IRS ignores approval guidelines, audits taxpayers anyway

Group managers at the Internal Revenue Service surveyed tax returns without approval according to a report from the inspector general. The report outlined a number of instances in which the IRS inexplicably surveyed tax returns, potentially jeopardizing the rights of 196 taxpayers:

IRS employees made decisions to survey tax returns with Abusive Tax Avoidance Transaction (ATAT) issues without proper approval. From a statistical sample of 311 surveyed tax returns, TIGTA determined that 246 required the Planning and Special Programs function to concur with the group manager’s decision to survey the tax return. However, group managers did not follow guidelines and surveyed 238 (97%) tax returns without approval from the Planning and Special Programs function. Additionally, in 88 instances, TIGTA could not determine why the tax returns were surveyed because justification was not included in the case files or did not support the decisions to survey the tax returns. TIGTA projected the IRS could have examined 840 additional tax returns and proposed additional tax assessments totaling $1.7 million over a five-year period. For 278 (89%) of the 311 surveyed tax returns, TIGTA found that IRS employees did not follow procedures when surveying tax returns with ATAT issues. TIGTA projected 196 taxpayers’ rights could have been jeopardized under § 7605(b) because the IRS surveyed tax returns after contacting taxpayers.

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