the IRS’s compliance with the legal seizure provisions on an annual basis to ensure that taxpayers’ rights were not violated while seizures were being conducted.

TIGTA reviewed a random sample of 50 of the 738 seizures conducted from July 1, 2011, through June 30, 2012, to determine whether the IRS is complying with legal and internal guidelines when conducting each seizure. While in the majority of seizures, the IRS followed all the guidelines, in 15 of the 50 seizures, TIGTA identified 17 instances in which the IRS did not comply with a particular requirement of the Tax Code.

Specifically, TIGTA found that in eight instances the sale of the seized property was not properly advertised. In four cases, the amount of the liability for which the seizure was made was not correct on the notice of seizure provided to the taxpayer. Proceeds resulting from the seizure of properties were not properly applied to the taxpayer’s account in one instance, and the seizure and sale expenses were not properly charged in another instance. In a small number of cases, 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.

TIGTA made no recommendations in the report. IRS officials were provided an opportunity to review the draft report but had no comments.

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Tax practice