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Oversight report shows IRS failing in PPIA review duty

The Internal Revenue Service has a lot of enforcement power over government money and taxpayers as well in Minnesota and all other 50 states. The agency is essentially the biggest "collector" in the country, which is why the agency surely needs a little oversight.

The U.S. Treasury Inspector General for Tax Administration is a government organization created to ensure that the IRS is carrying out internal revenue laws not only effectively, but efficiently as well. According to TIGTA, the IRS is failing to do its job when it comes to partial payment installment agreements with taxpayers with a tax liability.

A partial payment installment agreement is one option available to taxpayers who are under a large tax burden that they simply cannot pay in full. The process requires an initial financial analysis of the taxpayer's situation as well as an automated review every two years.

Should the IRS find in an automated review that the taxpayer's financial situation has changed, the IRS will conduct a manual review to determine if an adjustment to the PPIA should be made.

TIGTA claims that the IRS has failed to keep up with the review process. According to the group's recently published report, approximately 10 percent of the automated reviews never occurred and another 52 percent of the required manual reviews were either insufficient or not completed at all.

Not only were the reviews an issue, but the initial complete financial analysis proved problematic as well. The report stated that a large number of PPIAs were established based on either an improperly performed analysis or again, without one at all.

Issues with the initial financial analysis and failure to follow up may not seem like a problem for the taxpayer, but it can be. An improper analysis or lack of one could mean an installment agreement the taxpayer can't really afford and penalties later.

A tax attorney will work with the IRS on behalf of the taxpayer to ensure that an installment agreement falls in line with the financial interests of the taxpayer -- not just the IRS.

Source: Accounting Today, "IRS Needs Better Controls over Partial Payment Agreements," Michael Cohn, June 12, 2013

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