Neal, Lewis Probe TIGTA on Balance Due Notices

INSPECTOR GENERAL FOR TAX ADMINISTRATION AGREES WITH NEAL, LEWIS'S CONCERNS OVER IRS MAILING BALANCE DUE NOTICES

In response to letters the lawmakers wrote on June 11 and June 25, 2020, TIGTA expressed its concerns with IRS's decision to mail balance due notices

Jul 1, 2020

WASHINGTON, DC — House Ways and Means Chairman Richard E. Neal (D-MA) and Oversight Subcommittee Chairman John Lewis (D-GA) received a response (https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/Response%20to%20Ways%20and%20Means%20Collection%20Letter-FINAL%20063020.pdf ) from the Treasury Inspector General for Tax Administration (TIGTA) regarding the balance due notices that the Internal Revenue Service (IRS) recently mailed to taxpayers. The letter responds to the Chairmen's reiteration of their concerns with the IRS's decision to begin mailing previously printed balance due notices with incorrect due dates  as the agency's on-site operations reopen. In a previous letter sent on June 11, 2020, Chairman Neal and Subcommittee Chairman Lewis urged the IRS (https://waysandmeans.house.gov/media-center/press-releases/neal-lewis-urge-irs-consider-relief-taxpayers-receiving-outdated-balance) to grant relief to taxpayers who find themselves unprepared for these balance due notices. On June 25, 2020, the lawmakers followed up (https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2020.06.25 WM TIGTA Balance Due Notices.pdf) with TIGTA upon learning that the IRS issued hundreds of thousands
of notices for taxes that are not yet due.

In the June 25 letter to TIGTA, the lawmakers wrote: “It is our understanding that these notices were printed prior to the COVID-19 pandemic and mailed to approximately 1.5 million taxpayers, including to 500,000 taxpayers with unpaid 2019 balances that are not yet due . . . In particular, we were concerned that the errata sheet inserted with the notices contained two separate due dates for payments, which would likely cause needless confusion for taxpayers. Our concern now is heightened since learning that nearly one-third of the taxpayers receiving these 'delinquency notices' do not owe tax until the extended payment due date, which is July 15. Thus, it seems that notices were mailed to these taxpayers before the tax due date.”

The chairmen requested answers to the following questions by June 30, 2020 and received the following excerpted responses:

• Does TIGTA have any concerns with respect to the validity of, and decision to issue, the balance due notices?

  • “Yes, we do have concerns with the notices. As you note in your correspondence, the IRS sent approximately 1.5 million taxpayers a collection notice demanding payment with an insert advising taxpayers to disregard the demand for payment. We agree that this would likely confuse taxpayers who received the notice.”

• How many balance due notices were printed prior to the pandemic, and how many were mailed? Please separately provide the number of notices related to the 2019 tax year.

  • “IRS management indicated to us that 1.5 million notices were printed and all of the notices were mailed. Initially, they stated that of this total number, approximately 750,000 were sent to 2019 filers; however, the IRS subsequently amended the number to approximately 300,000.

    "TIGTA plans to initiate an audit so that we can provide a more complete assessment of the number of taxpayers who were impacted by the IRS's decisions.”

• Who reviewed and approved the issuance of these notices? We understand that the Office of Servicewide Penalties may have been involved in the decision to mail these notices, and we would like more information about this office and its role in this decision.

  • “The IRS has informed us that the Office of Servicewide Penalties, in consultation with the IRS Chief Counsel's office and other IRS functions, reviewed and approved the issuance of these notices. The Office of Servicewide Penalties is under the management of the Small Business/Self-Employed Division, and its stated purpose is to promote fair, consistent and accurate application and use of civil penalties in order to encourage voluntary compliance through penalty policy guidance and support.

    "As indicated above, we plan to initiate an audit to further evaluate the decisions made related to communications and compliance actions during and after the period when enforcement actions were suspended due to the pandemic.”

The full June 25 letter can be accessed HERE
(https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2020.06.25 WM TIGTA Balance Due Notices.pdf).

TIGTA’s response can be found HERE (https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/Response%20to%20Ways%20and%20Means FINAL%20063020.pdf).

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June 25, 2020

The Honorable J. Russell George
Inspector General
Treasury Inspector General for Tax Administration
U.S. Department of the Treasury
1401 H Street, N.W., Suite 469
Washington, D.C. 20005

Dear Inspector General George,

We write to request information about the recent decision by the Internal Revenue Service (IRS) to mail balance due notices to taxpayers when IRS operations resumed. It is our understanding that the agency printed these notices prior to the COVID-19 pandemic and recently mailed them to approximately 1.5 million taxpayers, including to 500,000 taxpayers with unpaid 2019 balances that are not yet due.

On June 11, 2020, we wrote IRS Commissioner Rettig to express our concerns about the notices. In particular, we were concerned that the errata sheet inserted with the notices contained two separate due dates for payments, which would likely cause needless confusion for taxpayers. Our concern now is heightened since learning that nearly one-third of the taxpayers receiving these “delinquency notices” do not owe tax until the extended payment due date, which is July 15^th. Thus, it seems that notices were mailed to these taxpayers before the tax due date.

Consequently, we ask that the Treasury Inspector General for Tax Administration (TIGTA) provide us with information regarding the IRS's issuance of these balance due notices, including the answers to the following questions:

We respectfully request a response by June 30, 2020. Thank you for your prompt attention to this matter.

Sincerely,

Richard E. Neal
Chairman
Committee on Ways & Means
United States House of Representatives

The Honorable John Lewis, Chairman
Subcommittee on Oversight