Tax Administration: IRS' Use of Enforcement Authorities to Collect
Delinquent Taxes (Testimony, 09/23/97, GAO/T-GGD-97-155).

GAO discussed: (1) the availability of information on the Internal
Revenue Service's (IRS) use of its enforcement authorities to collect
delinquent taxes; and (2) whether information existed that could be used
to determine whether collection enforcement authorities were properly
used.

GAO found that: (1) while IRS has some limited data about its use, and
misuse, of collection enforcement authorities, these data are not
sufficient to show: (a) the extent of the improper use of lien, levy, or
seizure authority; (b) the causes of improper actions; or (c) the
characteristics of taxpayers affected by improper actions; (2) 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;
(3) also, much of the data that are recorded on automated systems cannot
be aggregated without a significant investment of scarce programming
resources; (4) 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;
(5) 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; (6) IRS officials told GAO 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; and (7) however, IRS does not have the data that would permit
it or Congress to readily resolve resonable 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.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-97-155
     TITLE:  Tax Administration: IRS' Use of Enforcement Authorities to 
             Collect Delinquent Taxes
      DATE:  09/23/97
   SUBJECT:  Delinquent taxes
             Tax nonpayment
             Audit authority
             Collection procedures
             Government collections
             Taxpayers
             Tax administration systems
             Information systems
IDENTIFIER:  IRS Automated Collection System
             IRS Collection Appeals Program
             
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Cover
================================================================ COVER


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

GAO/GGD-97-155T


(268745)


Abbreviations
=============================================================== ABBREV


TAX ADMINISTRATION:  IRS' USE OF
ENFORCEMENT AUTHORITIES TO COLLECT
DELINQUENT TAXES
==================================================== Chapter STATEMENT

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 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. 


--------------------
\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. 


   USE OF LIENS, LEVIES, AND
   SEIZURES IN COLLECTING TAXES
-------------------------------------------------- Chapter STATEMENT:1

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 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. 


--------------------
\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. 

\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. 


   IRS HAS SOME LIMITED DATA ON
   THE USE AND MISUSE OF LIEN,
   LEVY, AND SEIZURE AUTHORITY
-------------------------------------------------- Chapter STATEMENT:2

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. 

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. 


--------------------
\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. 


   FURTHER ASSESSMENT OF EXTENT OR
   CAUSES OF MISUSE OF LIENS,
   LEVIES, AND SEIZURES IS LIMITED
   BY IRS' RECORD-KEEPING
   PRACTICES
-------------------------------------------------- Chapter STATEMENT:3

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
------------------------------------------------ Chapter STATEMENT:3.1

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 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
------------------------------------------------ Chapter STATEMENT:3.2

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
     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. 


--------------------
\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). 


      EXISTING RECORDS CANNOT
      ALWAYS BE RETRIEVED
------------------------------------------------ Chapter STATEMENT:3.3

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 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
-------------------------------------------------- Chapter STATEMENT:4

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

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. 


--------------------
\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). 


------------------------------------------------ Chapter STATEMENT:4.1

Mr.  Chairman, this concludes my prepared statement.  I would be
pleased to answer any questions you may have. 


FLOWCHART OF THE COLLECTION
PROCESS
=========================================================== Appendix I



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)


IRS COLLECTION ENFORCEMENT ACTIONS
========================================================== Appendix II

   Figure II.1:  IRS Levies,
   Fiscal Years 1993 Through 1996

   (See figure in printed
   edition.)

Source:  IRS data. 

   Figure II.2:  IRS Liens, Fiscal
   Years 1993 Through 1996

   (See figure in printed
   edition.)

Source:  IRS data. 

   Figure II.3:  IRS Seizures,
   Fiscal Years 1993 Through 1996

   (See figure in printed
   edition.)

Source:  IRS data. 


DISTRIBUTION OF SEIZURE CASES BY
TYPE OF ASSET SEIZED, FISCAL YEAR
1996
========================================================= Appendix III

                                                              Percent\
Type of asset                                                        a
------------------------------------------------------------  --------
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
----------------------------------------------------------------------
\a Percentages add to more than 100 because multiple types of assets
may be involved in a single seizure case. 

Source:  IRS data. 

*** End of document. ***