Report: IRS May Have Ignored Consumer Rights

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A new audit of IRS practices found the group may have overlooked some taxpayers' legal representatives in collection investigations.

Yesterday, we wrote how the IRS may have missed $5 billion in fraud, according to government auditors. This morning, we heard about a new report by the same group, which found more mistakes the IRS may have made when interviewing or auditing taxpayers…

[The Treasury Inspector General for Tax Administration] found that some revenue officers deviated from procedures by:

1) contacting the taxpayer directly, instead of the authorized representative, on the initial or subsequent contact in the collection investigation;

2) not sending copies of taxpayer correspondence to the authorized representative; or

3) not allowing enough time for the taxpayer to obtain a representative.

In addition, little documentation was found in managerial reviews indicating that managers checked to ensure revenue officers were: 1) involving representatives in all case actions; 2) providing representatives a copy of all original correspondence sent to taxpayers; and 3) allowing taxpayers sufficient time to obtain representation.

TIGTA adds breaking those rules “can increase the risk of taxpayers seeking monetary damages from the IRS if its personnel are intentionally disregarding the direct contact provisions of the Internal Revenue Code.”

The report was addressed to the small business and self-employed division of the IRS, which is presumably where these problems came up – in 14 cases out of a sample of 73. If that was representative of all collection cases (and it probably isn’t),  that would mean the IRS didn’t respect consumer rights 19 percent of the time.

But it’s not clear how many people were potentially affected – the report says “nearly 1.8 million individual taxpayers” granted power of attorney to a representative. But we don’t know how many of those people were contacted by the IRS about underpayment.

Want to know your rights as a taxpayer? That’s in IRS Publication 1. Learn how to avoid an audit in the links below.

Stacy Johnson

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