IRS employees may have violated policies and procedures governing the direct contact of represented taxpayers,  the Treasury Inspector General for Tax Administration (TIGTA) found. TIGTA also found that the agency has yet to develop a system to identify employee violations of the direct contact provisions.

Under the relevant sections of the Internal Revenue Code (IRC), taxpayers have a right to representation during interviews with the IRS. Their rights to representation are protected by prohibiting IRS contact of a taxpayer if the agency knows that the taxpayer has representation.

Focusing on direct contact violations related to the Small Business/Self-Employed (SB/SE) Division’s Field Collection employees, the TIGTA review 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 Oct. 1, 2021, and June 30, 2022. It 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. It found 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. Of those, 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. That led TIGTA to conclude 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.”

TIGTA recommended that the IRS do the following:

(1) ensure that group managers discuss the potential violations identified during the review 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.

"We are committed to protecting taxpayer rights and work hard to ensure our employees are aware of and protect those rights through guidance, training and regular reviews of their work," Lia Colbert, commissioner of the IRS's Small Business/Self-Employed Division, wrote in response to TIGTA's findings  Accounting Today reported. "Nonetheless, we agree that further steps can be taken to continue improvement of taxpayer rights. As the IRS hires new employees, we will continue to focus on providing appropriate training to educate employees on protection of taxpayer's rights to representation. The findings in this audit reinforce the importance of such training."