April 5, 2012
TIGTA: IRS Cannot Determine Effectiveness of its Tax Collection Efforts in 85% of Cases
The Treasury Inspector General for Tax Administration today released Designated Payment Codes Are Inaccurate and Ineffective (2012-30-026):
The IRS established Designated Payment Codes (DPC) to identify IRS enforcement actions or other events that result in taxpayers submitting subsequent payments on their balance due accounts. However, the IRS is not consistently or accurately applying DPCs, which reduces the IRS’s ability to assess the effectiveness of its collection actions. Ineffective use of IRS collection resources can unnecessarily burden the majority of taxpayers who fully and timely pay their taxes. ...
TIGTA reviewed a statistical sample of 138 subsequent payments that posted to taxpayer balance due accounts. TIGTA determined that 106 (77%) of the 138 subsequent payments were processed without the required DPC. In addition, 11 (34 percent) of the 32 subsequent payments that had a DPC were not accurate. ... As a result, DPC data cannot be used to determine the effectiveness of collection actions, and some IRS reports used to monitor and report collection activities are not accurate.
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I'm not surprised. Some of the very common problems I've encountered in the past are mis-coded and mis-placed payments from delinquent taxpayers. This inadequacy compounds the effect on the taxpayer, and foments a feeling helplessness.
Imagine how maddening it would feel to have proof of your payments being cashed, but the Revenue Officer denying you've made efforts to fix your back taxes.
If you feel like you're making payments, and they are having no impact on your tax liability, this may be why. It is not safe to assume the IRS is accounting for your payments properly.
Posted by: ibth | Apr 6, 2012 11:44:42 AM
Many of my clients have had similar experiences:
The IRS cashes a check but doesn't credit the account or credits the wrong year, etc. etc.
And that's when the check has all required reference annotations accompanied with the requisite payment vouchers.
The Service is most obviously inept when it tries to process payments drawn on foreign financial institutions - even when denominated in USD. Neither they nor the banks they use for this purpose have a practical clue what they're doing - even though they have clearly spelled out procedures in the IRM.
In light of the Service's institutional incompetence in handling the voluntary efforts of taxpayers to send them money from outside the US, the idea that the rubes in Congress want to strictly enforce US tax obligations against recalcitrant payers living off the US reservation strikes me as peculiarly laughable.
Posted by: Iquit | Apr 8, 2012 6:51:36 AM