Tax Administration:

IRS' Implementation of the 1988 Taxpayer Bill of Rights

GGD-92-23: Published: Dec 10, 1991. Publicly Released: Dec 10, 1991.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) implementation of the 1988 Taxpayer Bill of Rights, focusing on opportunities to further enhance IRS administration of the act.

GAO found that: (1) IRS statistics show that it aided about 32,500 taxpayers in fiscal years 1990 and 1991 through the Taxpayer Assistance Order Program; (2) IRS established procedures to inform taxpayers of their rights and guard against the use of enforcement results to evaluate employees or impose production quotas; (3) some taxpayers with hardships may be unaware that assistance is available; (4) IRS sends taxpayers copies of a taxpayer's rights guide, but does not emphasize to taxpayers the importance of reading the publication; (5) IRS uses inconsistent methods of notifying taxpayers when it cancels installment agreements; (6) in October 1991, IRS changed its procedures to allow the withdrawal of tax lien notices that were not filed according to IRS guidelines; (7) IRS interprets the holding period on levied bank deposits as applying to the amount of time that banks hold levied funds, and does not immediately notify taxpayers about a levy; and (8) IRS plans to ensure that notices setting the time and place of examinations comply with the Taxpayer Bill of Rights.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Congress recently passed Taxpayer Bill of Rights 2, which was signed into law by the President on July 30, 1996. This legislation includes Section 501, which allows IRS to withdraw a notice of lien.

    Matter: Congress may wish to consider clarifying the Internal Revenue Code to specifically provide IRS authority to withdraw a notice of a lien when it is in the best interests of the taxpayer and the government.

  2. Status: Closed - Not Implemented

    Comments: This recommendation was not included in Public Law 104-168, "Taxpayer Bill of Rights 2," which was approved on July 30, 1996. It is GAO's understanding that no action is expected on this issue in the near future.

    Matter: In light of the uncertainty over whether taxpayers should be given 21 days to correct an erroneous levy under section 6332(c) of the Internal Revenue Code, Congress may wish to consider clarifying this issue.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS issued 15 examples of Taxpayer Assistance Orders to the regional diagnostic centers as additional aids to supplement the initial training. Employee testing is ongoing and the October 1991 to August 1992 period showed improvements. Monitoring and training will continue as warranted.

    Recommendation: To improve implementation of the 1988 Taxpayer Bill of Rights, the Commissioner of Internal Revenue should develop testing procedures to determine whether IRS employees successfully recognize taxpayer hardship situations and, when hardships exist, initiate applications for assistance on the taxpayer's behalf. If the tests show that employees are having difficulty accomplishing this task, IRS should provide corrective training and/or additional aids. Finally, employee testing should be continuous in order to pinpoint future problem areas and to provide a baseline against which to measure progress.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS revised the audit notification letters to include the following words, "Enclosed please find publication 1, Your Rights as a Taxpayer. This publication advises you of your rights under the examination process. Please read this publication. Address any questions you may have to the examining office at or before the interview". The action was completed on March 12, 1993.

    Recommendation: To improve implementation of the 1988 Taxpayer Bill of Rights, the Commissioner of Internal Revenue should emphasize the importance of reading Publication 1 when contacting taxpayers by telephone or through correspondence before taxpayers have an audit interview.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: IRS has developed and incorporated into the Internal Revenue Manual procedures designed to ensure consistent treatment of taxpayers regardless of whether installment agreements are being monitored by IRS district offices or service centers.

    Recommendation: To improve implementation of the 1988 Taxpayer Bill of Rights, the Commissioner of Internal Revenue should develop standard procedures for district offices to use when advising taxpayers that their installment agreements are subject to cancellation. This action should help resolve the problem of inconsistent treatment of taxpayers when their installment agreements are monitored by service centers or by district offices.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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