United States General Accounting Office
GAO Testimony
Before the Committee on Finance, U.S. Senate
For Release
on Delivery
Expected at
TAX ADMINISTRATION
9:00 a.m. EDT
Tuesday,
September 23, 1997
IRS’ Use of Enforcement
Authorities to Collect
Delinquent Taxes
Statement of Lynda D. Willis, Director, Tax Policy and
Administration Issues, General Government Division
GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
Mr. Chairman and Members of the Committee:
I appreciate being invited here today to discuss the availability of
information on the Internal Revenue Service’s (IRS) use of its enforcement
authorities to collect delinquent taxes. In general, if taxes remain unpaid
after IRS gives appropriate notice and demand for payment, IRS is
authorized by the Internal Revenue Code to seize the delinquent taxpayer’s
property either through direct action or through demand (referred to as a
notice of levy) made on third parties, such as banks or employers, to turn
over the taxpayer’s assets or earnings to IRS.1 IRS is also authorized to file
liens against the delinquent taxpayer’s property.2
According to data IRS pulled together from various internal management
systems, in fiscal year 1996, IRS (1) filed about 750,000 liens against
taxpayer property, (2) issued about 3.2 million levies on taxpayer assets
held by third parties, and (3) completed about 10,000 seizures of taxpayer
property. These enforcement actions can have severe financial
consequences for taxpayers, and the potential exists for such actions to be
taken in error or improperly. Accordingly, you asked us to determine if
information existed that could be used to determine whether collection
enforcement authorities were properly used.
To determine whether information existed to evaluate IRS’ use of
collection enforcement authorities, we (1) asked IRS to provide us with
available basic statistics on its use, and misuse, of lien, levy, and seizure
authority from 1993 to 1996; (2) reviewed a small and subjectively selected
sample of seizure, revenue officer, appeals, and problem resolution case
files to identify the types of information that may be available from those
files; and (3) interviewed IRS employees involved in these areas to
determine how and when collection enforcement authorities were used,
the controls for preventing misuse of those authorities, and the results of
taxpayer complaints about the inappropriate use of the authorities.
In summary, while IRS has some limited data about its use, and misuse, of
collection enforcement authorities, these data are not sufficient to show
(1) the extent of the improper use of lien, levy, or seizure authority; (2) the
causes of the improper actions; or (3) the characteristics of taxpayers
1
Under the Internal Revenue Code, levy is defined as the seizure of a taxpayer’s assets to satisfy a tax
delinquency. IRS differentiates between the levy of assets in the possession of the taxpayer (referred
to as a seizure) and the levy of assets such as bank accounts and wages that are in the possession of
third parties such as banks and employers (referred to as a levy).
2
A lien is a legal claim that attaches to property to secure the payment of a debt. The filing of a lien
would prevent the taxpayer from selling an asset, with clear title, without payment of the tax debt.
Page 1 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
affected by improper actions. The lack of information exists because IRS’
systems—both manual and automated—have not been designed to capture
and report comprehensive information on the use and possible misuse of
collection authorities. Also, much of the data that are recorded on
automated systems cannot be aggregated without a significant investment
of scarce programming resources. Some information is available in manual
records, but—because collection enforcement actions can be taken by a
number of different IRS offices and records resulting from these actions
are not always linked to IRS’ automated information systems—this
information cannot be readily assembled to assess the use of enforcement
actions. Also, data are not readily available from other potential sources,
such as taxpayer complaints, because, in many circumstances, IRS does
not require that information on the resolution of the complaints be
recorded. IRS officials told us that collecting complete data on the use of
enforcement actions that would permit an assessment of the extent and
possible causes of misuse of these authorities is unnecessary because they
have adequate checks and balances in place to protect taxpayers.
However, IRS does not have the data that would permit it or Congress to
readily resolve reasonable questions about the extent to which IRS’
collections enforcement authorities are misused, the causes of those
occurrences, the characteristics of the affected taxpayers, or whether IRS’
checks and balances over the use of collection enforcement authorities
are working as intended.
The magnitude of IRS’ collection workload is staggering. As of the
Use of Liens, Levies, beginning of fiscal year 1996, IRS reported that its inventory of unpaid tax
and Seizures in assessments totaled about $200 billion. Of this amount, IRS estimated that
Collecting Taxes about $46 billion had collection potential.3 In addition, during the fiscal
year, an additional $59 billion in unpaid tax assessments were added to the
inventory.
To collect these delinquent tax debts, IRS has established a graduated
enforcement process. The process starts once IRS identifies taxpayers
3
The $46 billion figure is based on IRS’ analysis of a sample of unpaid tax assessments that, according
to IRS’ financial statements, consist of balances due where IRS has demonstrated the existence of a
receivable through information provided directly from the taxpayer or through actions by IRS that
support or validate IRS’ claim, such as securing a taxpayer’s agreement. Excluded from the receivables
are financial write-offs, allowance for doubtful accounts, and compliance assessments where the
taxpayer has not responded to validate the claim, i.e., there is not an established claim with the
taxpayer.
Page 2 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
who have not paid the amount due as determined by the tax assessment.4
In the first stage of the process, a series of notices are to be sent to the
taxpayer from one of IRS’ service centers. Collectively, these notices are
to provide the taxpayer with statutory notification of the tax liability, IRS’
intent to levy assets if necessary, and information on the taxpayer’s rights.
If the taxpayer fails to pay after being notified, the Internal Revenue Code
authorizes a federal tax lien to be filed to protect the government’s interest
over other creditors and purchasers of taxpayer property.
The second stage of IRS’ collection process involves attempts to collect
the taxes by making telephone contact with the taxpayer. IRS carries out
this stage through its Automated Collection System (ACS) program.
During this stage, IRS may levy taxpayer assets and file notices of federal
tax liens.
In the final stage of the collection process, information about the tax
delinquency is referred to IRS’ field offices for possible face-to-face
contact with the taxpayer. During this stage, IRS may also levy taxpayer
assets and file notices of federal tax liens. Additionally, as a final
collection action, taxpayer property, such as cars or real estate, may be
seized. Attachment I presents a flowchart that provides additional detail
about the collection process.
At any time in the collection process, IRS may find that a taxpayer cannot
pay what is owed or does not owe the tax IRS assessed. In such situations,
IRS may enter into an installment agreement with a taxpayer, compromise
for an amount less than the original tax assessment, suspend or terminate
the collection action, or abate an erroneous assessment. Also, if the
taxpayer is having a problem resolving a collection action with the
initiating IRS office, the taxpayer may go to IRS’ Taxpayer Advocate or to
IRS’ appeals program for resolution. If an enforcement action is taken that
involves a reckless or intentional disregard of taxpayer rights by an IRS
employee, a taxpayer may sue for damages. In the case of an erroneous
bank levy, a taxpayer may file a claim with IRS for reimbursement of bank
charges incurred because of the levy in addition to a refund of the
erroneously levied amount. If a taxpayer believes that enforced collection
would be a hardship, the taxpayer may request assistance from the
Taxpayer Advocate.
4
IRS tax assessments may result from a number of actions ranging from the self-assessment of taxes by
a taxpayer on a tax return filed voluntarily to an IRS assessment of a tax deficiency identified in an
audit.
Page 3 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
IRS produces management information reports that provide some basic
IRS Has Some Limited information on tax collections and the use of collection enforcement
Data on the Use and authorities, including the number of liens, levies, and seizures filed and, in
Misuse of Lien, Levy, the case of seizures, the tax delinquency that resulted in the seizure and
the tax proceeds achieved. Also, some offices within IRS collect
and Seizure Authority information on the misuse of these collection enforcement authorities, but
the information is not complete.
Overall, IRS’ management reports show that IRS’ collection program
collected about $29.8 billion during fiscal year 1996, mostly without taking
enforced collection action. In attempting to collect on delinquent
accounts, the reports show IRS filed about 750,000 liens against taxpayer
property, issued about 3.2 million levies on taxpayer assets held by third
parties, and completed about 10,000 seizures of taxpayer property.
Attachment II presents this overall information on IRS’ use of lien, levy,
and seizure authority during fiscal years 1993-96. Attachment III presents a
summary of the distribution of seizure cases by type of asset seized in
fiscal year 1996.
For the seizure cases completed in fiscal year 1996, the average tax
delinquency was about $233,700, and the average net proceeds from the
seizures was about $16,700. Although complete data were not available on
tax delinquencies and associated net proceeds for liens and levies, the best
information available from IRS indicates that about $2.1 billion of the
$29.8 billion was collected as a result of lien, levy, and seizure actions. The
remainder was collected as a result of contacts with taxpayers about their
tax delinquencies.
The best data that IRS has on the potential misuse of collection authorities
are from the Office of the Taxpayer Advocate.5 However, those data alone
are not sufficient to determine the extent of misuse. The data show that
about 9,600 complaints involving allegations of inappropriate, improper, or
premature collection actions were closed by the Advocate in fiscal year
1996, as were 11,700 requests for relief from collection actions because of
hardship. Although the Advocate does not routinely collect data on the
resolution of taxpayer complaints, it does collect data on the resolution of
requests for relief. According to the Advocate, during fiscal year 1996, the
requests for relief resulted in the release—either full or partial—from
about 4,000 levy and seizure actions and 156 liens.
5
The Office of Taxpayer Advocate is responsible for helping taxpayers to resolve problems they may
be having with any of IRS’ various offices, including Collections.
Page 4 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
These Taxpayer Advocate data are not sufficient to determine the extent
to which IRS’ initial collection actions were appropriate or not for several
reasons. First, the release of a lien could result from a taxpayer
subsequently paying the tax liability or offering an alternative solution, or
because IRS placed the lien in error. Although the Taxpayer Advocate
maintains an information system that accommodates collecting the data to
identify whether IRS was the cause of the taxpayer’s problem, the
Advocate does not require that such information be reported by the IRS
employee working to resolve the case or be otherwise accumulated. Thus,
about 82 percent of the taxpayer complaints closed in fiscal year 1996 did
not specify this information. Of the remaining 18 percent, about 9 percent
specified that IRS’ collection action was in error either through taking an
erroneous action, providing misleading information to the taxpayer, or
taking premature enforcement action.
In addition, the Advocate’s data do not cover the potential universe of
cases in which a collection action is alleged to have been made
improperly. The Advocate requires each complaint that is covered by its
information system to be categorized by only one major code to identify
the issue or problem. If a complaint had more than one problem, it is
possible that a collection-related code could be superseded by another
code such as one covering lost or misapplied payments. Also, complaints
that are handled routinely by the various IRS offices would not be
included in the Advocate’s data because that office was not involved in the
matter. For example, appeals related to lien, levy, and seizure actions are
to be handled by the Collection Appeals Program (effective April 1, 1996).
For fiscal year 1996, the Appeals Program reported that of the 705
completed appeals of IRS’ enforced collection actions, it fully sustained
IRS actions on 483 cases, partially sustained IRS in 55 cases, did not
sustain IRS actions in 68 cases, and returned 99 cases to the initiating
office for further action because they were prematurely referred to the
Collection Appeals Program. According to IRS Appeals officials, a
determination that Appeals did not sustain an IRS enforcement action
does not necessarily mean that the action was inappropriate. If a taxpayer
offered an alternative payment method, the Appeals Officer may have
approved that offer—and thus not sustained the enforcement
action—even if the enforcement action was justified. In any event, the
Collection Appeals Program keeps no additional automated or summary
records on the resolution of appeals as they relate to the appropriateness
of lien, levy, or seizure action.
Page 5 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
IRS’ record-keeping practices limit both our and IRS’ ability to generate
Further Assessment data needed to determine the extent or causes of the misuse of lien, levy,
of Extent or Causes of and seizure authority. Neither IRS’ major data systems—masterfiles and
Misuse of Liens, supplementary systems—nor the summary records (manual or automated)
maintained by the IRS offices responsible for the various stages of the
Levies, and Seizures Is collection process systematically record and track the issuance and
Limited by IRS’ complete resolution of all collection enforcement actions, i.e., liens, levies,
and seizure actions. Moreover, the detailed records kept by these offices
Record-Keeping do not always include data that would permit a determination about
Practices whether an enforcement action was properly used. But, even if collection
records contained information relevant to the use of collection
enforcement actions, our experience has been that obstacles exist to
retrieving records needed for a systematic review.
Major Information Systems IRS maintains selected information on all taxpayers, such as taxpayer
Do Not Contain Data identification number; amount of tax liability by tax year; amount of taxes
Necessary to Assess paid by tax year; codes showing the event triggering the tax payment,
including liens, levies, and seizures; and taxpayer characteristics,
Enforcement Actions including earnings and employment status, on its Individual and Business
Masterfiles. Also, if certain changes occur to a taxpayer’s account, such as
correction of a processing error in a service center, IRS requires
information to be captured on the source of the error, that is, whether the
error originated with IRS or the taxpayer.
Although some related data are recorded in the Masterfiles, those data are
currently not readily accessible because IRS does not have retrieval
programs and IRS officials told us that developing such programs would
take considerable time because scarce programming resources are
unavailable due to higher priority information management systems work.
Moreover, the data that are recorded do not include some key aspects of
enforcement actions. For example, the Masterfiles do not contain
information on attempted levies—IRS’ most frequently used enforcement
authority. Also, IRS does not maintain automated information showing all
tax payments received as a result of lien or levy actions taken. While IRS
procedures provide for coding tax payments according to the event
triggering the payment (which could include liens, levies, and seizures),
IRS advised us that controls are not in place to ensure that the automated
data are complete, and, in a recent limited review, IRS found wide
discrepancies between the automated information and actual collections.
As a result of the lack of such key data, IRS cannot readily produce data
on the overall use or misuse of its collection enforcement authorities or on
Page 6 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
the characteristics of affected taxpayers. The lack of such data also
precludes us from identifying a sample of affected taxpayers to serve as a
basis for evaluating the use or misuse of collection actions.
Offices With Authority to As I noted earlier, the IRS tax collection process involves several steps,
Initiate Liens, Levies, and which are carried out by different IRS offices that are often
Seizures Do Not Keep organizationally dispersed. Since authorities exist to initiate some of the
collection actions at different steps in the process, several different offices
Summary Records Related could initiate a lien, levy, or seizure to resolve a given tax assessment. In
to Appropriateness of addition, our examination of procedures and records at several of these
Actions offices demonstrated that records may be incomplete or inaccurate. For
example, the starting point for a collection action is the identification of an
unpaid tax assessment. The assessment may originate from a number of
sources within IRS, such as the service center functions responsible for
the routine processing of tax returns; the district office, ACS, or service
center functions responsible for examining tax returns and identifying
nonfilers; or the service center functions responsible for
computer-matching of return information to identify underreporters.
These assessments may not always be accurate, and as reported in our
financial audits of IRS, cannot always be tracked back to supporting
documentation.6 Since collection actions may stem from disputed
assessments, determining the appropriateness of IRS actions would be
problematic without an accurate tax assessment supported by
documentation.
Further, offices responsible for resolving taxpayer complaints do not
always maintain records on the resolution of those complaints that would
permit identification of instances of inappropriate use of collections
authorities. We found several examples of this lack of data during our
review.
• If a taxpayer complains about enforced collection actions (other than
allegations of criminal or serious administrative misconduct by specific
IRS employees), the complaint is to be handled initially by the office
responsible for the action. These offices do not routinely keep automated
or other summary records on the complaints or on the appropriateness of
lien, levy, or seizure actions taken. If this information is recorded, it would
be included in the affected taxpayer’s collection case file and, as I will
discuss later, systematically obtaining these files is impractical. Also, in
6
See Financial Audit: Examination of IRS’ Fiscal Year 1995 Financial Statements (GAO/AIMD-96-101,
July 11, 1996) and Financial Audit: Examination of IRS’ Fiscal Year 1994 Financial Statements
(GAO/AIMD-95-141, Aug. 4, 1995).
Page 7 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
cases involving ACS, where an automated system is used for recording
data, specific information about complaints may not be maintained
because the automated files have limited space for comments and
transactions.
• If a taxpayer complaint is not resolved by the responsible office, the
taxpayer may seek assistance from the Taxpayer Advocate. As noted
earlier, the Advocate has some information on complaints about the use of
collection enforcement authorities, but those data are incomplete. In
addition, starting in the last quarter of 1996, the Advocate was to receive
notification of the resolution of taxpayer complaints involving IRS
employee behavior (that is, complaints about IRS employees behaving
inappropriately in their treatment of taxpayers, such as rudeness,
overzealousness, discriminatory treatment, and the like.) These
notifications, however, do not indicate if the problem involved the
possible misuse of collection authority.
• If a taxpayer’s complaint involves IRS employee integrity issues, the
complaint should be referred to IRS’ Inspection Office. According to
Inspection, that office is responsible for investigating allegations of
criminal and serious administrative misconduct by specific IRS employees,
but it would not normally investigate whether the misconduct involved
inappropriate enforcement actions. In any event, Inspection does not keep
automated or summary records on the results of its investigations as they
relate to appropriateness of lien, levy, or seizure actions.
• Court cases are to be handled by the Chief Counsel’s General Litigation
Office. Internal Revenue Code sections 7432 and 7433 provide for
taxpayers to file a claim for damages when IRS (1) knowingly or
negligently fails to release a lien or (2) recklessly or intentionally
disregards any provision of law or regulation related to the collection of
federal tax, respectively. According to the Litigation Office, a total of 21
cases were filed under these provisions during 1995 and 1996. However,
the Litigation Office does not maintain information on case outcomes. The
Office has recently completed a study that covered court cases since 1995
involving damage claims in bankruptcy cases. As a part of that study, the
Office identified 16 cases in which IRS misapplied its levy authority during
taxpayer bankruptcy proceedings. IRS officials told us that the results of
this study led IRS to establish a Bankruptcy Working Group to make
recommendations to prevent such misapplication of levy authority.
Existing Records Cannot Even if collection files included information relevant to an assessment of
Always Be Retrieved the use of enforcement authorities, obstacles exist to the reconstruction of
records that would permit an assessment of the use or possible misuse of
Page 8 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
collection enforcement authorities. As we have learned from our prior
work, IRS cannot always locate files when needed. For example, locating
district office closed collection files once they have been sent to a Federal
Records Center is impractical because there is no list identifying file
contents associated with the shipments to the Records Centers. On a
number of past assignments, we used the strategy of requesting IRS
district offices to hold closed cases for a period of time, and then we
sampled files from those retained cases. However, the results of these
reviews could not be statistically projected to the universe of all closed
cases because we had no way to determine if the cases closed in the
relatively short period of time were typical of the cases closed over a
longer period of time.
We discussed with IRS the feasibility of collecting additional information
IRS Officials Said That for monitoring the extent to which IRS may have inappropriately used its
Collecting Data to collection enforcement authorities, and the characteristics of taxpayers
Assess Enforcement who might be affected by such inappropriate actions. IRS officials noted
that, although IRS does not maintain specific case data on enforcement
Actions Is Impractical actions, they believed that sufficient checks and balances (e.g.,
and Unnecessary supervisory review of collection enforcement actions, collection appeals,
complaint handling, and taxpayer assistance) are in place to protect
Because Taxpayers taxpayers from inappropriate collection action. The development and
Are Protected maintenance of additional case data are, according to IRS officials, not
Through Checks and practical without major information system enhancements. The IRS
officials further observed that, given the potential volume and complexity
Balances of the data involved and the resources needed for data gathering and
analysis, they were unable to make a compelling case for compiling the
information.
We recognize that IRS faces resource constraints in developing its
management information systems and that IRS has internal controls, such
as supervisory review and appeals, that are intended to avoid or resolve
inappropriate use of collection authorities. We also recognize that the lack
of relevant information to assess IRS’ use of its collection enforcement
authorities is not, in itself, evidence that IRS lacks commitment to resolve
taxpayer collection problems after they occur. However, the limited data
available and our prior work indicate that, at least in some cases, these
controls may not work as effectively as intended.7
7
See Tax Administration: IRS Is Improving Its Controls for Ensuring That Taxpayers Are Treated
Properly (GAO/GGD-96-176, Aug. 30, 1996) and Tax Administration: IRS Can Strengthen Its Efforts to
See That Taxpayers Are Treated Properly (GAO/GGD-95-14, Oct. 26, 1994).
Page 9 GAO/T-GGD-97-155
Statement
Tax Administration: IRS’ Use of
Enforcement Authorities to Collect
Delinquent Taxes
IRS is responsible for administering the nation’s voluntary tax system in a
fair and efficient manner. To do so, IRS oversees a staff of more than
100,000 employees who work at hundreds of locations in the United States
and foreign countries and who are vested, by Congress, with a broad set of
discretionary enforcement powers, including the ability to seize taxpayer
property to resolve unpaid taxes. Given the substantial authorities granted
to IRS to enforce tax collections, IRS and the other stakeholders in the
voluntary tax system—such as Congress and the taxpayers—should have
information to permit them to determine whether those authorities are
being used appropriately; whether IRS’ internal controls are working
effectively; and whether, if inappropriate uses of the authorities are
identified, the problems are isolated events or systemic problems. At this
time, IRS does not have the data that would permit it or Congress to
readily determine the extent to which IRS’ collections enforcement
authorities are misused, the causes of those occurrences, the
characteristics of the affected taxpayers, or whether the checks and
balances that IRS established over the use of collection enforcement
authorities are working as intended.
Mr. Chairman, this concludes my prepared statement. I would be pleased
to answer any questions you may have.
Page 10 GAO/T-GGD-97-155
Page 11 GAO/T-GGD-97-155
Appendix I
Flowchart of the Collection Process
Service Center Processing
▲
Taxes assessed but not paid. A.
First collection notice sent.
B.
Statutory lien arises.
No
▲ ▲
Does Yes
No taxpayer Does
Does taxpayer Does Yes
response require Information
▲
▲
taxpayer
▲
▲
taxpayer C.
pay? IRS research to ▲ agree with is researched.
owe?
proceed? amount No
owed?
No ▲
Yes Yes ▲
Case closed.
Cannot full pay.
IA,OIC, or CNC
considered.
▲
▲
Meets IA, Yes
Case Establish
OIC or CNC
▲
▲
Service Center
▲
Case closed. processed. IA, OIC or
tolerance? Yes approved? CNC.
▲ No No
▲
Sent to
Field ACS
(ACS Collection)
▲
D.
(Field Collection)
▲
E.
Page 12 GAO/T-GGD-97-155
Appendix I
Flowchart of the Collection Process
(ACS Collection)
▲
D.
▲
A.
▲
B.
▲
Case closed.
▲
Yes Does
Does taxpaper
have other taxpayer
No Other notices No response Yes
delinquencies or Taxpayer
▲
▲
▲
▲
C. or telephone require IRS
otherwise meet pays?
criteria to contact research to
go to ACS or attempted. proceed?
field? Notices include
information on
taxpayer No
rights.
Yes
Notice of intent
to levy sent
certified
mail (statutory
▲
▲
requirement).
Includes publication on
taxpayer rights.
▲
Does Meets Yes (ACS Collection)
No
criteria
▲
taxpayer
pay? for ACS?
Yes
▲ No (Field Collection)
Case closed.
(ACS Collection)
D.
(Field Collection) (Field Collection)
▲
▲
E. E.
Page 13 GAO/T-GGD-97-155
Appendix I
Flowchart of the Collection Process
Automated Collection System (Field Collection)
D.
▲
E.
▲
Is levy Research to Are levy No
No
▲
information find levy sources
▲
available? sources. found?
Yes
▲
Yes
▲
Send final No Was final
▲
notice. notice sent?
▲
Yes ▲
Does
▲
Does Issue taxpayer No
No Attempt phone
▲
taxpayer
▲
▲
levies. or levy
pay? contact.
source
pay? ▲
Yes
Yes Does
No
taxpayer
owe?
▲ Yes
Yes Does
taxpayer
pay?
▲
Issue levies if new
▲ sources found.
No
▲
Does
taxpayer Does
response No taxpayer
require IRS
pay?
research
to proceed?
▲ ▲ ▲ Yes
No
Case
▲
Yes
Closed.
▲
▲
Establish IA or OIC if taxpayer
cannot full pay, if taxpayer cannot
pay at all, then CNC. ▲
(Field Collection) File lien, if appropriate. (Field Collection)
E.
Page 14 GAO/T-GGD-97-155
Appendix I
Flowchart of the Collection Process
Field Collection
Attempt
▲
E. taxpayer
contact.
▲
No Does
taxpayer
owe?
▲ Yes
Can
Does Obtain/analyze taxpayer No
Yes No taxpayer financial pay Establish CNC. File
▲
taxpayer
▲
pay? information. something? lien, if appropriate.
Yes
▲
Can
No
taxpayer Establish IA or OIC.
▲
pay in File lien, if appropriate.
full?
Yes ▲
Yes Does
taxpayer
pay?
▲ No
Enforce collection. Issue levies if
sources available.
▲
Are taxes No
Seize assets.
▲
fully paid?
▲
▲ ▲ ▲▲
Continue enforced
Yes No
Case Are taxes actions until paid or case
▲
▲
Closed. fully paid? otherwise closed.
Note: This is a summary level overview of IRS' process for collecting unpaid tax assessments. Some processing steps are not shown in detail. For instance,
a case may be diverted to problem resolution or the collection appeals program. In unusual cases, for example very large delinquencies, IRS may bypass
certain steps. Also, during any part of the collection process, IRS may file a lien if it is determined appropriate.
Source: GAO analysis of IRS procedures.
Page 15 GAO/T-GGD-97-155
Appendix II
IRS Collection Enforcement Actions
Figure II.1: IRS Levies, Fiscal Years
1993 Through 1996 Number of IRS levies issued nationwide
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1993 1994 1995 1996
Collection field function
Automated call site
Source: IRS data.
Page 16 GAO/T-GGD-97-155
Appendix II
IRS Collection Enforcement Actions
Figure II.2: IRS Liens, Fiscal Years
1993 Through 1996 Number of IRS liens nationwide
1,000,000
800,000
600,000
400,000
200,000
0
1993 1994 1995 1996
Filed
Released
Source: IRS data.
Page 17 GAO/T-GGD-97-155
Appendix II
IRS Collection Enforcement Actions
Figure II.3: IRS Seizures, Fiscal Years
1993 Through 1996 Number of IRS seizures nationwide
12,000
10,000
8,000
6,000
4,000
2,000
0
1993 1994 1995 1996
Source: IRS data.
Page 18 GAO/T-GGD-97-155
Appendix III
Distribution of Seizure Cases by Type of
Asset Seized, Fiscal Year 1996
Type of asset Percenta
Personal residence 10.4
Other real property 26.0
Vehicles 31.2
Licenses 3.7
Cash register contents 7.4
Office equipment/furniture 7.5
Machinery 8.0
Inventory 6.0
Safe deposit boxes 1.4
Other business property 7.1
Other personal property 6.6
a
Percentages add to more than 100 because multiple types of assets may be involved in a single
seizure case.
Source: IRS data.
(268745) Page 19 GAO/T-GGD-97-155
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Tax Administration: IRS' Use of Enforcement Authorities to Collect Delinquent Taxes
Published by the Government Accountability Office on 1997-09-23.
Below is a raw (and likely hideous) rendition of the original report. (PDF)