The IRS often fails to send notices of federal tax liens to taxpayer representatives such as accountants, according to a new report.
For the report, auditors from the Treasury Inspector General for Tax Administration reviewed a sample of 125 federal tax liens filed during the 12-month period ending June 30, 2008, and determined that the IRS mailed the 125 lien notices to the taxpayers themselves within five business days, as required by law. However, in eight of the 27 cases in which the taxpayer had an authorized representative, the IRS did not notify the taxpayers representative of the lien filing.
The IRS also did not have an automated process that updated the taxpayer representative information directly with the system that generates the lien notices. TIGTA estimated that 45,554 taxpayer representatives may not have been provided with lien notices, resulting in potential violations of the taxpayers right to have their representative notified.
When an initial lien notice is returned because it could not be delivered and a different address is available for the taxpayer, the IRS does not always meet its statutory requirement to send the lien notice to the taxpayers last known address. In 234 of 283 cases in the sample, employees did not check the IRS computer systems for different addresses so they could send out a lien notice to the right address in time.
In addition, TIGTA identified 17 cases in which a new lien notice should have been sent to the taxpayer at the updated address because the IRS systems listed the address prior to the lien filing. The 17 cases could involve legal violations, TIGTA noted, because the IRS did not meet its statutory requirement to send lien notices to the taxpayers last known address.
TIGTA recommended that the IRS establish an automated process that would systemically upload taxpayer representative information directly from the centralized authorization file to the automated lien system, determine why lien notices were not sent to taxpayers representatives, and take actions to correct the problems. TIGTA also recommended that the IRS establish an automated check of a taxpayers last known address in the system prior to printing a lien notice. IRS management agreed with the recommendations and planned to correct the problems.
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