IRS Asset Seizure: Compliance Increase Up To A “Solid C+”

Last year, the IRS was found to be in compliance of its own IRS asset seizure regulations 56% of the time .


Now, according to the the Treasury Inspector General's June 29, 2012 report, the IRS has "drastically improved". The IRS Asset Seizure rules are now followed 78% of the time, with a mere 11 out of 50  sampled seizure procedures found to be non-compliant.


These were the IRS asset seizure violations the Inspector General Found:
  • The sale of the seized property was not properly advertised (violation of I.R.C. § 6335(b))
  • The amount of the liability for which the seizure was made was not correct on the notice of seizure provided to the taxpayer.  (violation of I.R.C. § 6335(a))
  • Proceeds resulting from the seizure were not properly applied to the taxpayer’s account.  (violation of I.R.C. § 6342(a))
  • Information relating to the sale of the seized property was either incorrect or not provided to the taxpayer.  (violation of I.R.C. § 6340(c))


It is unknown if these mistake were 'harmless error' and irrelevant to the outcome.


This is not to say there hasn't been improvements with collection actions, namely through the IRS Office of Appeals. There certainly have been. But we still find cases and situations where the IRS is clearly doing something wrong and there is no meaningful way to challenge many inappropriate collection actions of the IRS.


Here are a few examples I can think of:

  • An unlawful forced withdrawal of an offer in compromise. There is NO review for this, aside from pleading with a group and/or a territory managers, which sometimes can be successful.
  • Unlawful taxpayer contact. Sure, a taxpayer, could file a suit in district court. But the damage awards are so slight that no attorney can take such cases on a contingency basis. And taxpayers typically don't have the resources to pay an attorney out of pocket to bring such a case.
  • Actions taken by collections that are contrary of their previous communicated intentions which the taxpayer relied upon to their detriment.


Sure, there is the collection due process hearing option, but what happens when a taxpayers defaults on a negotiation they previously made in such a hearing? Should they lose all procedural due process rights for not being able to pay back a negotiated settlement?


There is even the Collection Appeal Program (CAP), but the standard of review is very favorable to the IRS.