The Treasury Inspector General for Tax Administration (“TIGTA”) released its report, “The Estate Tax Collection Process Has Improved, but Opportunities Exist to Better Ensure Taxpayers Are Treated Equitably” (Sept. 24, 2007), Reference Number 2007-30-174.
In its report, TIGTA noted that it had some concerns about the IRS estate tax collection process. Specifically, IRS processes are generally designed for a maximum 10-year payment period. For example, under IRC § 6166, qualifying estates may elect to pay their estate tax liability over 14 years, which exceeds the 10-year period during which the general Federal estate tax lien attaches estate assets. TIGTA found that the IRS is not consistently securing and recording IRC § 6324A special extended tax liens on estate tax cases to secure the Federal Government's interest after the 10-year general estate tax lien expires. Therefore, additional processes and controls for the 4-year period that extends beyond the 10-year general estate tax lien period are required.
There are two specific activities requiring improvements, according to the TIGTA Report. First, special lien monitoring controls require enhancements to ensure the Federal Government's interest is protected for estate tax cases in which installment payment periods extend past the normal 10-year general estate tax lien period. Second, requests for payment extension cases may be evaluated more effectively by the technical experts in the Collection Advisory Office than by the less technical Cincinnati Campus Compliance Operations staff, according to the TIGTA report. These payment extension requests should be reassessed to determine whether the cases are being worked by employees with proper technical expertise. According to the report, the current process allows similarly situated taxpayers to be treated differently. In addition, from a customer service perspective, estate taxpayers are not being provided proper follow-up when their requests for a payment extension have been granted. This can cause unnecessary taxpayer burden because the taxpayer may have to contact the IRS to determine whether the extension was granted.
For the full report, see “The Estate Tax Collection Process Has Improved, but Opportunities Exist to Better Ensure Taxpayers Are Treated Equitably” (Sept. 24, 2007), Reference Number 2007-30-174.
Posted by Lewis J. Saret, General Editor, Wealth Strategies Journal.
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