What IRS Can Do To Collect More Delinquent Taxes
GGD-82-4
Published: Nov 05, 1981. Publicly Released: Nov 05, 1981.
Skip to Highlights
Highlights
GAO reviewed and evaluated the Internal Revenue Service's (IRS) policies, procedures, and practices for collecting delinquent taxes and evaluating its collection activities to determine IRS effectiveness in collecting delinquent taxes from taxpayers who claim that they cannot immediately pay their taxes in full. IRS districts and their respective regions and service centers were selected for review on the basis of obtaining a geographical mix of districts considering the size of the district, available GAO resources, and the impact of conducting the review on the IRS collection activities. Samples of installment agreements and currently not collectible cases were also reviewed.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should discontinue the current installment-agreement-by-mail program except for those accounts which would ordinarily not be sent to a district office for intensified collection action. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should develop a guide based on equity in assets, gross income, income over expenses, and amount of tax liability to identify cases with loan potential and require taxpayers meeting this potential to seek loans and provide written documentation of rejections. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should establish more specific guidelines for employees to use in evaluating and analyzing financial statements, including guidelines defining the necessity and amount of expenses. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should require taxpayers to provide information on credit card expenses to ensure that expenses are not duplicated and are for necessities. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should require taxpayers to provide proof of income and certain expense items which may be questionable. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should require employees to use dates when liabilities are paid off to increase the amount of installment agreement payments, obtain advance-dated installment agreements, or reactivate currently not collectible accounts. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should develop a more detailed quality review of financial statements to ensure that: (1) all information is considered in arriving at the decision to grant an installment agreement or classify the account as currently not collectible, and (2) the information is mathematically correct. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should establish installment payments based on taxpayers' ability to pay regardless of whether the payments cover interest charges and increase payments when possible. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should place more emphasis on the use of payroll deductions as a means to collect the monthly installment payments. |
Closed – Not Implemented
IRS believes that current instructions are adequate. A follow-up should be considered at a later date, depending on actions on the other recommendations.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should establish procedures to enforce installment agreements better before defaulted agreements will be reinstated and give collection employees a guide on acceptable reasons for missed payments. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should develop an evaluation system that would consider dollars collected, case disposition, cost of collecting through installments to determine the effectiveness of the program, reasons for defaults, and possible corrective action. |
Closed – Not Implemented
The program was discontinued since this report was issued.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should establish more specific guidelines for setting closing codes for accounts classified as currently not collectible due to financial hardship to ensure that prompt and timely follow-up is made to collect delinquent taxes. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should require the Examination and Collection Divisions to make arrangements for referring taxpayers to Collection or having Examination personnel obtain financial statements from those taxpayers who agree to but are unable to pay their tax delinquencies in full. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should develop a system to code delinquent accounts resulting from audits issued to the field to show whether the delinquency resulted from a no-contact audit. |
Closed – Not Implemented
Discussions were held between collection, examination, and computer services as to the desirability and feasibility of developing a technique code. IRS decided not to pursue further development of the code for collection action and plans no further action.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should develop a statistical information system for audit-originated cases to be used to determine potential problems and as feedback for the Examination Division to show the collection outcome of audit cases. |
Closed – Not Implemented
IRS stated that the costs of implementing a statistical information system by various tax classifications would not be effective. GAO intends to look at this matter in the near future.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should establish more specific guidelines for office branches to use in processing delinquent accounts to ensure that they take all available collection actions before transferring the cases to the field office. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should conduct a comprehensive study to determine the most effective use of offers in compromise and the type of case where offers should be suggested. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should establish specific policies and procedures showing when and how compromises should be used as an effective collection tool. These procedures should identify how assets should be evaluated to arrive at a minimum acceptable compromise amount. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should ensure that the IRS review of currently not collectible accounts includes a procedure to determine if revenue officers are suggesting offers in appropriate cases. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should periodically evaluate the effectiveness of the compromise program as a collection tool. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should set up procedures to ensure that financial information developed during the offer investigation is used in follow-up collection action and that accounts previously classified as currently not collectible are reactivated when financial information indicates that collection is possible. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should take strong collection action when appropriate based on more accurate and reliable financial information to resolve delinquencies in the best interest of the government. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should establish a more comprehensive means of setting goals and measuring performance, including such criteria as dollars collected and type of disposition. |
Closed – Not Implemented
IRS has completed its pilot test and does not intend to take further action.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should determine what resources are needed to work a delinquent account adequately and ensure accurate and reliable financial information, request the additional resources from Congress, and inform Congress of the cases IRS will not be able to work under various staffing levels. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
Full Report
Office of Public Affairs
Topics
Collection proceduresDebt collectionDelinquent taxesInstallment paymentsPayroll deductionsPersonal income taxesPolicy evaluationTax administrationTax nonpaymentTax return audits