Tax Administration:

New Delinquent Tax Collection Methods for IRS

GGD-93-67: Published: May 11, 1993. Publicly Released: Jun 10, 1993.

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Pursuant to a congressional request, GAO reviewed options available to the Internal Revenue Service (IRS) to improve its collection of delinquent federal taxes, focusing on whether IRS could strengthen its tax collection programs by: (1) adopting private-sector and state collection techniques; and (2) increasing cooperation with state governments.

GAO found that: (1) IRS accounts receivable inventory has outpaced its ability to collect delinquent taxes; (2) IRS could benefit from initiating early telephone contact with delinquent taxpayers in conjunction with sending bills for delinquent taxes; (3) detailed information about delinquent accounts is critical to customizing IRS collection strategies; (4) IRS should use collection performance as a criterion in determining compensation and rewards for individual collectors; (5) IRS is planning to conduct a pilot program using private collection companies to contact delinquent taxpayers about their tax debts; and (6) IRS should explore ways of increasing cooperation with state governments to collect delinquent taxes.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: This recommendation was a matter for congressional consideration not requiring agency action unless Congress changes the tax code. The agency is on record as not supporting this recommendation, but has stated that it would implement the recommendation if required to do so by law.

    Matter: Congress should consider revising current tax law to allow IRS to use collection performance in determining compensation and rewards for its collection staff as long as other criteria, such as fair and courteous treatment of taxpayers, are also considered.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: X

    Recommendation: The Commissioner of Internal Revenue should identify and implement ways to increase cooperation with state governments in collecting delinquent taxes.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Not Implemented

    Comments: IRS is restructuring its entire organization and modernizing its computer systems and work processes. The results of the activities, although several years away, will have profound effects on IRS' operations and functions, including collections. GAO believes that this recommendation will eventually be recognized and subsumed within the course of the restructuring and modernization changes under way.

    Recommendation: The Commissioner of Internal Revenue should develop detailed information on delinquent taxpayers and use it to customize collection procedures.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Not Implemented

    Comments: IRS is restructuring its entire organization and modernizing its computer systems and work processes. The results of these activities, although several years away, will have profound effects on all of IRS' operations and functions, including collections. GAO believes that this recommendation will eventually be recognized and subsumed within the course of the restructuring and modernization changes under way.

    Recommendation: The Commissioner of Internal Revenue should restructure IRS collection organization to support earlier telephone contact with delinquent taxpayers and determine how to use current collection staff in earlier, more productive phases of the collection cycle.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  4. Status: Closed - Implemented

    Comments: IRS' 1996 appropriation bill included a provision authorizing IRS to spend $13 million to hire and study private collection agencies. IRS awarded contracts to five private collectors and began a pilot project in August 1996. The project ended in June 1997 and IRS is studying the results to determine what future actions it will take.

    Recommendation: The Commissioner of Internal Revenue should test the use of private collection companies to support IRS collection efforts as permitted by current law.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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