United States General Accounting Office

GAO Testimony

Before the Committee on Finance, U.S. Senate

For Release

on Delivery

Expected at

9:00 a.m. EDT

Tuesday,

September 23, 1997

TAX ADMINISTRATION

IRS’ Use of Enforcement

Authorities to Collect

Delinquent Taxes

Statement of Lynda D. Willis, Director, Tax Policy and

Administration Issues, General Government Division

GAO/T-GGD-97-155

Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

Mr. Chairman and Members of the Committee:

I appreciate being invited here today to discuss the availability of

information on the Internal Revenue Service’s (IRS) use of its enforcement

authorities to collect delinquent taxes. In general, if taxes remain unpaid

after IRS gives appropriate notice and demand for payment, IRS is

authorized by the Internal Revenue Code to seize the delinquent taxpayer’s

property either through direct action or through demand (referred to as a

notice of levy) made on third parties, such as banks or employers, to turn

over the taxpayer’s assets or earnings to IRS.1

 IRS is also authorized to file

liens against the delinquent taxpayer’s property.2

According to data IRS pulled together from various internal management

systems, in fiscal year 1996, IRS (1) filed about 750,000 liens against

taxpayer property, (2) issued about 3.2 million levies on taxpayer assets

held by third parties, and (3) completed about 10,000 seizures of taxpayer

property. These enforcement actions can have severe financial

consequences for taxpayers, and the potential exists for such actions to be

taken in error or improperly. Accordingly, you asked us to determine if

information existed that could be used to determine whether collection

enforcement authorities were properly used.

To determine whether information existed to evaluate IRS’ use of

collection enforcement authorities, we (1) asked IRS to provide us with

available basic statistics on its use, and misuse, of lien, levy, and seizure

authority from 1993 to 1996; (2) reviewed a small and subjectively selected

sample of seizure, revenue officer, appeals, and problem resolution case

files to identify the types of information that may be available from those

files; and (3) interviewed IRS employees involved in these areas to

determine how and when collection enforcement authorities were used,

the controls for preventing misuse of those authorities, and the results of

taxpayer complaints about the inappropriate use of the authorities.

In summary, while IRS has some limited data about its use, and misuse, of

collection enforcement authorities, these data are not sufficient to show

(1) the extent of the improper use of lien, levy, or seizure authority; (2) the

causes of the improper actions; or (3) the characteristics of taxpayers

1

Under the Internal Revenue Code, levy is defined as the seizure of a taxpayer’s assets to satisfy a tax

delinquency. IRS differentiates between the levy of assets in the possession of the taxpayer (referred

to as a seizure) and the levy of assets such as bank accounts and wages that are in the possession of

third parties such as banks and employers (referred to as a levy).

2

A lien is a legal claim that attaches to property to secure the payment of a debt. The filing of a lien

would prevent the taxpayer from selling an asset, with clear title, without payment of the tax debt.

Page 1 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

affected by improper actions. The lack of information exists because IRS’

systems—both manual and automated—have not been designed to capture

and report comprehensive information on the use and possible misuse of

collection authorities. Also, much of the data that are recorded on

automated systems cannot be aggregated without a significant investment

of scarce programming resources. Some information is available in manual

records, but—because collection enforcement actions can be taken by a

number of different IRS offices and records resulting from these actions

are not always linked to IRS’ automated information systems—this

information cannot be readily assembled to assess the use of enforcement

actions. Also, data are not readily available from other potential sources,

such as taxpayer complaints, because, in many circumstances, IRS does

not require that information on the resolution of the complaints be

recorded. IRS officials told us that collecting complete data on the use of

enforcement actions that would permit an assessment of the extent and

possible causes of misuse of these authorities is unnecessary because they

have adequate checks and balances in place to protect taxpayers.

However, IRS does not have the data that would permit it or Congress to

readily resolve reasonable questions about the extent to which IRS’

collections enforcement authorities are misused, the causes of those

occurrences, the characteristics of the affected taxpayers, or whether IRS’

checks and balances over the use of collection enforcement authorities

are working as intended.

Use of Liens, Levies,

and Seizures in

Collecting Taxes

The magnitude of IRS’ collection workload is staggering. As of the

beginning of fiscal year 1996, IRS reported that its inventory of unpaid tax

assessments totaled about $200 billion. Of this amount, IRS estimated that

about $46 billion had collection potential.3

 In addition, during the fiscal

year, an additional $59 billion in unpaid tax assessments were added to the

inventory.

To collect these delinquent tax debts, IRS has established a graduated

enforcement process. The process starts once IRS identifies taxpayers

3

The $46 billion figure is based on IRS’ analysis of a sample of unpaid tax assessments that, according

to IRS’ financial statements, consist of balances due where IRS has demonstrated the existence of a

receivable through information provided directly from the taxpayer or through actions by IRS that

support or validate IRS’ claim, such as securing a taxpayer’s agreement. Excluded from the receivables

are financial write-offs, allowance for doubtful accounts, and compliance assessments where the

taxpayer has not responded to validate the claim, i.e., there is not an established claim with the

taxpayer.

Page 2 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

who have not paid the amount due as determined by the tax assessment.4

In the first stage of the process, a series of notices are to be sent to the

taxpayer from one of IRS’ service centers. Collectively, these notices are

to provide the taxpayer with statutory notification of the tax liability, IRS’

intent to levy assets if necessary, and information on the taxpayer’s rights.

If the taxpayer fails to pay after being notified, the Internal Revenue Code

authorizes a federal tax lien to be filed to protect the government’s interest

over other creditors and purchasers of taxpayer property.

The second stage of IRS’ collection process involves attempts to collect

the taxes by making telephone contact with the taxpayer. IRS carries out

this stage through its Automated Collection System (ACS) program.

During this stage, IRS may levy taxpayer assets and file notices of federal

tax liens.

In the final stage of the collection process, information about the tax

delinquency is referred to IRS’ field offices for possible face-to-face

contact with the taxpayer. During this stage, IRS may also levy taxpayer

assets and file notices of federal tax liens. Additionally, as a final

collection action, taxpayer property, such as cars or real estate, may be

seized. Attachment I presents a flowchart that provides additional detail

about the collection process.

At any time in the collection process, IRS may find that a taxpayer cannot

pay what is owed or does not owe the tax IRS assessed. In such situations,

IRS may enter into an installment agreement with a taxpayer, compromise

for an amount less than the original tax assessment, suspend or terminate

the collection action, or abate an erroneous assessment. Also, if the

taxpayer is having a problem resolving a collection action with the

initiating IRS office, the taxpayer may go to IRS’ Taxpayer Advocate or to

IRS’ appeals program for resolution. If an enforcement action is taken that

involves a reckless or intentional disregard of taxpayer rights by an IRS

employee, a taxpayer may sue for damages. In the case of an erroneous

bank levy, a taxpayer may file a claim with IRS for reimbursement of bank

charges incurred because of the levy in addition to a refund of the

erroneously levied amount. If a taxpayer believes that enforced collection

would be a hardship, the taxpayer may request assistance from the

Taxpayer Advocate.

4

IRS tax assessments may result from a number of actions ranging from the self-assessment of taxes by

a taxpayer on a tax return filed voluntarily to an IRS assessment of a tax deficiency identified in an

audit.

Page 3 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

IRS Has Some Limited

Data on the Use and

Misuse of Lien, Levy,

and Seizure Authority

IRS produces management information reports that provide some basic

information on tax collections and the use of collection enforcement

authorities, including the number of liens, levies, and seizures filed and, in

the case of seizures, the tax delinquency that resulted in the seizure and

the tax proceeds achieved. Also, some offices within IRS collect

information on the misuse of these collection enforcement authorities, but

the information is not complete.

Overall, IRS’ management reports show that IRS’ collection program

collected about $29.8 billion during fiscal year 1996, mostly without taking

enforced collection action. In attempting to collect on delinquent

accounts, the reports show IRS filed about 750,000 liens against taxpayer

property, issued about 3.2 million levies on taxpayer assets held by third

parties, and completed about 10,000 seizures of taxpayer property.

Attachment II presents this overall information on IRS’ use of lien, levy,

and seizure authority during fiscal years 1993-96. Attachment III presents a

summary of the distribution of seizure cases by type of asset seized in

fiscal year 1996.

For the seizure cases completed in fiscal year 1996, the average tax

delinquency was about $233,700, and the average net proceeds from the

seizures was about $16,700. Although complete data were not available on

tax delinquencies and associated net proceeds for liens and levies, the best

information available from IRS indicates that about $2.1 billion of the

$29.8 billion was collected as a result of lien, levy, and seizure actions. The

remainder was collected as a result of contacts with taxpayers about their

tax delinquencies.

The best data that IRS has on the potential misuse of collection authorities

are from the Office of the Taxpayer Advocate.5

 However, those data alone

are not sufficient to determine the extent of misuse. The data show that

about 9,600 complaints involving allegations of inappropriate, improper, or

premature collection actions were closed by the Advocate in fiscal year

1996, as were 11,700 requests for relief from collection actions because of

hardship. Although the Advocate does not routinely collect data on the

resolution of taxpayer complaints, it does collect data on the resolution of

requests for relief. According to the Advocate, during fiscal year 1996, the

requests for relief resulted in the release—either full or partial—from

about 4,000 levy and seizure actions and 156 liens.

5

The Office of Taxpayer Advocate is responsible for helping taxpayers to resolve problems they may

be having with any of IRS’ various offices, including Collections.

Page 4 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

These Taxpayer Advocate data are not sufficient to determine the extent

to which IRS’ initial collection actions were appropriate or not for several

reasons. First, the release of a lien could result from a taxpayer

subsequently paying the tax liability or offering an alternative solution, or

because IRS placed the lien in error. Although the Taxpayer Advocate

maintains an information system that accommodates collecting the data to

identify whether IRS was the cause of the taxpayer’s problem, the

Advocate does not require that such information be reported by the IRS

employee working to resolve the case or be otherwise accumulated. Thus,

about 82 percent of the taxpayer complaints closed in fiscal year 1996 did

not specify this information. Of the remaining 18 percent, about 9 percent

specified that IRS’ collection action was in error either through taking an

erroneous action, providing misleading information to the taxpayer, or

taking premature enforcement action.

In addition, the Advocate’s data do not cover the potential universe of

cases in which a collection action is alleged to have been made

improperly. The Advocate requires each complaint that is covered by its

information system to be categorized by only one major code to identify

the issue or problem. If a complaint had more than one problem, it is

possible that a collection-related code could be superseded by another

code such as one covering lost or misapplied payments. Also, complaints

that are handled routinely by the various IRS offices would not be

included in the Advocate’s data because that office was not involved in the

matter. For example, appeals related to lien, levy, and seizure actions are

to be handled by the Collection Appeals Program (effective April 1, 1996).

For fiscal year 1996, the Appeals Program reported that of the 705

completed appeals of IRS’ enforced collection actions, it fully sustained

IRS actions on 483 cases, partially sustained IRS in 55 cases, did not

sustain IRS actions in 68 cases, and returned 99 cases to the initiating

office for further action because they were prematurely referred to the

Collection Appeals Program. According to IRS Appeals officials, a

determination that Appeals did not sustain an IRS enforcement action

does not necessarily mean that the action was inappropriate. If a taxpayer

offered an alternative payment method, the Appeals Officer may have

approved that offer—and thus not sustained the enforcement

action—even if the enforcement action was justified. In any event, the

Collection Appeals Program keeps no additional automated or summary

records on the resolution of appeals as they relate to the appropriateness

of lien, levy, or seizure action.

Page 5 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

Further Assessment

of Extent or Causes of

Misuse of Liens,

Levies, and Seizures Is

Limited by IRS’

Record-Keeping

Practices

IRS’ record-keeping practices limit both our and IRS’ ability to generate

data needed to determine the extent or causes of the misuse of lien, levy,

and seizure authority. Neither IRS’ major data systems—masterfiles and

supplementary systems—nor the summary records (manual or automated)

maintained by the IRS offices responsible for the various stages of the

collection process systematically record and track the issuance and

complete resolution of all collection enforcement actions, i.e., liens, levies,

and seizure actions. Moreover, the detailed records kept by these offices

do not always include data that would permit a determination about

whether an enforcement action was properly used. But, even if collection

records contained information relevant to the use of collection

enforcement actions, our experience has been that obstacles exist to

retrieving records needed for a systematic review.

Major Information Systems

Do Not Contain Data

Necessary to Assess

Enforcement Actions

IRS maintains selected information on all taxpayers, such as taxpayer

identification number; amount of tax liability by tax year; amount of taxes

paid by tax year; codes showing the event triggering the tax payment,

including liens, levies, and seizures; and taxpayer characteristics,

including earnings and employment status, on its Individual and Business

Masterfiles. Also, if certain changes occur to a taxpayer’s account, such as

correction of a processing error in a service center, IRS requires

information to be captured on the source of the error, that is, whether the

error originated with IRS or the taxpayer.

Although some related data are recorded in the Masterfiles, those data are

currently not readily accessible because IRS does not have retrieval

programs and IRS officials told us that developing such programs would

take considerable time because scarce programming resources are

unavailable due to higher priority information management systems work.

Moreover, the data that are recorded do not include some key aspects of

enforcement actions. For example, the Masterfiles do not contain

information on attempted levies—IRS’ most frequently used enforcement

authority. Also, IRS does not maintain automated information showing all

tax payments received as a result of lien or levy actions taken. While IRS

procedures provide for coding tax payments according to the event

triggering the payment (which could include liens, levies, and seizures),

IRS advised us that controls are not in place to ensure that the automated

data are complete, and, in a recent limited review, IRS found wide

discrepancies between the automated information and actual collections.

As a result of the lack of such key data, IRS cannot readily produce data

on the overall use or misuse of its collection enforcement authorities or on

Page 6 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

the characteristics of affected taxpayers. The lack of such data also

precludes us from identifying a sample of affected taxpayers to serve as a

basis for evaluating the use or misuse of collection actions.

Offices With Authority to

Initiate Liens, Levies, and

Seizures Do Not Keep

Summary Records Related

to Appropriateness of

Actions

As I noted earlier, the IRS tax collection process involves several steps,

which are carried out by different IRS offices that are often

organizationally dispersed. Since authorities exist to initiate some of the

collection actions at different steps in the process, several different offices

could initiate a lien, levy, or seizure to resolve a given tax assessment. In

addition, our examination of procedures and records at several of these

offices demonstrated that records may be incomplete or inaccurate. For

example, the starting point for a collection action is the identification of an

unpaid tax assessment. The assessment may originate from a number of

sources within IRS, such as the service center functions responsible for

the routine processing of tax returns; the district office, ACS, or service

center functions responsible for examining tax returns and identifying

nonfilers; or the service center functions responsible for

computer-matching of return information to identify underreporters.

These assessments may not always be accurate, and as reported in our

financial audits of IRS, cannot always be tracked back to supporting

documentation.6

 Since collection actions may stem from disputed

assessments, determining the appropriateness of IRS actions would be

problematic without an accurate tax assessment supported by

documentation.

Further, offices responsible for resolving taxpayer complaints do not

always maintain records on the resolution of those complaints that would

permit identification of instances of inappropriate use of collections

authorities. We found several examples of this lack of data during our

review.

• If a taxpayer complains about enforced collection actions (other than

allegations of criminal or serious administrative misconduct by specific

IRS employees), the complaint is to be handled initially by the office

responsible for the action. These offices do not routinely keep automated

or other summary records on the complaints or on the appropriateness of

lien, levy, or seizure actions taken. If this information is recorded, it would

be included in the affected taxpayer’s collection case file and, as I will

discuss later, systematically obtaining these files is impractical. Also, in

6

See Financial Audit: Examination of IRS’ Fiscal Year 1995 Financial Statements (GAO/AIMD-96-101,

July 11, 1996) and Financial Audit: Examination of IRS’ Fiscal Year 1994 Financial Statements

(GAO/AIMD-95-141, Aug. 4, 1995).

Page 7 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

cases involving ACS, where an automated system is used for recording

data, specific information about complaints may not be maintained

because the automated files have limited space for comments and

transactions.

• If a taxpayer complaint is not resolved by the responsible office, the

taxpayer may seek assistance from the Taxpayer Advocate. As noted

earlier, the Advocate has some information on complaints about the use of

collection enforcement authorities, but those data are incomplete. In

addition, starting in the last quarter of 1996, the Advocate was to receive

notification of the resolution of taxpayer complaints involving IRS

employee behavior (that is, complaints about IRS employees behaving

inappropriately in their treatment of taxpayers, such as rudeness,

overzealousness, discriminatory treatment, and the like.) These

notifications, however, do not indicate if the problem involved the

possible misuse of collection authority.

• If a taxpayer’s complaint involves IRS employee integrity issues, the

complaint should be referred to IRS’ Inspection Office. According to

Inspection, that office is responsible for investigating allegations of

criminal and serious administrative misconduct by specific IRS employees,

but it would not normally investigate whether the misconduct involved

inappropriate enforcement actions. In any event, Inspection does not keep

automated or summary records on the results of its investigations as they

relate to appropriateness of lien, levy, or seizure actions.

• Court cases are to be handled by the Chief Counsel’s General Litigation

Office. Internal Revenue Code sections 7432 and 7433 provide for

taxpayers to file a claim for damages when IRS (1) knowingly or

negligently fails to release a lien or (2) recklessly or intentionally

disregards any provision of law or regulation related to the collection of

federal tax, respectively. According to the Litigation Office, a total of 21

cases were filed under these provisions during 1995 and 1996. However,

the Litigation Office does not maintain information on case outcomes. The

Office has recently completed a study that covered court cases since 1995

involving damage claims in bankruptcy cases. As a part of that study, the

Office identified 16 cases in which IRS misapplied its levy authority during

taxpayer bankruptcy proceedings. IRS officials told us that the results of

this study led IRS to establish a Bankruptcy Working Group to make

recommendations to prevent such misapplication of levy authority.

Existing Records Cannot

Always Be Retrieved

Even if collection files included information relevant to an assessment of

the use of enforcement authorities, obstacles exist to the reconstruction of

records that would permit an assessment of the use or possible misuse of

Page 8 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

collection enforcement authorities. As we have learned from our prior

work, IRS cannot always locate files when needed. For example, locating

district office closed collection files once they have been sent to a Federal

Records Center is impractical because there is no list identifying file

contents associated with the shipments to the Records Centers. On a

number of past assignments, we used the strategy of requesting IRS

district offices to hold closed cases for a period of time, and then we

sampled files from those retained cases. However, the results of these

reviews could not be statistically projected to the universe of all closed

cases because we had no way to determine if the cases closed in the

relatively short period of time were typical of the cases closed over a

longer period of time.

IRS Officials Said That

Collecting Data to

Assess Enforcement

Actions Is Impractical

and Unnecessary

Because Taxpayers

Are Protected

Through Checks and

Balances

We discussed with IRS the feasibility of collecting additional information

for monitoring the extent to which IRS may have inappropriately used its

collection enforcement authorities, and the characteristics of taxpayers

who might be affected by such inappropriate actions. IRS officials noted

that, although IRS does not maintain specific case data on enforcement

actions, they believed that sufficient checks and balances (e.g.,

supervisory review of collection enforcement actions, collection appeals,

complaint handling, and taxpayer assistance) are in place to protect

taxpayers from inappropriate collection action. The development and

maintenance of additional case data are, according to IRS officials, not

practical without major information system enhancements. The IRS

officials further observed that, given the potential volume and complexity

of the data involved and the resources needed for data gathering and

analysis, they were unable to make a compelling case for compiling the

information.

We recognize that IRS faces resource constraints in developing its

management information systems and that IRS has internal controls, such

as supervisory review and appeals, that are intended to avoid or resolve

inappropriate use of collection authorities. We also recognize that the lack

of relevant information to assess IRS’ use of its collection enforcement

authorities is not, in itself, evidence that IRS lacks commitment to resolve

taxpayer collection problems after they occur. However, the limited data

available and our prior work indicate that, at least in some cases, these

controls may not work as effectively as intended.7

7

See Tax Administration: IRS Is Improving Its Controls for Ensuring That Taxpayers Are Treated

Properly (GAO/GGD-96-176, Aug. 30, 1996) and Tax Administration: IRS Can Strengthen Its Efforts to

See That Taxpayers Are Treated Properly (GAO/GGD-95-14, Oct. 26, 1994).

Page 9 GAO/T-GGD-97-155
Statement 

Tax Administration: IRS’ Use of

Enforcement Authorities to Collect

Delinquent Taxes

IRS is responsible for administering the nation’s voluntary tax system in a

fair and efficient manner. To do so, IRS oversees a staff of more than

100,000 employees who work at hundreds of locations in the United States

and foreign countries and who are vested, by Congress, with a broad set of

discretionary enforcement powers, including the ability to seize taxpayer

property to resolve unpaid taxes. Given the substantial authorities granted

to IRS to enforce tax collections, IRS and the other stakeholders in the

voluntary tax system—such as Congress and the taxpayers—should have

information to permit them to determine whether those authorities are

being used appropriately; whether IRS’ internal controls are working

effectively; and whether, if inappropriate uses of the authorities are

identified, the problems are isolated events or systemic problems. At this

time, IRS does not have the data that would permit it or Congress to

readily determine the extent to which IRS’ collections enforcement

authorities are misused, the causes of those occurrences, the

characteristics of the affected taxpayers, or whether the checks and

balances that IRS established over the use of collection enforcement

authorities are working as intended.

Mr. Chairman, this concludes my prepared statement. I would be pleased

to answer any questions you may have.

Page 10 GAO/T-GGD-97-155
Page 11 GAO/T-GGD-97-155
Appendix I 

Flowchart of the Collection Process

▲

▲

 Service Center Processing

▲

A.

 Does

taxpayer

agree with

amount

owed?

▲

Information

is researched.

▲

▲

B.

▲

C.

Cannot full pay.

IA,OIC, or CNC

considered.

Case closed.

Meets

Service Center

tolerance?

Field

Sent to

ACS

Case

processed.

IA,

OIC or CNC

approved?

▲

No

Yes

Yes

No

No

Yes

▲▲

No

Yes

No

D.

E.

▲

▲

(ACS Collection)

(Field Collection)

▲

Does

taxpayer

response require

IRS research to

proceed?

Yes

▲

▲

Does

taxpayer

owe?

▲

Taxes assessed but not paid. First collection notice sent.

Statutory lien arises.

▲

Case closed.

Yes

No

▲

Does

taxpayer

pay?

▲

Establish

IA, OIC or

CNC.

Page 12 GAO/T-GGD-97-155
Appendix I 

Flowchart of the Collection Process

▲

▲

▲

Other notices

or telephone

contact

attempted. Notices include

information on

taxpayer

rights.

▲

Taxpayer

pays?

▲

Notice of intent

to levy sent

certified

mail (statutory

requirement). Includes publication on

taxpayer rights.

Case closed.

▲

A.

B.

C.

D.

Does taxpaper

have other

delinquencies or

otherwise meet

criteria to

go to ACS or

field?

D.

▲

E.

▲

No

Yes

Yes

Yes

No

No

Meets

criteria

for ACS?

Case closed.

▲

▲

Yes

No

(ACS Collection)

(Field Collection)

▲

(ACS Collection)

(Field Collection) E.

(ACS Collection)

(Field Collection)

Does

taxpayer

response

require IRS

research to

proceed?

▲

▲

Does

taxpayer

pay?

▲

Yes

No

▲

▲

Page 13 GAO/T-GGD-97-155
Appendix I 

Flowchart of the Collection Process

▲

E.

▲

E.

(Field Collection)

(Field Collection)

(Field Collection)

D.

Issue levies if new

sources found.

Automated Collection System

▲

▲

▲

Research to

find levy

sources.

▲

Are levy

sources

found?

Is levy

information

available?

No

Yes Yes

No

No

▲

▲

Yes

Was final

notice sent?

Issue

levies.

▲

Does

taxpayer

or levy

source

pay?

▲

▲

▲

Attempt phone

contact.

Establish IA or OIC if taxpayer

cannot full pay, if taxpayer cannot

pay at all, then CNC.

File lien, if appropriate.

Does

taxpayer

response

require IRS

research

to proceed?

No

Does

taxpayer

owe?

Does

taxpayer

pay?

No

Case

Closed.

Yes

▲

▲

▲

▲

▲

No

▲

▲ ▲

Yes

Yes

Does

taxpayer

pay?

No

▲

Yes

Send final

notice.

▲

▲

▲

No

Yes

No

Does

taxpayer

pay?

Yes

▲

Page 14 GAO/T-GGD-97-155
Appendix I 

Flowchart of the Collection Process

Does

taxpayer

pay?

Does

taxpayer

pay?

Case

Closed.

No

Attempt

taxpayer

contact.

Obtain/analyze

taxpayer financial

information.

Can

taxpayer

pay

something?

Establish CNC. File

lien, if appropriate.

Can

taxpayer

pay in

full?

Establish IA or OIC.

File lien, if appropriate.

Enforce collection. Issue levies if

sources available.

Are taxes

fully paid? Seize assets.

No

No

▲

▲

▲

▲

▲

▲

▲

▲

E. ▲

Does

taxpayer

owe?

Yes

▲

Yes Are taxes

fully paid?

No

Yes

No

Yes

No

▲

▲

Field Collection

Yes

▲

▲

No

▲

Continue enforced

actions until paid or case

otherwise closed.

Note: This is a summary level overview of IRS' process for collecting unpaid tax assessments. Some processing steps are not shown in detail. For instance,

a case may be diverted to problem resolution or the collection appeals program. In unusual cases, for example very large delinquencies, IRS may bypass

certain steps. Also, during any part of the collection process, IRS may file a lien if it is determined appropriate.

Source: GAO analysis of IRS procedures.

Yes

▲ ▲ ▲

Page 15 GAO/T-GGD-97-155
Appendix II 

IRS Collection Enforcement Actions

Figure II.1: IRS Levies, Fiscal Years

1993 Through 1996

1993 1994 1995 1996

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Automated call site

Collection field function

Number of IRS levies issued nationwide

Source: IRS data.

Page 16 GAO/T-GGD-97-155
Appendix II 

IRS Collection Enforcement Actions

Figure II.2: IRS Liens, Fiscal Years

1993 Through 1996

1993 1994 1995 1996

0

200,000

400,000

600,000

800,000

1,000,000

Filed

Released

Number of IRS liens nationwide

Source: IRS data.

Page 17 GAO/T-GGD-97-155
Appendix II 

IRS Collection Enforcement Actions

Figure II.3: IRS Seizures, Fiscal Years

1993 Through 1996

1993 1994 1995 1996

0

2,000

4,000

6,000

8,000

10,000

12,000

Number of IRS seizures nationwide

Source: IRS data.

Page 18 GAO/T-GGD-97-155
Appendix III 

Distribution of Seizure Cases by Type of

Asset Seized, Fiscal Year 1996

Type of asset Percenta

Personal residence 10.4

Other real property 26.0

Vehicles 31.2

Licenses 3.7

Cash register contents 7.4

Office equipment/furniture 7.5

Machinery 8.0

Inventory 6.0

Safe deposit boxes 1.4

Other business property 7.1

Other personal property 6.6

aPercentages add to more than 100 because multiple types of assets may be involved in a single

seizure case.

Source: IRS data.

(268745) Page 19 GAO/T-GGD-97-155
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