Anticipate Stronger IRS Trust Fund Penalty Activity

Recently, in report number 2014-30-034, the office of TIGTA reported on an audit that it conducted in which it determined that the IRS was not acting timely on trust fund recovery penalty actions. In particular, TIGTA found untimely actions relating to trust fund recovery procedures including expired assessment statutes, unsupported collection determinations, and incomplete trust fund recovery penalty investigations associated with currently non-collectable cases. According to this study, the actions were either untimely or inadequate in 99 out of 265 cases that were viewed in a statistical sampling. For fifty-nine of these 99 cases, untimely actions were more than 500 days to review and process the trust fund penalty assessment. The report went on that when these assessments are not timely made, the taxpayer’s ability to pay declines, thereby decreasing the probability of collecting the trust fund taxes. In addition, the report states that the government’s interests is not protected if these assessments are overlooked or not timely made. As a result, TIGTA recommended that the IRS emphasize to group managers their responsibilities to better monitor these cases and to insure that revenue officers take timely actions, enhancing communication, and training, and insuring timely completion and adequacy of the systems to take appropriate actions, and to revise the guidance regarding the accuracy of collection determination. In response to the report, IRS officials agreed with all of these recommendations and plan to take compliant action. Therefore, you can anticipate more frequent and more difficult interactions with revenue officers who are now under the gun to see to it that trust fund penalty determinations are finished sooner and are more detailed and accurate.