IMPROVE FEDERAL GOVERNMENT AGENCY TAX COMPLIANCE

TIGTA Seal and Slogan

Treasury Inspector General for Tax Administration

Office of Audit

A CONCERTED EFFORT SHOULD BE TAKEN TO IMPROVE FEDERAL GOVERNMENT AGENCY TAX COMPLIANCE

Issued on September 5, 2012

Highlights

Highlights of Report Number: 2012-30-094 to the Internal Revenue Service Commissioner for the Small Business/Self-Employed Division.

IMPACT ON TAXPAYERS

Federal agencies are exempt from paying Federal income taxes; however, they are not exempt from meeting their employment tax deposits and related reporting requirements. As of December 31, 2011, 70 Federal agencies with 126 delinquent tax accounts owed approximately $14 million in unpaid taxes. In addition, 18 Federal agencies had not filed or were delinquent in filing 39 employment tax returns. Federal agencies should be held to the same filing and paying standards as all American taxpayers.

WHY TIGTA DID THE AUDIT

In August 2007, TIGTA issued a report citing the need to expand the Federal Agency Delinquency Program’s efforts to identify and address the causes for Federal agency delinquencies, strengthen controls over case processing, and develop strategies to resolve aged cases. Although the overall objective of the current review was todetermine the effectiveness of the IRS’s process to collect delinquent taxes and secure delinquent tax returns from Federal agencies, TIGTA also followed up on the effectiveness of the corrective actions taken in response to the prior TIGTA report.

WHAT TIGTA FOUND

The corrective actions the IRS took in response to the prior TIGTA report did not fully address previously identified internal control weaknesses. Specifically, a process toresolve aged Federal agency delinquent tax accounts has not been fully developed.

TIGTA analyzed 132 aged Federal agency delinquent tax accounts from the December 2008 Federal Agency Delinquency Listing. As of December 31, 2011, TIGTA identified 40 aged Federal agency delinquent tax accounts totaling approximately $2.6 million that were still open after three years. In addition, Federal Agency Delinquency Program employees suspended collection actions for 34 of the 40 aged delinquent tax accounts totaling approximately $2.4 million. Because the IRS has suspended pursuing these aged delinquent tax accounts, the possibility that the delinquent Federal agencies will now voluntarily pay their outstanding tax liabilities is very low.

Management information reports do not provide sufficient details about the causes of Federal agency delinquencies in order to be effectively used to enhance outreach and educational efforts. A lack of control over processing Federal agency cases permitted the use of enforcement actions that violated IRS policies. In addition, limited procedures concerning the timeliness of case processing resulted in delayed case resolution.

WHAT TIGTA RECOMMENDED

To improve the administration of the Federal Agency Delinquency Program, TIGTA made several recommendations to the Commissioner, Small Business/Self‑Employed Division, which include strengthening the procedures for resolving delinquent tax accounts and assisting Federal agencies with understanding and meeting their tax responsibilities.

IRS management agreed with the recommendations and the outcome measures in this report. In addition, IRS management responded that in October 2011 they had completed the corrective action for one of the recommendations. Prior to issuing the draft report, TIGTA requested the IRS provide confirmation that the updates to the management information reports were completed and that the information was useful. The IRS provided and TIGTA reviewed the updates, which addressed TIGTA’s main concerns. However, the IRS did not confirm that it was making use of the updated report information.

READ THE FULL REPORT

To view the report, including the scope, methodology, and full IRS response, go to:

http://www.treas.gov/tigta/auditreports/2012reports/201230094fr.html.

E-mail Address: TIGTACommunications@tigta.treas.gov

Phone Number: 202-622-6500

Website: http://www.tigta.gov

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Latest Tax News

Treasury Inspector General for Tax Administration
June 3, 2013
Washington, D.C.

(from: http://www.treasury.gov/tigta/congress/congress_06032013.pdf)

During the 2012 election cycle, some Members of Congress raised concerns to
the IRS about its selective enforcement efforts and reemphasized its duty to treat similar
organizations consistently. In addition, several organizations applying for
I.R.C. § 501(c)(4) tax-exempt status made allegations that the IRS: 1) targeted specific
groups applying for tax-exempt status, 2) delayed the processing of targeted groups’
applications for tax-exempt status, and 3) requested unnecessary information from
targeted organizations. Lastly, several Members of Congress requested that the IRS
investigate whether existing social welfare organizations are improperly engaged in a
substantial, or even predominant, amount of campaign activity.
We initiated this audit based on concerns expressed by Congress and reported in
the media regarding the IRS’s treatment of organizations applying for tax-exempt status.
We focused our efforts on reviewing the processing of applications for tax-exempt status
and determining whether allegations made against the IRS were founded. Over 600
tax-exempt application case files were reviewed by TIGTA. We did not review whether
specific applications for tax-exempt status should be approved or denied. We also did
not review any IRS examinations of tax-exempt organizations in this audit.

Results of Review
In summary, we found that all three allegations were substantiated. The IRS used
inappropriate criteria that identified for review Tea Party and other organizations applying
for tax-exempt status based upon their names or policy positions instead of indications of
potential political campaign intervention. Because of ineffective management by IRS
officials: 1) inappropriate criteria were developed and stayed in place for a total of more
12 I.R.C. § 501(c)(6) (2012).
13 Nonprofit organizations such as chambers of commerce, real estate boards, and boards of trade that
promote the improvement of business conditions.
14 Treasury Regulations §§ 1.501(c)(4)-1, 1.501(c)(5)-1, and 1.501(c)(6)-1.
15 A second audit is planned to assess how the EO function monitors I.R.C. §§ 501(c)(4)–(6) organizations
to ensure that political campaign intervention does not constitute their primary activity.

Treasury Inspector General for Tax Administration

Office of Audit

IT WILL TAKE YEARS TO IMPLEMENT THE RETURN PREPARER PROGRAM AND TO REALIZE ITS IMPACT

Issued on September 30, 2010

Highlights

Highlights of Report Number: 2010-40-127 to the Internal Revenue Service Deputy Commissioner for Services and Enforcement.

IMPACT ON TAXPAYERS

Every year, more than one-half of all taxpayers pay someone else to prepare their Federal income tax returns. In Calendar Year 2009, the Internal Revenue Service (IRS) processed approximately 83.1 million individual Federal income tax returns prepared by paid preparers.

WHY TIGTA DID THE AUDIT

This audit was initiated because the IRS recently made reforms to return preparer oversight. The reforms include requirements for registration, competency testing, continuing professional education, ethical standards, and enforcement.

The overall objective of this review was to monitor and evaluate the IRS’s implementation of the Return Preparer Strategy. The scope of this audit was limited to the planning, design, and implementation of the Return Preparer Registration System and planning for the implementation of future phases of the Return Preparer Strategy.

WHAT TIGTA FOUND

Immediately after announcing the Return Preparer Review, the IRS established a Return Preparer Implementation Project Office. The Project Office will support the IRS in implementing key Return Preparer Program functions for Filing Season 2011 and lay the foundation for long-term Program institutionalization.

When the decision was made to register preparers in September 2010, the IRS had only begun to implement the Return Preparer Program and had not established all Program requirements, established the organizational structure of the Return Preparer Program, or determined how to test to ensure all preparers met the requirements. It has also not determined how the IRS will enforce Program requirements, and it has not developed the system(s) and processes necessary to administer and oversee the Program.

The new preparer requirements will take several years to implement, and it will not be until Calendar Year 2014 that all preparers will be subjected to all suitability and competency tests. During that time, the IRS will be developing and implementing an enforcement strategy. Currently, the IRS does not have a sufficient management information system to gather data on preparers. Further, the IRS will need to ensure taxpayers understand the new requirements and the importance of only using registered preparers to prepare their tax returns.

WHAT TIGTA RECOMMENDED

TIGTA made several recommendations for improvement. Specifically, the IRS should complete the study comparing the four preparer programs to gain an understanding of the basis for the requirements and to ensure consistencies in the requirements and suitability testing among the programs.

In its response to the draft report, IRS management stated that it plans to complete the study comparing the four preparer programs and to leverage existing best practices when appropriate.

READ THE FULL REPORT

To view the report, including the scope, methodology, and full IRS response, go to:

http://www.treas.gov/tigta/auditreports/2010reports/201040127fr.html

Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site: http://www.tigta.gov

Testimonials

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My name is Anne and it has come to my attention that I would have the opportunity to write a testimonial about Front Range Tax Resolution.  Approximately four years ago I was fortunate enough to find my way to this fabulous company, with dire need for tax help.  My situation was critical due to past taxes that were threatening my home, my financial security and keeping me up nights in total worry.  When I received a call from Judd Kalush, he was very friendly, full of knowledge about taxes, which escape my understanding and a willingness to head straight into IRS negotiations on my behalf.  To say he has saved the day is an understatement!  Just knowing I have Front Range Tax in my corner is a secure feeling and has proved to be the best move I could have made.  I recommend Front Range Tax to anyone who needs assistance with taxes.  Don’t waste your money or time on the advertisements on TV about past tax, just call Judd Kalush and relax your worries! I know I have..

Anne Stolsig

 

Dear Judd,

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I have been most impressed with the professional manner in which you handled this situation on my behalf.  Your understanding of the IRS Tax Code and more especially the “inner workings” of Protocol and Investigative processes has been invaluable to the amicable resolution of this case.  The knowledge and skill sets of your staff that assisted in the whole process go beyond the norm in my book.  Leadership comes from the top and you have definitely left your signature on your employees.

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Sincerely,

 

Richard Huxtable

President

 

Huxtable Electric Inc.

ElumiNation Energy Solutions LLC.

1580 Championship Blvd.

Franklin, TN 37064

850.650.7531  Phone

850.650.7534  Fax

850.420.2950 Cell

 

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With your remarkable expertise and amazing results, we are now able to finally plan for a promising future, tax debt free.   

Marc & Amy O.,

Broomfield, CO

 

Although many companies say they will help you when you get in this situation… the reality is not everyone can deliver what they promise… You and your team, on the other hand, not only delivered as promised but, in fact, do go the “extra mile” when necessary.  I know because you have done that for me.  Although I was nervous about this process when it all began, it wasn’t long before I knew I was in good hands.  It has been my good fortune to run across such a capable group of people and I am truly appreciative.

Thanks,

Frank