Daily Tax Update - September 29, 2014: TIGTA Report: IRS Employees may be Premature in Declaring Delinquent Taxes not Collectible

TIGTA Report: IRS Employees may be Premature in Declaring Delinquent Taxes not Collectible:  In a report released earlier today, the Treasury Inspector General for Tax Administration (TIGTA) stated that IRS employees do not always complete required case actions before closing cases as currently not collectible (CNC), resulting in delinquent taxes not being collected.  Generally, if an IRS employee is unable to contact or unable to locate (UTC/UTL) a delinquent taxpayer, the collection case may be closed as CNC. During fiscal year 2012, the IRS closed 482,611 tax cases involving $6.7 billion as CNC-UTC/UTL.  TIGTA performed an audit to determine whether these cases were adequately researched, documented, and approved to ensure that all actions were taken to collect outstanding taxpayer liabilities. 

TIGTA found that of a stratified sample of 250 cases reviewed, there was “no evidence that employees completed all of the required research steps for 57 percent of the cases prior to their closing.”  Additionally, seven percent of the cases did not have a Notice of Federal Tax Lien (NFTL) filed on all delinquent tax periods as required. 

TIGTA recommended that the IRS ensure that controls are in place so that employees complete the required research, make NFTL determinations, and document that all case actions have been completed prior to approving any CNC-UTC/UTL case closures. Additionally, TIGTA recommended verifying that cases with aggregate unpaid assessed balances of more than $10,000 beginning in fiscal year 2012 had an NFTL filed on all applicable tax periods.