IRS Property Seizures Fall Short of Legal Guidelines

The Internal Revenue Service has mostly overcome past problems in following legal and internal guidelines when conducting seizures of taxpayers’ property, but it failed to comply with the legal requirements in at least some instances, according to a new report.

The report, by the Treasury Inspector General for Tax Administration, found 22 instances in which the IRS did not comply with a particular Tax Code requirement when seizing a taxpayer’s property because of unpaid taxes. The TIGTA inspectors selected a random sample of 50 of the 578 property seizures conducted between July 1, 2008, and June 30, 2009, and found that in 17 of the 50 seizures, the IRS did not comply with the statutory requirements. However, most of the omissions were technical in nature.

In seven instances, the amount of the liability for which the seizure was made was not correct on the notice of seizure provided to the taxpayer. There were another seven instances in which expenses and proceeds resulting from the seizure were not properly applied to the taxpayer’s account. TIGTA also found three instances in which the required information relating to the sale of the seized property was not provided to the taxpayer. In another three instances, the sale of the seized property was not advertised as required. The other two instances were redacted from the report.

“Although we did not identify instances in which taxpayers were adversely affected, noncompliance with Internal Revenue Code requirements could result in abuses of taxpayers’ rights,” said the report.

TIGTA did not provide any recommendations, but noted that it found similar issues last year, and the IRS has taken corrective actions since then. IRS management did not comment on the report.