Randolph Law Firm, P.C.

Billions in tax debt not properly pursued by the IRS

The Treasury Inspector General has published a federal report indicating that the IRS does not vigorously try to collect some tax debts nationwide, including here in Nevada. Instead, the agency closes out an account as "uncollectible" prior to having followed all of the required collection procedures. For some individuals who are being assiduously pressured by the IRS to satisfy their tax debt, the report may seem to be almost surreal.

The report identifies some $6.7 billion in taxes not collected. Before a tax is labeled as uncollectible, the agency is supposed to trace addresses, vehicles, and court records. The Treasury Inspector General's report says also that about 57 percent of tax debt accounts are not given the full search treatments required.

The report asserts that $1.9 billion could be collected if the IRS had followed all requirements for collection. The IRS indicates the $6.7 billion that went uncollected is because the IRS could not find the taxpayers. The report alleges that $53 million was called into question in situations where the required notices warning taxpayers of an impending lien were not being sent.

Despite the protestations of the IRS, the report of the Treasury Inspector General is a serious wake-up call. This is true at least for those who oversee the actions of the agency and for those who may be victims of equal protection violations. In other words, if some taxpayers are not pursued by the IRS and others are aggressively tracked and contacted, it raises equal protection and fairness issues asserted by the taxpayer who is aggressively pursued.

Could the IRS laxity in some collections of tax debt qualify some taxpayers for class action status against the agency for pressing them and not trying to collect from others? It may be difficult to justify class action status due to a seeming lack of uniformity in the claims. Nonetheless, those who are being aggressively dunned by the IRS here in Nevada and elsewhere may have a defense against the agency's attempts to confiscate their property while other accounts go uncollected in violation of the regulations.   

Source: Forbes, "IRS Flubs 57% Of Tax Collections, Says Audit Of IRS", Robert W. Wood, Sept. 29, 2014

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