February 1, 2022
Procedurally Taxing nicely summarized the National Taxpayer Advocate's annual report, which reported that collection due process notices and hearing requests continue to fall. Some of the falloff in the most recent period is no doubt attributable to the pandemic, but the trend was set before Covid arrived. Here is a graph displaying the trend:
The report gives more details and explanations for those interested. It also included a chart on the number of family status cases petitioned to the Tax Court. The number of Earned Income Tax Credit (EITC) cases seems low when you read about the number of EITC audits.
This section of the report also contains an analysis of the number of non-Tax Court cases litigated during the past year. Even more than the CDP filing chart above, a chart showing the number of lien cases referred to the Department of Justice shows a precipitous decline.
Perhaps, the decline should come as no surprise given the decline in revenue officers over this period. Without revenue officers to initiate these cases, there can be no referrals to DOJ.
The number is getting close to approaching zero which is bad news for tax administration. Again, of course, the pandemic plays a role, but the slide started before the pandemic arrived.
The decline in suits is more than matched by the decline in liens, levies and seizures. The chart below shows the amazing decline in these activities. This chart shows not only the recent drop off as a result of the pandemic but also the 10-year decline as the IRS’ resources were squeezed by Congressional budgetary action.
No big surprises that the IRS is struggling in its enforcement efforts, that these efforts have declined significantly over the past decade or that they declined significantly during the pandemic. Still, a pretty bleak picture of the IRS’ ability to pursue meaningful collection action when needed.
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