The Treasury Inspector General for Tax Administration (TIGTA) released on September 5, 2018 their Final Audit Report of their Review of the Office of Appeals Collection Due Process Program.
The Collection Due Process (CDP) Program was designed to give taxpayers an opportunity for an independent review to ensure that a levy action that has been proposed or a lien that has been filed is warranted and appropriate. An effective process is necessary to ensure that statutory requirements are met and taxpayers’ rights are protected.
This audit was initiated because TIGTA is statutorily required to determine whether the IRS complied with the required procedures under 26 United States Code Sections 6320 and 6330 when taxpayers exercised their rights to appeal the filing of a Notice of Federal Tax Lien or the issuance of a Notice of Intent to Levy.
During this year’s audit, TIGTA identified similar deficiencies in the IRS’s processing of CDP cases as previously reported. Specifically, the Office of Appeals did not always classify taxpayer requests properly and, as a result, some taxpayers received the wrong type of hearing. From two statistically valid samples, TIGTA identified eight taxpayer cases that were misclassified. This is a slight increase from the six misclassified taxpayer cases that were identified in the prior year’s review.
TIGTA also identified an issue involving taxpayers that mail or fax their hearing request to the wrong IRS location. When taxpayers mail or fax their hearing request to other than the required IRS location, Compliance function guidance requires employees to fax the taxpayer’s request to the CDP Coordinator at the correct Compliance function site on the same day.
TIGTA determined that the IRS Compliance function did not timely process the hearing requests for an additional eight taxpayers. These taxpayers were not granted a CDP hearing but properly requested an Equivalent Hearing, and Appeals appropriately provided the hearing per guidelines.
However, the IRS Compliance function did not follow procedures and may not have adequately protected taxpayer rights by the untimely processing of the misdirected hearing requests.
In addition, TIGTA continued to identify errors related to the determination of the Collection Statute Expiration Date (CSED) on taxpayer accounts. From two statistically valid samples, TIGTA identified nine taxpayer cases that had an incorrect CSED. For the nine taxpayer cases identified, the IRS incorrectly extended the time period in seven of the taxpayer cases, allowing the IRS additional time it should not have had to collect the delinquent taxes.
TIGTA recommended that the Chief, Appeals, update the taxpayer accounts identified with CSED errors and coordinate with the proper IRS function to resolve any systemic issues causing incorrect CSEDs. In their response, IRS management agreed with our recommendation.
Click Here to view the report, including the scope, methodology, and full IRS response.
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