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Even the IRS has Collection Problems | Wilmington NC CPA

A Wilmington NC and Wilmington NC Tax Preparer discusses a report about IRS collection problems

If you'd like a free initial consult from a Wilmington NC CPA and tax accountant, please call us at (910) 399-2705.

With their ability to lien and seize assets, one would think the IRS has no collection problems. But that’s not always the case, per a WebCPA report.  But first, some background.

“I wouldn’t count on the IRS dropping the ball once they start proceedings against you, despite this report.  In my experience, they’re doggedly consistent and persistent.”
Gary Bode, CPA 
Wilmington NC Small Business Accountant

Some Background on the IRS Oversight Agency – from their website

The Treasury Inspector General for Tax Administration (TIGTA)-Office of Investigations (OI) has the unique responsibility to conduct investigations that proactively and reactively protect the Treasury’s ability to collect revenue. TIGTA-OI conducts programs that:

  • Protect IRS employees from external threats.
  • Protect the integrity of the IRS.
  • Detect and prevent fraud and abuse.
  • Investigate allegations of IRS employee misconduct.

Now the Report per the 7/19/10 issue of Web CPA

The Internal Revenue Service basically dismissed over $1.4 billion in delinquent taxes between 2002 and 2008 without filing tax liens to collect them, according to a new report from the Treasury Inspector General for Tax Administration.  The report faulted IRS revenue officers for not documenting valid reasons why they decided not to file tax liens in many cases.

However the report implies that most of these dropped cases were due to a determination that the funds were currently uncollectible.  The main thrust seems to be the IRS agents just didn’t document the reason, thus violating IRS internal policy.  Another facet not mentioned is whether these cases were kept on hold in case the taxpayer developed means to pay within the statute of limitations.

The IRS came under public outrage around 2004 when their Offer in Compromise program was criticized for being too accommodating.  It was a well known tax planning technique to not file returns for several years and then negotiate an Offer in Compromise that allowed paying “pennies on the dollar”. Large national, apparently non CPA, firms sprang up to exploit this technique, with their commercials becoming a mainstay of late night TV.

If you need a free consult on an accounting, business consulting or tax preparation issue, please feel free to call us at (910) 399-2705.

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