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ABUSIVE TAX COLLECTION |
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There are three "hammers" that you can use to get a rogue tax collector back in his or her cage. These are, the Fair Debt Collection regulations, the independent Treasury Inspector General, and the recently enacted right to sue for damages for abusive or illegal activity by an IRS employee. I. Fair Debt Collection regulations IRM § [5.1] 1.7 05/27/99 The Internal Revenue Code requires the IRS to comply with certain sections of the Fair Debt Collection Practices Act (FDCPA). These deal with: * contacts regarding unpaid tax, and * harassment and abuse of taxpayers. 2. This law applies to contacts with all taxpayers, including corporations and partnerships. 3. Violations of IRC 6304 could subject the IRS to civil action (IRC 7433) by the taxpayer. Specifically - 1. IRC 6304 requires the IRS to comply with certain sections of the Fair Debt Collection Practices Act (FDCPA). These deal with: * contacts regarding unpaid tax, and * harassment and abuse of taxpayers. 2. This law applies to contacts with all taxpayers, including corporations and partnerships. 3. Violations of IRC 6304 could subject the IRS to civil action (IRC 7433) by the taxpayer.
Contacting Taxpayers 1. Some contacts require the taxpayer's consent, first. These include: A. contacting the taxpayer at any unusual time or place, or a time or 2. Employees can generally assume that it is convenient to contact the taxpayer after 8:00 a.m. and before 9:00 p.m. local time at the taxpayer's location, unless there is reason to know otherwise.
Awareness that the Taxpayer has a Representative 1. An IRS employee is considered to know about the representative if the taxpayer says there is one. This can be written or oral. If the taxpayer is represented: A. ask for a written power of attorney or disclosure authorization form, 2. There may be doubt whether a person still represents the taxpayer or an issue is covered. If so contact the representative and ask. CAUTION: If the IRS employee does not have the power of attorney or some other written authorization, the representative may be contacted, but no more can be disclosed than what is authorized in IRC 6103(k)(6).
Promoting Public Confidence 1. It is IRS policy not to use methods which are threatening or harassing to the public. See Policy Statement P-1-1. IRC 6304 prohibits employees from harassing, oppressing, or abusing any person in connection with the collection of any unpaid tax. 2. The following actions are considered violations: A. the use or threat of use of violence or other criminal means to harm EXCEPTION: If the telephone call is only for the purpose of acquiring location information about the taxpayer, the employee cannot:
E. tell any third party that they are an employee of the IRS, or F. provide their title (R/O, TE, etc.) to the third party unless , that information is requested by the third party. "Location information" is defined as the taxpayer's place of abode and phone number at such place, or place of employment. ________________________
II. Treasury Inspector General The IRS Restructuring & Reform Act of 1998 created the independent Treasury Office of the Inspector General for Tax Administration. If you believe you are being harassed or abused by an IRS tax collector, consider filing a complaint with the Treasury Inspector General for Tax Administration. This is office is completely independent of the Internal Revenue Service, and oversees criminal, wasteful or abusive conduct on the part of any IRS employee. REPORTING FRAUD, WASTE & ABUSE If you are aware of fraud, waste, mismanagement, and abuse in the IRS programs and operations, report it to the TIGTA's Hotline! * What kinds of things should you report? Mismanagement or violations of law, rules, or regulations by the IRS employees or contractors. Mismanagement or violations of law, rules, or regulations by the TIGTA employees or contractors. * Your complaint will be kept confidential if it is received on the phone, through the mail, or in person. We cannot guarantee confidentiality if you send your complaint by e-mail (online submission). * Laws protect you from reprisals (any action taken against you because you filed this complaint).
TREASURY DIRECTIVE 27-14 Date: January 15, 1999 Sunset Review: January 15, 2001 Expiration Date: January 15, 2002
Treasury Inspector General for Tax Administration
1. PURPOSE. This directive describes the organization and functions of the Office of Treasury Inspector General for Tax Administration (OTIGTA).
2. THE TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION. The Treasury Inspector General for Tax Administration (TIGTA) is appointed by the President, by and with the advice and consent of the Senate, and reports to the Secretary of the Treasury and the Deputy Secretary. The Office of the Treasury Inspector General for Tax Administration (OTIGTA) is organizationally placed within the Departmental Offices, but is independent of the Departmental Offices and all other offices and bureaus within the Department.
a. Pursuant to the Inspector General Act of 1978, as amended, the TIGTA carries out a comprehensive audit and investigative program to assess the operations and programs of the Internal Revenue Service (IRS), the IRS Oversight Board, and the Office of Chief Counsel of the IRS. (Hereafter, the IRS Oversight Board and the Office of the Chief Counsel of the IRS are referred to as the "Related Entities").
b. The TIGTA carries out the duties and responsibilities described in Treasury Order 115-01 "Office of the Inspector General for Tax Administration" or successor documents.
c. The TIGTA provides executive leadership to the OTIGTA and exercises supervision over the personnel and functions of its major components. The TIGTA determines the budget needs of the OTIGTA, sets organizational policies and priorities, oversees organizational operations and provides reports to the Secretary and members of Congress.
d. The TIGTA is a member of the President's Council on Integrity and Efficiency (PCI&E).
e. Under the supervision of the TIGTA are a Deputy Inspector General for Tax Administration; a Counsel to the Treasury Inspector General for Tax Administration; an Assistant Inspector General for Audit; an Assistant Inspector General for Investigations; four Regional Inspectors General for Tax Administration; the Director, Office of Resources, Management and Support; the Director, Office of Systems Development and Integration; the Director, Central Case Development Center; the National Director for Communication, Education and Quality; and such support staff as the TIGTA deems necessary. (See Attachment I for chart of OTIGTA organization.)
3. THE DEPUTY INSPECTOR GENERAL FOR TAX ADMINISTRATION. The Deputy Inspector General for Tax Administration serves as the TIGTA's principal assistant and is designated as the first assistant to the TIGTA for the purposes of 5 U.S.C. 3345.
a. The Deputy Inspector General for Tax Administration directs and oversees the national proactive and coordinated activities of auditors and investigators to detect and deter fraud and abuse involving the IRS or the Related Entities;
b. The Deputy Inspector General for Tax Administration manages the strategic management process of the OTIGTA, which consists of formulating the TIGTA's Strategic Plan and Annual Business Plan; evaluating the programs and operations of the Assistant Inspectors General and Regional Inspectors General; and preparing the semiannual report for the Secretary and Congress.
c. The Deputy Inspector General for Tax Administration coordinates legislative activities for the OTIGTA.
d. The Deputy Inspector General for Tax Administration supervises the following officials:
(1) The Director, Office of Management, Resources and Support, who advises and assists the TIGTA on administrative, financial, personnel, and management matters; develops, directs and oversees OTIGTA administrative policy, planning and resource activities nationally; and furnishes administrative services for OTIGTA headquarters operations.
(2) The Director, Office of Systems Development and Integration, who is responsible for developing the OTIGTA's information system architecture and budget requirements; establishing information technology policies and procedures; acquiring, developing, and maintaining computer hardware, data telecommunications, and software applications; and providing information technology services in support of audits, investigations and administrative activities at OTIGTA locations nationwide.
(3) The Director, Central Case Development Center, who is responsible for detecting unauthorized access to taxpayer records by employees of the IRS and Related Entities, and detecting fraud and abuse by employees through analysis of audit trails and other records maintained on IRS computer systems.
(4) The National Director of Communications, Education, and Quality, who originates, plans, implements and directs the OTIGTA's system management program, leadership and management education programs, and internal and external communications programs.
4. THE COUNSEL TO THE TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION. The Counsel to the Treasury Inspector General for Tax Administration performs the following functions.
a. Provides legal advice to the various components of the OTIGTA on issues that arise in the exercise of their audit and investigative responsibilities. Such issues include the scope and exercise of the TIGTA's authorities and responsibilities; audit and investigative techniques and procedures; the impact of proposed and existing legislation and regulations on IRS and OTIGTA programs and operations; and legal issues that arise in the conduct and resolution of audits and investigations.
b. Provides legal advice on OTIGTA internal administration and operations, including appropriations, ethics, personnel matters, and the disclosure of tax and other information.
c. Conducts and supervises the litigation on personnel and Equal Employment Opportunity matters involving OTIGTA employees and, as applicable, coordinates with the Department of Justice and others on these matters.
d. Reviews and coordinates with the Department of Justice the enforcement of subpoenas issued by the OTIGTA, and representation of OTIGTA in litigation.
5. THE ASSISTANT INSPECTOR GENERAL FOR AUDIT. The Assistant Inspector General for Audit (AIGA) performs the following functions.
a. Plans and oversees an audit program that provides for independent reviews and appraisals of the operations of the IRS and Related Entities. These reviews provide information on the condition of all functional activities of the IRS and Related Entities, and are sufficient in scope to provide a basis for constructive management action by responsible officials.
b. Provides overall leadership and direction for evaluating the vulnerability of IRS and Related Entities operating activities to problems, and recommends action to pursue in planning audit coverage that provides for:
(1) systematic verifications and analyses of financial transactions;
(2) assessments of the design and development of new and existing information systems;
(3) appraisals of the effectiveness and efficiency of IRS and Related Entities programs and operations; and
(4) execution of the responsibilities mandated under the Chief Financial Officers Act relating to audits of IRS financial statements.
c. Plans and executes continuous quality assurance of audit activities by conducting visitations to independently assess the execution of regional and headquarters audit operations and their adherence to the GAO's Government Auditing Standards; identifying operational concerns in audit activities and preparing reports that recommend appropriate management actions; monitoring and evaluating regional audit activities using qualitative and quantitative methods of analysis; and recommending new procedures and techniques for improving the overall quality of audit operations.
d. Formulates and maintains audit policies, procedures, and program guidelines; develops and maintains the audit management information system; and produces management information reports for use by OTIGTA managers.
e. Develops and maintains the professional skills of audit personnel by providing professional training course development, design and instruction. The AIGA determines, in conjunction with the National Director for Communications, Education and Quality, training priorities and goals of the audit training programs, identifies training needs, and defines and articulates training objectives.
f. Supervises the Deputy Assistant Inspector General for Audit; the Directors of the Office of Strategic Planning; the Director, Office of Policy and Management; and the Director, Office of Audit Projects.
6. ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS. The Assistant Inspector General for Investigations (AIGI) performs the following functions.
a. Plans and oversees a program to investigate activities related to fraud, waste, abuse, and mismanagement concerning the activities and operations of IRS and Related Entities. This includes investigating allegations against employees, applicants, grantees, and contractors (including those performing tax administration functions for the IRS) of criminal acts and other misconduct such as bribery; embezzlement; abuse of authority; unauthorized disclosure or use of tax information; false claims; conflict of interest; violations of the Federal ethics standards; and abuse of taxpayer rights.
b. Protects the IRS and Related Entities against external attempts to corrupt or threaten their employees such as attempts by non-IRS employees and tax practitioners to unlawfully interfere with the programs and operations of the IRS through bribery, impersonation, intimidation, harassment, threats, assaults or other unlawful actions that may impact IRS personnel and impede Federal tax administration.
c. Formulates investigative policies and procedures; performs quality assurance and oversight reviews to assure that the investigative program is in compliance with guidelines and investigative standards; prepares reports on investigative trends; and processes requests for release of information in compliance with the Freedom of Information Act, the Privacy Act and Internal Revenue Code disclosure provisions.
d. Provides support nationwide in the forensic examination of documentary evidence; furnishes expertise in the use of technical and electronic investigative equipment; assists in the enhancement of video and audio evidentiary material; provides expertise and assistance during the search and seizure of computers and computer data; performs tests of the security of IRS and Related Entities information systems; and, in conjunction with the National Director for Communications, Education and Quality, assesses investigative training needs and sets training objectives.
e. Operates a nationwide complaint center, including a hotline, to receive and process allegations of fraud, waste or abuse; supervises investigations of allegations against the IRS Executive Resources Board, members of the IRS Oversight Board, and officials who are appointed by the TIGTA; administers the Potentially Dangerous Taxpayer System; and gathers information regarding individuals or groups who advocate violence against the IRS.
f. Supervises the Deputy Assistant Inspector General for Investigations; the Director, Office of Investigations; the Director, Office of Policy and Oversight; the Director, Office of Training and Investigative Support; and an Executive Assistant.
7. THE REGIONAL INSPECTORS GENERAL FOR TAX ADMINISTRATION. The Regional Inspectors General for Tax Administration perform the following functions:
a. Provide executive level direction over regional audit and investigative staffs;
b. Supervise the regional information technology and administrative staffs; and
c. Direct local proactive activities of auditors and investigators to detect and deter fraud and abuse involving IRS personnel and activities.
d. There are four Regional Inspectors General for Tax Administration. The regional offices are located in the metropolitan areas of New York, NY; Atlanta, GA; Dallas, TX; and San Francisco, CA. These regional offices have the same geographical boundaries as the four IRS regions; OTIGTA personnel who are assigned to a Regional Inspectors General for Tax Administration are located at various locations within the region. (See Attachment II for chart of the OTIGTA field structure.)
(1) The Regional Inspector General for Audit is responsible for the execution of the audit program throughout the region. The audit program, which includes verification of financial transactions and analyses of IRS operating programs, policy and procedures, serves as the basis for informing appropriate officials of the manner in which operations are being carried out and responsibilities are being discharged, and recommending necessary changes in policies, practices and procedures.
(2) The Regional Inspector General for Investigations is responsible for the execution of the investigative program throughout the region. This program investigates allegations of fraud, abuse or misconduct by employees of the IRS and the Related Entities, and actions by individuals who attempt to threaten or corrupt these employees or impede tax administration. The investigative results are given to the Department of Justice, IRS management, or other authorities for appropriate criminal and administrative action.
8. AUTHORITY. Treasury Order 115-01, "Office of the Inspector General for Tax Administration"
9. EXPIRATION DATE. This Directive will expire three years from the date of issuance unless superseded or canceled prior to that date.
10. OFFICE OF PRIMARY INTEREST. Office of Treasury Inspector General for Tax Administration. ___________________________ III. Suit for damages for abuse or illegal collection activity
Civil damages for violations The following was adapted from text written by tax attorney Robert McKenzie, Chicago Illinois and appearing on his website. The IRS Restructuring & Reform Act of 1998 installed new protections for taxpayers' rights. Among these are strengthened rights to sue the IRS or an IRS employee for disregar of Tac Code or Treasury regulations, including fair debt collection practices. The act permits up to $100,000 in civil damages caused by an officer or employee of the IRS who negligently disregards provisions of the Code or Treasury regulations in connection with the collection of Federal tax with respect to the taxpayer. The damages are $1,000,000 if the disregard was wilful or reckless. Each award is further enhanced by the costs of the action. The taxpayer must exhaust administrative remedies. The Act also permits up to $1 million in civil damages caused by an officer or employee of the IRS who wilfully violates provisions of the Bankruptcy Code relating to automatic stays or discharges. These provisions are effective for actions of officers or employees of the IRS occurring after the date of enactment. [§3102]
Third-Parties May Recover Damages for Wrongful Seizures Under prior law a party other than taxpayer could only bring a wrongful levy action pursuant to IRC§7426(b) which did not provide the same statutory damages and relief as §7433. Therefore, the third-party who had his property wrongfully seized by the Internal Revenue Service had fewer remedies available than the taxpayer who was subject to reckless or intentional disregard of the Internal Revenue Code by an IRS employee. Under the new Act if in any third-party action against the IRS for wrongful levy there is a finding that any officer or employee of the IRS recklessly or intentionally or by reason of negligence disregarded any provision of the Internal Revenue Code, the IRS can be held liable for an amount equal to the lesser of one million dollars (one hundred thousand dollars in the case of negligence) less the sum of money due under IRC§7426(a)(1). A third party may receive actual, direct economic damages sustained as a proximate result of reckless, or intentional or negligent disregard of any provision of the IRC by an IRS officer, reduced by any amount of damages which would be awarded by IRC§7426(b), IRC§7426(h)(1)(A) and the cost of the action. The new action must be brought within two years of the occurrence as opposed to the nine months required by the IRC§7426. Therefore, a third-party who has failed to bring a third-party action pursuant to IRC§7426 may still have a cause of action pursuant to IRC§7433. The third-party must also have exhausted administrative remedies to qualify for damages. |
