Cross References

  • TIGTA Report Number 2023-30-051, August 16, 2023

Taxpayers have a right to representation in matters before the Internal Revenue Service. IRC section 7521(b)(2) and (c) provide taxpayers the right to representation during interviews. The law also protects taxpayers’ rights to representation by prohibiting IRS contact of a taxpayer if it knows the taxpayer is represented.

IRC section 6304(a)(2) states:

“The Secretary may not communicate with a taxpayer in connection with the collection of any unpaid tax if the Secretary knows the taxpayer is represented by any person authorized to practice before the Internal Revenue Service with respect to such unpaid tax and has knowledge of, or can readily ascertain, such person’s name and address, unless such person fails to respond within a reasonable period of time to a communication from the Secretary or unless such person consents to direct communication with the taxpayer.”

The Treasury Inspector General for Tax Administration (TIGTA) is required to annually report on the IRS’s compliance with provisions of the law that restricts the IRS from directly contacting taxpayers who are represented. For this year’s review, TIGTA analyzed the extent to which Small Business/Self-Employed Division Field Collection employees comply with the direct contact provisions of IRC section 7521 and Fair Tax Collection Practices of IRC section 6304(a)(2) during interactions with taxpayers or their representatives. IRC section 7803(a)(3) also guarantees the right of representation for taxpayers before the IRS.

What TIGTA found. The IRS has policies and procedures to help ensure that taxpayers are afforded the right to designate an authorized representative to act on their behalf in a variety of tax matters. In addition, the IRS has a process to handle the review and disposition of taxpayer allegations of direct contact violations. However, the IRS has not developed a system to identify IRS employee violations of the direct contact provisions.

TIGTA found that revenue officers potentially violated taxpayers’ rights concerning directly contacting taxpayers who are represented before the IRS. TIGTA reviewed a stratified statistically valid sample of 132 taxpayers from a population of 1,613 taxpayers who had collection actions documented in case history narratives by revenue officers between October 1, 2021, and June 30, 2022. TIGTA found eight taxpayers (12 instances) for whom revenue officers did not comply with the IRC sections pertaining to direct contact provisions and the right to fair collection practices.

TIGTA also reviewed Fiscal Year 2022 Embedded Quality Review System (EQRS) data pertaining to Field Collection. There were 129 cases in which the quality element right to representation not observed, was reported as a potential exception and the reviewer included

a narrative explaining the specific nature of the violation. TIGTA found that for the 129 potential violations, there were 48 taxpayers for whom the IRS did not comply with the law regarding the right to representation. While IRS procedures require the reporting of potential Fair Tax Collection Practices violations to a Labor Relations Specialist for investigation, the 48 potential violations TIGTA identified were not reported. TIGTA concluded that the IRS has significant gaps in both its reporting of potential employee misconduct and in disciplining employees for potential taxpayer violations. TIGTA also determined that training for new revenue officers does not have case scenarios to show the variety of ways taxpayers may ask to consult with a representative.

What TIGTA recommended. TIGTA recommended that the IRS: 1) Ensure that group managers discuss the potential violations identified during the re-

view of Integrated Collection System case narratives with responsible employees and report potential violations to Labor Relations,

2) Report the potential Fair Tax Collection Practices violations identified in EQRS reviews

to Labor Relations for investigation,

3) Establish controls to ensure that all potential violations of Fair Tax Collection Practices

identified in case reviews are reported for investigation,

4) Establish procedures that require EQRS reviewers to include a narrative detailing a

potential violation relating to the ‘right to representation not observed’ quality element, and

5) Improve new revenue officer training by adding direct contact scenarios pertaining to

taxpayers’ statements concerning their right to representation.

The IRS agreed with all five recommendations.