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GGD-78-42 1 (1978-07-31)

handle is hein.gao/gaobaaxud0001 and id is 1 raw text is: DOCUMENT RESCUE 06829 - (821471861 (Restricted) IRS Seizure of Taxpayer Property: Effective, but Not Uniformly Applied. GGD-78-42; a-137762. July 31, 1978. 84 pp. + 3 appendices (12 pp.). Report to Sen. Russell B. Long, Chairman, Joint Committee on Taxation; Rep. Al Ollman, Vice Chairsat; by Elmer B. Staats, Comptroller General. Issue Area: Tax Administration (2700); Tax Policy (1500). Contact: General Government Div. Budqet Function: General Government: Central Piscal Operations (803). orqanization Concerned: Department of the Treasury; Internal Revenue Service. Conqressional Relevance: Joint Committee on Tazation. Rep. A1 Ullman; Sen. Russell B. Long. Authority: Budget and Accounting Act of 192., as amended (31 U.S.C. 66a(a)). Tax Reform Act cf 1976. 26 U.S.C. 6331. Internal Revenue Code, sec. 7512. Intern.?l Revenue Code, sec. 7215. Internal Revenue Code, sec. 335. G.A. Leasing Corp. v. United States, 429 U.S. 3-8 (1977). The Internal Revenue Service (IRS) has broad authority under the law to levy upon or seize the property of those who neqlect or refuse, after notice and demand, to pay their taxes or to remit trust fund taxes. A review was conducted of IRS seizure cases closed in 1975. Findings/Conclusions: Seizure was used infrequently by IRS, and sale of seized property was even more infrequent, but seizure was an effective means of enforcing collection of delinquent taxes. IRS is required to establish a minimum price it will accept in the event that seized prcperty is declared purchased by IRS in crder to protect taxpayers' ownership interest. This is not alvfays done because the sinimum price cannot exceed taxpayers' lial-ility and the minimum price is often set too low. Setting minimum prices at a level so low that it is very unlikely that propErty mill have to be purchased for the Government bypasses the intent of the law. IRS cften undervalued seized property. Third-party interests were not always protected because IRS did not advise landlords that they may be entitled to rent payments for btoring seized Froperty on their premises, and purchasers did net always understand that property niqht be encumbered by lienholders. Seizure action varied among IRS districts in: the type of taxpayers seized aqainst, timeliness, taxpayers' awareness cf appeal rights, factors considered in seizure decisiens, and tte extent to which planned sales were advertised. In many instances of seizures, alternative collection actions should have been explored. Recommendations: The IRS should: require its revenue officers to notify taxpayers, sufficiently in advance cf the sale date, of what the minimum price is and of the possitility that the property could sell at that price; use professional appraisers

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