TIGTA - Annual Review of IRS Compliance with Tax Lien and Collection Due Process Procedures

In Report #2024-300-037, TIGTA’s systemic review of 103,460 NFTLs that were filed from July 1, 2022, to June 30, 2023, in which a CDP notice was required to be sent to the taxpayer, and a separate review of a statistical sample of 117 NFTLs from the same population, identified a total of 272 taxpayers that were potentially not timely mailed a CDP notice as required by I.R.C. § 6320(a). 

TIGTA also identified thousands of levies that were issued during the period when taxpayers had the right to request a lien CDP hearing.  TIGTA’s analysis of NFTLs filed from July 1, 2022, to June 30, 2023, identified: 

• 5,801 cases in which levies were issued during the 30-calendar-day period while the taxpayer had the right to elect a CDP hearing.

• 4 cases in which levies were issued while the taxpayer's appeal was pending.

In addition, taxpayer representatives should be provided copies of all taxpayer correspondence if designated by the taxpayer.  

From the statistical sample of 117 NFTLs, there were 41 cases in which the taxpayer designated their authorized representative to receive notices. However, in three of the 41 cases, the IRS did not provide CDP notices to the taxpayers’ authorized representatives.  

TIGTA also reviewed procedures for filing NFTLs in cases where taxpayers were in a disaster zone due to Hurricane Ian.  TIGTA determined that the IRS did not take any of the required preemptive steps that were available to it to suspend collection activity on taxpayers that were impacted by the hurricane on September 28, 2022. 

TIGTA recommended that the IRS:  

1. take corrective action on the cases identified in the statistical sample in which the lien notice was not mailed timely; 
2. ensure that the corrective actions initiated on the cases systemically identified are completed, and safeguards are implemented to protect against the recurrence of the causal issues; 
3. direct the Director, Collection, to establish Field Collection Internal Revenue Manual procedures that prohibit field employees from taking levy action during the 30-calendar-day period that the law provides taxpayers can elect lien CDP hearings; 
4. apply the retention standard when evaluating IRS Collection employees, managers, and executives who intentionally disregard IRS policies designed to protect taxpayers; and 
5. review disaster procedures for NFTL processing and consider updates, as needed, to reduce burden for taxpayers impacted by disasters. The IRS agreed with four of the five recommendations provided in this report.  

For recommendation 3, the IRS did not agree to establish Field Collection IRM procedures to prohibit field employees from taking levy action on taxpayers during the period the law provides taxpayers to elect a lien CDP hearing, which potentially impacted 5,801 taxpayers. 

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