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Statutory Audits

Statutory Audits. January 1999. Mandatory Audit Coverage (all audits start in 1/99 except as noted). Mandatory Audit Coverage (all audits start in 1/99 except as noted). Mandatory Audit Coverage Initial Planning Work. Researched RRA98, IRC, intent of law.

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Statutory Audits

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  1. Statutory Audits January 1999

  2. Mandatory Audit Coverage(all audits start in 1/99 except as noted)

  3. Mandatory Audit Coverage(all audits start in 1/99 except as noted)

  4. Mandatory Audit CoverageInitial Planning Work • Researched RRA98, IRC, intent of law. • Met with N.O. officials to discuss sources of information, existing systems of records to capture new provisions, planned IRM changes, etc. • Met with limited district personnel on plans for implementing RRA98. • Prepared draft audit plans.

  5. Mandatory Audit CoveragePremise • Scope would start from date of enactment. • Objective would be focused only on TIGTA mandates, not our traditional full-scope obj. • Initial reviews will evaluate the effectiveness of control systems to determine reliability of populations. • Due to limited timeframes for first round, we limited the obj to what we could accomplish. Next round would continue in 4th Q FY99.

  6. Format for Presentation • Explanation of RRA98 Provision • Status of IRS Implementation • Current IRS Management Control System • Audit Objective • Estimated Population (if known) • Projecting Results • Status of EDP Request

  7. Seizures & Levies(Mandatory) Explanation of the Provision The TIGTA shall evaluate the IRS’s compliance with required procedures for seizure of property for collection of taxes, including required procedures under IRC § 6330 regarding levies. IRC§6330 requires pre-notification and the opportunity for a formal hearing and judicial review to taxpayers against whose property the IRS may levy.

  8. Seizures & Levies Status of the IRS’s Implementation The IRS has issued guidelines for most RRA98 provisions regarding seizures and levies. The IRS is in the process of developing procedures for personal residence seizures. New procedures are also being developed for the new levy notice. RRA98 mandates that the Service start sending the levy notice on January 18, 1999.

  9. Seizures & Levies Current IRS Management Control System The only known management control system is the Collection quality review system, CQMS. CQMS reviews a sampling of TDA cases to determine the overall quality of closed TDA cases. Management uses the program to determine root causes of quality deficiencies and to develop positive plans for improvement.

  10. Seizures & Levies Audit Objective Determine if levies and seizures conducted by the IRS adhere to legal guidelines set forth in IRC Ch. 64, subch D, incl IRC § 6330, which was added by RRA98. Audit will cover all aspects of levies and seizures of all types of properties from initiation of field collection activity to the final disposition of the asset.

  11. Seizures (only) Population • 118 (5 DO + PR had no seizures) Projecting Results • N/A - 100% case review Status of EDP Request • None needed

  12. Levies (only) Estimated Population • Unknown Projecting Results • Can not identify entire population Status of EDP Request • None needed at this time

  13. Liens(Mandatory) Explanation of the Provision The TIGTA shall evaluate the IRS’s compliance with required procedures under IRC § 6320 upon the filing of a notice of lien. IRC § 6320 requires that taxpayers, against whom a Notice of Federal Tax Lien has been filed, receive notification and the opportunity to request a formal hearing.

  14. Liens Status of the IRS’s Implementation The Service is in the process of designing the new lien notice and developing procedures for issuing the notice before the January 18, 1999 implementation date.

  15. Liens Current IRS Management Control System There is no known management control system in place at this time to ensure that the new notice is issued to taxpayers as mandated by IRC § 6320. The IRS may be able to use either ALS or Master File to ensure that the notices are issued after the lien filing.

  16. Liens Audit Objective Determine if the IRS is complying with IRC § 6320 regarding the issuance of lien notices to taxpayers within five days after filing the lien and to determine if the IRS is properly adhering to procedures regarding taxpayer’s request for a hearing. We will also ensure that all applicable law or administrative procedures have been met for all taxpayers requesting a hearing (IRC § 6330).

  17. Liens Estimated Population • Unknown Projecting Results • Plan to sample 6 weeks of data Status of EDP Request • Request for Jan/Feb 99 liens has been submitted

  18. Enforcement Statistics(Mandatory) Explanation of the Provision TheTIGTA shall evaluate the IRS’s compliance with RRA98 restrictions on the use of enforcement statistics to evaluate IRS employees. Status of the IRS’s Implementation IRS is revising the IRM and has determined director certifications will be centrally filed. Front-line forms will be filed in the local offices (District or POD).

  19. Enforcement Statistics Current IRS Management Control System • Cross-functional independent management review 12/31/98, 6/30/99 and annually thereafter to correspond with the quarter ending 6/30. • IRM guidelines to be established by January 1999.

  20. Enforcement Statistics Audit Objective Determine the IRS’s compliance with restrictions on the use of enforcement statistics to evaluate IRS employees. We will also determine if the IRS is using “fair and equitable treatment” as an evaluation standard.

  21. Enforcement Statistics Estimated Population • Can not be determined Projecting Results • Can not identify entire population Status of EDP Request • None needed

  22. Direct Contact with Taxpayers Versus Representatives (Mandatory) Explanation of the Provision TIGTA shall evaluate the IRS’s compliance with restrictions under IRC § 7521(b)(2) on directly contacting taxpayers who have indicated that they prefer their representatives be contacted. We will also include IRC § 7521(c) provisions on notifying a taxpayer directly that their rep is causing unreasonable delay or hindrance.

  23. Direct Contact with Taxpayers Versus Representatives Status of the IRS’s Implementation • There is no new law requiring implementation. • However, there are no IRS systems to capture this information (suspended interviews that resulted in taxpayer representation). Only case files may document this situation.

  24. Direct Contact with Taxpayers Versus Representatives Current IRS Management Control System • There is no management control system identified other than the local and national procedures requiring the employee to suspend the interview. • There is no system to capture the information when this issue arises; therefore, there are no reports for management to use to monitor the issue.

  25. Direct Contact with Taxpayers Versus Representatives Audit Objective Evaluate the IRS’s compliance with restrictions under IRC § 7521(b)(2) and (c) regarding directly contacting taxpayers. We will also determine if any IRS systems capture this information.

  26. Direct Contact with Taxpayers Versus Representatives Estimated Population • Unknown Projecting Results • Can not identify entire population Status of EDP Request • None needed

  27. Fair Debt Collection Act(For Information Only) Explanation of the Provision TIGTA shall report information regarding any administrative or civil actions with respect to violations of the fair debt collection provisions of IRC § 6304, including a summary of judgments or awards granted. Status of the IRS’s Implementation Collection issued an August 31, 1998 memorandum that outlined guidelines advising employees of these requirements.

  28. Fair Debt Collection Act Current IRS Management Control System The Service is currently amending the IRM to incorporate procedures for employees to follow to meet the fair debt collection provisions. However, we have not been able to determine if the IRS is implementing any control system to ensure the provisions are to be met.

  29. Fair Debt Collection Act Audit Objective Obtain information regarding any administrative or civil actions resulting from violations of the fair debt collection provision as required by IRC § 6304. This will include a summary of judgments or awards granted to taxpayers. We will also determine if any IRS systems capture this information.

  30. Fair Debt Collection Act Estimated Population • Unknown Projecting Results • Can not identify entire population Status of EDP Request • None identified at this time

  31. Taxpayer Designations(Mandatory) Explanation of the Provision TIGTA shall evaluate the IRS’s compliance with restrictions under RRA98 Section 3707 on designation of TPs. Sec. 3707 prohibits IRS from designating TPs as illegal tax protesters and requires IRS to remove these protestor designations from the IMF and to disregard such designations on other systems. Also, nonfiler designations must be removed once the TP has filed and paid tax returns for 2 consecutive years.

  32. Taxpayer Designations Status of the IRS’s Implementation • Employees in the field have been educated on the new law. Related IRM sections are being revised to reflect the elimination of the ITP designation. • A RIS to eliminate the ITP designation from the Master File as required by RRA98 has been approved and is in process. This RIS is to be completed by January 15, 1999.

  33. Taxpayer Designations Current IRS Management Control System The IRS is establishing new procedures to eliminate the ITP designation (and possibly implement another program) and to monitor the new UTAAP nonfiler designation.

  34. Taxpayer Designations Audit Objective Determine if the ITP designation has been eliminated from the IMF/BMF and is being disregarded in the field offices, and the nonfiler designation is being monitored. We will also ensure that any new taxpayer designations meet the intent of the law. (note: only accounts on active MF will be reviewed, not retention register accounts)

  35. Taxpayer Designations Estimated Population • Unknown Projecting Results • N/A - 100% match to be performed Status of EDP Request • “Before date of law” data received • “After date of law” request to be submitted

  36. FOIA(Mandatory) Explanation of the Provision TIGTA shall report information regarding improper denial of requests for information from the IRS identified under paragraph (3)(A), which states TIGTA shall conduct periodic audits of a statistically valid sample of the total number of determinations made by the IRS to deny written requests based on FOIA or the Privacy Act.

  37. FOIA Status of the IRS’s Implementation No new law requiring implementation was created by the Act.

  38. FOIA Current IRS Management Control System Disclosure is responsible for the Service’s disclosure program, including the FOIA, which provides for public access to records maintained by Federal agencies. This office ensures Treasury’s compliance with the law, has oversight and reporting responsibilities, provides guidance on procedural and policy matters, and provides FOIA-related training.

  39. FOIA Audit Objective Determine if the IRS is properly applying the exemptions cited under IRC § 6103 or section 552(b)(7) of title 5, United States Code to deny written requests for information; and to identify the process for controlling the requests for information under FOIA or the Privacy Act.

  40. FOIA Estimated Population • 3,700 (FY 98) Projecting Results • Projectable over a partial period Status of EDP Request • FY 98 data received (7/18-9/30/98) • FY 99 data to be received 1/29/99

  41. Disclosure and Joint Filers(Mandatory) Explanation of the Provision The TIGTA shall review and certify whether or not the Secretary is complying with the requirements of IRC § 6103(e)(8) to disclose information to an individual filing a joint return on collection activity involving the other individual filing the return.

  42. Disclosure and Joint Filers Status of the IRS’s Implementation This IRC section has been in effect since 1996. As of December 1998, the IRS has not decided who should be responsible for this issue.

  43. Disclosure and Joint Filers Current IRS Management Control System • We know of no management control system at this time. • In fact, we have found that this information is being disclosed verbally.

  44. Disclosure and Joint Filers Audit Objective Determine if the IRS is complying with the requirements of IRC § 6103(e)(8) and RRA98 section 6109(c) to disclose information on collection activity involving an individual filing a joint return upon the written request of the other individual filing a joint return or a duly authorized representative. We will also determine if any IRS systems capture this information.

  45. Disclosure and Joint Filers Estimated Population • Unknown Projecting Results • Can not identify entire population Status of EDP Request • None needed

  46. Statutes(For Information Only) Explanation of the Provision TIGTA shall report information regarding extensions of the statute of limitations for assessment and collection of tax under IRC § 6501 and the provision of notice to taxpayers regarding requests for such extensions.

  47. Statutes Status of the IRS’s Implementation The National Office Examination Division is convening a team in November 1998 to review this area, especially concerning restricted consents and changes to the applicable notices. The revised IRM dealing with statutes should be issued by June 1999. This law goes into effect January 1, 2000.

  48. Statutes Current IRS Management Control System Guidelines and procedures are being implemented.

  49. Statutes Audit Objective Determine if the IRS is complying with IRC § 6501 to inform taxpayers of their right to refuse to extend the assessment statute of limitations, or to limit such extension to a particular issue or time period.

  50. Statutes Date of First Planned Audit October 1999

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