By Eric Boehm | Watchdog.org
The Internal Revenue Service does not always follow its own rules when attempting to collect unpaid taxes, according to a new audit.
A review of the IRS Office of Appeals, which resolves disputes between the agency and taxpayers, found officials did not always follow proper procedures when dealing with taxpayers or their legally designated representatives. Under the provisions of the Internal Revenue Code, agents in the office are required to stop taking action against taxpayers if the taxpayer asks to consult with a representative – a financial assistant or the like.
It’s similar to how a suspect can request a lawyer before answering questions from police.
From that point forward, any action taken by the IRS is supposed to include the taxpayers’ official representative. But many times it does not.
In 11 of the 96 cases audited by the Treasury Inspector General, IRS employees violated those rules in one way or another – usually by contacting the taxpayer directly without going through the official legal channels.
“Neither we nor the IRS know with any degree of precision how well the IRS is complying with direct contact provisions,” the auditors wrote.
The Office of Appeals handled more than 72,000 cases during the audit period, which ran Oct. 1, 2011, through Sept. 30, 2012.
“When the sample results are projected to the population, we estimate that the deviations may have negatively affected 8,277 taxpayers,” auditors wrote.
Of a greater concern to the auditors was the possibility the IRS could be vulnerable to lawsuits from taxpayers who try to recover monetary damages from the agency if they believe its personnel are intentionally disregarding the rules.
During the same time, the Treasury Inspector General closed 13 direct contact complaints involving IRS personnel, but only two employees were disciplined or counseled by IRS management officials for their actions, according to the audit report.
The violations had to do with agency employees failing to follow proper protocol when dealing with individuals assigned as taxpayers’ representatives via power of attorney.
In two cases, Appeals personnel tried to contact the taxpayer directly by telephone instead of contacting the representative designated on the power of attorney. In nine cases, there was no evidence that copies of taxpayer correspondence were sent to the power of attorney.
In an official response, the IRS said it agreed with the findings in the audit and would take corrective action, consisting of having managerial-level employees review the rules for direct contact with taxpayers.
“We have worked and will continue to protect taxpayer rights and earn their confidence in our ability to resolve tax disputes fairly and without litigation,” wrote Kirsten Wielobob, deputy chief of the IRS Office of Appeals.
The audit may be less embarrassing for the agency than an earlier one that found IRS employees rang up more than $108 million in personal expenses on government-issued and taxpayer-funded credit cards, or a separate audit that found the IRS blew through $50 million in tax money between 2010 and 2012 to send employees to conferences around the country.
Boehm is a reporter for Watchdog.org and can be reached at [email protected] Follow @EricBoehm87 on Twitter for more.