IRS Priorities Questioned for Tax Collection Cases

The Internal Revenue Service’s priorities when deciding which tax debt cases to pursue in person through its field collection agents are not altogether clear to its own employees, according to a new report.

The report, from the Government Accountability Office, found the IRS needs to do a better job of defining the objectives and case selection process for its tax debt collection program in the field. The IRS uses automated processes to prioritize which tax debt cases it will potentially choose for in-person contact, but group managers in the agency’s field collection program manually select the actual cases to assign to revenue officers. When they review the cases, the group managers consider factors such as the current workload of the revenue officers who are available, along with case characteristics such as potential collectability when deciding whether to assign a case.

However, the GAO found the program’s objectives are not clearly defined and communicated to employees, including the question of fairness. The GAO assembled a series of focus groups of IRS employees and heard different interpretations of the objectives of the program and the role of fairness. “Without clearly defined and clearly understood objectives aligned to its mission, Field Collection management does not have reasonable assurance that case selection processes support achievement of that mission,” said the report. “Further, the lack of clearly articulated objectives undercuts the effectiveness of Field Collection management's efforts to measure performance and assess risks.”

The report found the IRS’s documentation and assessment of the case selection risks were inadequate, and the field collection program lacks the guidance that group managers need to exercise judgment in case selection. “These deficiencies limit the Field Collection management's ability to provide reasonable assurance that selection decisions effectively support achievement of IRS's mission,” said the report.

The GAO made five recommendations in the report, suggesting the IRS develop and document the objectives for the program in clear and measurable terms, including fairness; provide guidance for the group managers' use of judgment in selecting which cases to pursue; and develop procedures to assess the IRS’s automated and manual processes. The IRS agreed with the GAO’s recommendations and described what steps it plans to take to address them.

In response to the report, John M. Dalrymple, the IRS’s deputy commissioner for services and enforcement, pointed out that budget cuts over the past six years have led to a 50 percent decline in field collection staff.

“The direct result of this cutback is that we are unable to pursue and close cases that deserve attention, thereby undermining the fairness of the overall tax collection system,” he wrote. “While the foundation for current Collection case selection processes was designed on extensive historical experience and is quite mature, we agree with the importance of continuously improving performance and the need to conduct periodic evaluations our automated and manual control procedures for case selection.”