Fair Tax Collection Practices Violations Did Not Result in Administrative or Civil
Action
July 2004
Reference
Number: 2004-40-143
This report has cleared the Treasury
Inspector General for Tax Administration disclosure review process and
information determined to be restricted from public release has been redacted
from this document.
July
29, 2004
MEMORANDUM FOR
DEPUTY COMMISSIONER FOR OPERATIONS SUPPORT
FROM: Gordon C. Milbourn III /s/ Gordon C.
Milbourn III
Acting Deputy Inspector
General for Audit
SUBJECT: Final Audit Report - Fair Tax Collection
Practices Violations Did Not Result in Administrative or Civil Action (Audit # 200440003)
This
report presents the results of our review of violations of fair tax collection
practices. The overall objective of
this review was to obtain information on any Internal Revenue Service (IRS)
administrative or civil actions resulting from fair tax collection practices
violations by IRS employees.
Section
(§) 1102(d)(1)(G) of the IRS Restructuring
and Reform Act of 1998 requires the Treasury Inspector General for Tax
Administration (TIGTA) to include, in one of its semiannual reports to the
Congress, information regarding any administrative or civil actions related to
violations of the fair debt collection provisions of 26 U.S.C. § 6304, Fair Tax Collection Practices. The
IRS has traditionally referred to the § 6304 violations as “Fair Debt
Collection Practices Act (FDCPA)” violations.
The
TIGTA semiannual report must provide a summary of the resulting administrative
or civil actions and include any judgments or awards granted.
None
of the 55 cases coded as potential FDCPA violations and closed on the Automated
Labor and Employee Relations Tracking System (ALERTS) during the period January
1 through December 31, 2003, resulted in a reportable administrative action
against an IRS employee. In addition,
there were no civil actions identified that resulted in the IRS paying monetary
settlements to taxpayers because of an FDCPA violation.
IRS management has reviewed
the draft report and provided their concurrence with its contents via
email. Since no formal response was
required, the IRS has agreed that the report will be issued without one.
Copies of this
report are also being sent to the IRS managers affected by the report
findings. Please contact me at (202)
622-6510 if you have questions or Michael R. Phillips, Assistant Inspector
General for Audit (Wage and Investment Income Programs), at (202) 927-0597.
There Were No Fair Tax Collection
Practices Violations Resulting in Administrative Action
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – Fair Tax Collection Practices Provisions
Section (§) 1102(d)(1)(G) of the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 requires the Treasury Inspector General for Tax Administration (TIGTA) to include, in one of its semiannual reports to the Congress, information regarding any administrative or civil actions related to violations of the fair debt collection provisions of 26 U.S.C. § 6304, Fair Tax Collection Practices, by IRS employees. The IRS has traditionally referred to the § 6304 violations as “Fair Debt Collection Practices Act (FDCPA)” violations. The TIGTA semiannual report must provide a summary of the resulting administrative or civil actions and include any judgments or awards granted.
Because the Congress did not provide an explanation of what was meant by “administrative actions,” we used the IRS’ definition when determining the number of fair tax collection practices violations to be reported under § 1102(d)(1)(G). The IRS’ definition of administrative actions includes disciplinary actions ranging from admonishment through removal. Lesser actions, such as oral or written counseling, are not considered administrative actions.
As originally enacted, the FDCPA included provisions that restricted various collection abuses and harassment in the private sector. These restrictions did not apply to Federal Government practices. However, the Congress believed it was appropriate to require the IRS to comply with applicable portions of the FDCPA and to be at least as considerate to taxpayers as private creditors are required to be with their customers (see Appendix IV for a detailed description of the fair tax collection practices provisions).
Taxpayer complaints about IRS employees’ conduct can be reported to several IRS functions for tracking on management information systems. If a taxpayer files a civil action or if IRS management determines that a taxpayer’s fair tax collection practices rights were potentially violated, the complaint could be referred and then tracked on one or both of the following IRS systems:
·
The Workforce Relations
Division’s Automated Labor and Employee Relations Tracking System (ALERTS),
which generally tracks employee behavior that may warrant IRS management
administrative actions.
·
The Office of Chief Counsel’s
Counsel Automated System Environment (CASE), which is an inventory control
system that tracks items such as taxpayer civil actions or bankruptcies.
The IRS implemented codes to track
fair tax collection practices violations on the ALERTS in March 1999 and on the
CASE in June 1999.
For the Fiscal Year (FY) 2004
review, we analyzed closed cases from the ALERTS and the CASE to identify fair
tax collection practices violations.
However, we could not ensure the cases recorded on the ALERTS and the
actions recorded on the CASE included all the fair tax collection practices
violations. As previously stated in our
FY 2000 report on the FDCPA, the data captured on the ALERTS related to
potential FDCPA violations might not always be complete and accurate. In this audit, we did not attempt to
determine the accuracy or consistency of disciplinary actions taken against
employees for fair tax collection practices violations that were not reported
to the Workforce Relations Division.
We conducted this audit in the Agency-Wide Shared Services, Chief Counsel, and Human Capital offices in the IRS National Headquarters in Washington, D.C., during the period March through June 2004. The audit was conducted in accordance with Government Auditing Standards. Detailed information on our audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
None of the 55 cases coded as potential violations and closed on the ALERTS during the period January 1 through December 31, 2003, resulted in an administrative action against an IRS employee for violating fair tax collection practices.
While oral or written counseling is not an administrative
action under the IRS definition, we did note from the ALERTS information that
one employee received written counseling for a fair tax collection practices
violation during our audit period. The
counseling emphasized to the employee the importance of exercising professional
conduct while conducting official business.
Since the IRS does not routinely track all informal oral counseling or
minor actions against its employees, it is impossible to determine how often
and for what reasons informal, oral counseling or other minor disciplinary
actions occurred. Nevertheless, such
conduct as exhibited in this case can violate the rights of the taxpayer and
impair the IRS’ ability to meet its mission of providing top-quality customer
service.
There were no cases closed on the CASE in which the IRS paid damages to taxpayers resulting from a civil action filed due to a fair tax collection practices violation. From January 1 through December 31, 2003, the CASE included only one closed civil action case coded as an FDCPA violation. Our review of the case documentation indicated the violation was improperly coded with the FDCPA subcategory code.
Appendix I
Detailed Objective, Scope,
and Methodology
The overall objective of this review was to obtain information on any Internal Revenue Service (IRS) administrative or civil actions resulting from fair tax collection practices violations by IRS employees.
To accomplish our objective, we:
I.
Determined the number of fair
tax collection practices violations resulting in administrative actions.
A.
Obtained a computer extract
from the Automated Labor Employee Relations Tracking System (ALERTS) of all 55
cases that were opened after July 22, 1998, and closed during the period
January 1 through December 31, 2003, as Fair Debt Collection Practices Act
(FDCPA) violations. The computer
extract contained 55 cases.
B.
Determined whether any of the
FDCPA-coded cases resulted in administrative action.
II.
Determined the number of fair
tax collection practices violations resulting in civil actions (judgments and
awards granted).
A.
Obtained a computer extract
from the Counsel Automated System Environment (CASE) of the Subcategory 6304
(established to track FDCPA violations) cases opened after July 22, 1998, and
closed during the period January 1 through December 31, 2003. The Office of Chief Counsel identified one
case.
B.
Determined whether the
FDCPA-coded case resulted in civil judgments or awards.
Note: We used ALERTS and CASE data provided by the IRS and
did not determine whether the data provided were complete. Our validation consisted of reviewing case
file documentation to ensure a potential fair tax collection practices
violation existed and comparing the information in the case files to the data
received. The IRS could not locate the
case file documentation for one case.
However, based on our review of the other 54 cases, we concluded that we
could rely on the accuracy of the information recorded in the ALERTS. Based on that information, we concluded that
this case was not a fair tax collection practices violation. For cases in which fair tax collection
practices violations were in question, we consulted with the Treasury Inspector
General for Tax Administration Office of Chief Counsel.
Appendix II
Major Contributors to This Report
Michael R. Phillips, Assistant Inspector General for Audit
(Wage and Investment Income Programs)
Mary V. Baker, Director
James D. O’Hara, Audit Manager
Nelva U. Blassingame, Lead Auditor
Jean Kao, Auditor
Stephanie McFadden, Auditor
Appendix III
Commissioner C
Office of the
Commissioner – Attn: Chief of
Staff C
Chief Counsel CC
Chief, Agency-Wide Shared Services OS:A
Chief Financial Officer
OS:CFO
Chief Human Capital Officer OS:HC
Director, Personnel Field Services OS:HC:PS
Director, Workforce Relations OS:HC:R
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
RAS:O
Office of
Management Controls OS:CFO:AR:M
Audit Liaisons:
Chief
Counsel CC
Chief Human Capital Officer OS:HC
Appendix IV
Fair Tax Collection
Practices Provisions
To ensure equitable treatment among debt collectors in the public and private sectors, the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 requires the IRS to comply with certain provisions of the Fair Debt Collection Practices Act. These provisions are referred to as fair tax collection practices procedures. Specifically, the IRS may not communicate with taxpayers in connection with the collection of any unpaid tax:
· At unusual or inconvenient times.
· If the IRS knows the taxpayer has obtained representation from a person authorized to practice before the IRS, and the IRS knows or can easily obtain the representative’s name and address.
· At the taxpayer’s place of employment, if the IRS knows or has reason to know that such communication is prohibited.
Further, the IRS may not harass, oppress, or abuse any person in connection with any tax collection activity or engage in any activity that would naturally lead to harassment, oppression, or abuse. Such conduct specifically includes, but is not limited to:
· The use or threat of violence or harm.
· The use of obscene or profane language.
· Causing a telephone to ring continuously with harassing intent.
· The placement of telephone calls without meaningful disclosure of the caller’s identity.