TIGTA on Currently Not Collectable Cases

The Treasury Inspector General for Tax Administration (TIGTA) has released a new report highlighting problems with inappropriate case closings for taxpayers seeking “currently not collectable” status.

Sometimes, taxpayer really can’t pay their tax debt. These are people with income that barely covers their modest living expenses. Their case could be classified as “currently not collectable.” In order to qualify, the taxpayer has to submit a financial statement to the IRS to document their income and expenses. Once they have “uncollectable” status, collections are suspended.  However, the case is reviewed every few years to insure that the taxpayer’s status hasn’t changed to where they could now pay on some of their debt.

In this new study, TIGTA found problems with closed “currently not collectable” cases that were handled in the IRS’s walk-in Taxpayer Assistance Offices. There were 2 studies. One was a judgmental sample of 17 cases and the other was a statistically valid sample of 132 cases. Problems these studies found indicated that in some cases there were no financial statements completed or case notes were missing, in other cases the closing code was incorrect, finally there were cases closed without supervisor approval. Because of incomplete information, TIGTA was unable to determine if the cases had been closed correctly.

The IRS agrees with TIGTA’s recommendations to insure that current rules be followed and to create internal controls to check the closing codes.

Thanks to Accounting Today.

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