Tax Administration: IRS' Levy of Federal Payments Could Generate Millions of Dollars
GGD-00-65
Published: Apr 07, 2000. Publicly Released: May 08, 2000.
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Highlights
Pursuant to a congressional request, GAO reviewed the status of the Internal Revenue Service's (IRS) continuous levy program, focusing on: (1) the number of taxpayers that could be subject to a continuous levy, the revenue that might be generated, and the cost to IRS to have the Financial Management Service (FMS) levy the federal payments of those taxpayers; (2) issues that could delay program implementation or otherwise affect revenues from the program; (3) the controls and testing that IRS and FMS have planned to prevent levying taxpayers not subject to levy and to prevent levying payments for more than the taxpayer owes; and (4) changes, if any, IRS and FMS could make to yield increased revenues from the program.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | To ensure that adequate controls are in place to prevent inappropriate levies, the Commissioner of Internal Revenue should ensure that IRS contacts a sufficient number of taxpayers when testing program controls during the first phase of program implementation. |
Closed – Implemented
In July 2000, IRS started the continuous levy process on a pilot basis with a small number of cases, and it is gradually adding cases to ensure that it does not go into full implementation until all controls have been tested.
|
| Internal Revenue Service | To ensure that adequate controls are in place to prevent inappropriate levies, the Commissioner of Internal Revenue should develop a procedure to provide that refunds resulting from an inappropriate levy are made in a timely manner, similar to refunds issued in cases involving taxpayer hardship. |
Closed – Implemented
IRS has developed a new section of the IRM in 2000, that directs employees to provide manual refunds when necessary for returning levied funds.
|
| Internal Revenue Service | To ensure that adequate controls are in place to prevent inappropriate levies, the Commissioner of Internal Revenue should ensure that IRS excludes from levy and Trust Fund Recovery Penalty involving more than one responsible party until IRS has a system in place to ensure that all responsible parties' accounts receive appropriate credit for any payments levied. |
Closed – Not Implemented
IRS has determined that the number of Trust Fund Recovery Penalties cases has been minor and therefore, they will continue to be included in the program.
|
| Internal Revenue Service | To ensure that adequate controls are in place to prevent inappropriate levies, the Commissioner of Internal Revenue should assess the feasibility of permitting federal agencies to submit vendors' taxpayer identification numbers (TIN) and names to IRS as part of its TIN-matching program for purposes other than information reporting. |
Closed – Implemented
IRS determined that this would be feasible only with legislative changes needed to overcome taxpayer data disclosure issues. Although the House Ways and Means Committee did not accept the submitted legislation for the changes, IRS did assess feasibility.
|
| Financial Management Service | To ensure that future payment records submitted to FMS by federal agencies will include valid payee TINs and names, the Commissioner of FMS should issue guidance directing federal agencies to use IRS' TIN-matching program, if IRS decides that it can validate vendor TINs and names through this program. |
Closed – Implemented
FMS expanded on their TIN policy directive to require that federal payment vouchers submitted to Treasury include a valid TIN.
|
| Financial Management Service | To increase the number of tax delinquencies that could be collected through continuous levy, the Commissioner of Internal Revenue and the Commissioner of FMS should respectively direct IRS and FMS to coordinate their efforts in preparing the necessary files and making the programming changes needed to enable FMS to match more than one TIN and name from IRS' accounts receivable records to its payment records for each tax debt submitted by IRS. |
Closed – Implemented
IRS and FMS are currently coordinating on preparing the necessary files and making the required programming changes. The work is underway with details being worked out. The estimated completion date is January 31, 2005.
|
| Internal Revenue Service | To increase the number of tax delinquencies that could be collected through continuous levy, the Commissioner of Internal Revenue and the Commissioner of FMS should respectively direct IRS and FMS to coordinate their efforts in preparing the necessary files and making the programming changes needed to enable FMS to match more than one TIN and name from IRS' accounts receivable records to its payment records for each tax debt submitted by IRS. |
Closed – Implemented
IRS and FMS are currently coordinating on preparing the necessary files and making the required programming changes. The work is underway with details being working out. The completion date is January 31, 2005.
|
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Topics
Computer matchingDebt collectionDelinquent taxesFederal taxesInternal controlsSocial security benefitsSocial security numberTax administrationTaxpayersSocial security beneficiaries