Taxpayers who tried to appeal a tax lien or levy for unpaid taxes to the Internal Revenue Service’s Office of Appeals did not always receive the right kind of hearing or their requests were sometimes misclassified, according to a new report.

The report, by the Treasury Inspector General for Tax Administration, found that the IRS’s Office of Appeals needs to improve its processing of Collection Due Process cases. The IRS’s Appeals office is supposed to operate independently of other IRS offices with the mission of resolving tax disputes without litigation on a fair and impartial basis.

The program lets taxpayers appeal when the IRS files a tax lien or a Notice of Intent to Levy for unpaid taxes. Typically a taxpayer has 30 calendar days to request such a hearing. If a taxpayer’s request for a CDP hearing is not received within the allotted time period, the taxpayer, at the discretion of the Appeals office, may be given an equivalent hearing, but taxpayers are not allowed to petition for a reversal if they disagree with the results of those hearings.

However, in its report, TIGTA found that taxpayers did not always receive the appropriate type of hearing and the Appeals office did not always classify taxpayer requests in the proper way. TIGTA found that four cases had been misclassified, an increase from a prior audit.

On some taxpayer accounts, TIGTA also found errors with the Collection Statute Expiration Dates, or CSEDs, which could potentially violate taxpayer rights or result in lost revenue for the federal government. TIGTA found more errors related to the CSEDs on taxpayer accounts than in prior audits. Specifically, 15 cases from a sample of 70 Collection Due Process cases had incorrect CSEDs, a 50-percent increase from the prior review, which had identified 10 cases with incorrect CSEDs. TIGTA inspectors estimated that 7,990 of the 37,289 CDP cases that were closed in fiscal year 2010 had an incorrect CSED.

In addition, hearing officers did not always document their case files with all of the necessary information. That increased the risk that the IRS had not met all of the legal and administrative requirements needed for the proposed levy or lien.

“Appeals must ensure that all its casework is handled accurately and timely, since any lapse can affect a taxpayer’s right to petition the United States Tax Court and the time allowed for the IRS to collect any balances owed,” said TIGTA Inspector General J. Russell George in a statement.

TIGTA recommended that the Appeals office correct the inaccurate expiration dates identified in the audit and develop a job aid for employees to assist in more accurately determining the correct CSEDs. The management in charge of the Appeals office agreed with TIGTA’s recommendations.

“We share your interest in enhancing tax administration while protecting taxpayer rights and entitlements,” wrote Appeals chief Christopher Wagner. “Appeals has worked and will continue to work diligently to protect taxpayer rights, enhance the final work product, and ensure accurate computer coding of taxpayer accounts.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access