TIGTA report - dangerous taxpayer representatives

[Famspear]

Highlights from a new report from the Treasury Inspector General for Tax Administration:

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Improvement Is Needed to Better Enable Frontline Employee Identification of Potentially
Dangerous and Caution Upon Contact Designations

March 20, 2014

Reference Number: 2014-40-020

Highlights

Final Report issued on March 20, 2014

Highlights of Reference Number: 2014-40-020 to the Internal Revenue Service Deputy Commissioner for Services and Enforcement.

IMPACT ON TAXPAYERS

The IRS has approximately 25,000 employees who have direct contact with taxpayers and their representatives (hereafter referred to as frontline employees). The safety of its employees is a top priority for the IRS. As such, the IRS has programs to help protect employees when interacting with individuals who are known to be violent, abusive, or pose some other type of danger. Examples include the Potentially Dangerous Taxpayer (PDT) and Caution Upon Contact (CAU) programs.


WHY TIGTA DID THE AUDIT

This audit was initiated in response to a Treasury Inspector General for Tax Administration Office of Investigations referral that identified paid tax return preparers who may pose a threat to IRS employees conducting official business. Frontline IRS employees can be exposed to many difficult, threatening, and dangerous situations. The overall objective of this review was to determine the adequacy of processes and procedures for employees who have direct contact with taxpayer representatives to identify those representatives who are designated as potentially dangerous or who need to be approached with caution upon contact.


WHAT TIGTA FOUND

The IRS has not developed sufficient procedures to enable frontline employees to readily identify whether a taxpayer representative has been designated as PDT or CAU. While a frontline employee can research an individual’s tax account for the PDT or CAU designation using the individual’s Social Security Number (SSN), the employee typically does not have a taxpayer representative’s SSN. The employee generally must search for the representative’s tax account using the representative’s name. Without the SSN, the employee is unable to definitively identify and examine the representative’s tax account for a PDT or CAU indicator.

As of August 29, 2013, the IRS designated 84 taxpayer representatives with a PDT or CAU indicator. Although this number is a small percentage of the 2.3 million representatives in the Centralized Authorization File, the safety of frontline employees, others working in the same facilities, and taxpayers is at risk when these employees unknowingly meet with potentially dangerous taxpayer representatives. IRS employees reported four incidents of physical assault by taxpayer representatives in Calendar Years 2010 through 2012. The IRS agreed that even one assault is one too many.


WHAT TIGTA RECOMMENDED

TIGTA recommended that the Deputy Commissioner for Services and Enforcement: 1) develop a process to enable frontline employees to readily access information that identifies whether a taxpayer representative has been designated as a PDT or CAU; and 2) ensure that internal guidance is updated with procedures to research taxpayer representative designations and that outreach and training is performed to ensure that frontline employees are knowledgeable of the revised process.

IRS management’s response to the report states that they believe their current procedures are appropriate to ensure the safety of employees. However, TIGTA remains concerned that frontline employees do not have a process to readily identify whether a taxpayer representative has been designated as PDT or CAU.

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What surprises me is that the CAF unit at the IRS has a record of 2.3 million representatives. Somehow, that figure seems high.

[ArthurWankspittle]

What surprises me is that the CAF unit at the IRS has a record of 2.3 million representatives. Somehow, that figure seems high.

Might it include people filing for incapable relatives and things like that?

[LaVidaRoja]

This may refer to taxpayer cases that have representatives. It is not the actual number of representatives. IIRC, generally, the representation is connected to the individual taxpayer represented. A single representative might hold 2848's on 50 or more clients. In this accounting, that would be 50 representations.

[notorial dissent]

So, probably a meaningless statistic?

[Famspear]

I don't know, but the vast majority of people who are registered as representatives in the CAF unit would be lawyers, CPAs, and enrolled agents.

I don't know how many CPAs and enrolled agents there are in the United States, but I believe there are only about 1.2 million lawyers in the entire country. The percentage of lawyers who practice federal tax to the extent of actually being on the CAF system would be very, very small in relation to that 1.2 million figure. So, the number of CPAs and enrolled agents that would have to be on CAF in order for the total to come to over 2 million would have to be just astonishing. Indeed, I don't think there would be enoughCPAs and enrolled agents in the entire world to make up that difference -- and a large chunk of CPAs don't even practice in the tax area.

I"m trying to find out how many CPAs there are nationwide right now, and I'll check on the enrolled agents as well.

[Famspear]

Apparently there are about 45,000 enrolled agents. The American Institute of CPAs shows just under 400,000 members, but I don't yet have a figure for total CPAs nationwide.

[notorial dissent]

OK. If you are actually talking about "enrolled agents" as a class, in the context I am familiar with, that number sounds reasonable. I would equally expect that the actual number of lawyers, accountants, and CPA's in that group to be fairly small both statistically and actually. If you consider that every tax preparer in the US is an enrolled agent then that number is reasonable, with the bulk of the number being made up of retirees, college students, part timers, people between jobs, and people doing it as a short term second job. Just consider the number of one shot wonders that the tax prep firms turn out each year to process returns, each one of those is an "enrolled agent". Now a better question, would be how many of them are still active after their first year, and of that number, how many actually are a real threat to IRS personnel?

[rogfulton]

OK. If you are actually talking about "enrolled agents" as a class, in the context I am familiar with, that number sounds reasonable. I would equally expect that the actual number of lawyers, accountants, and CPA's in that group to be fairly small both statistically and actually. If you consider that every tax preparer in the US is an enrolled agent then that number is reasonable, with the bulk of the number being made up of retirees, college students, part timers, people between jobs, and people doing it as a short term second job. Just consider the number of one shot wonders that the tax prep firms turn out each year to process returns, each one of those is an "enrolled agent". Now a better question, would be how many of them are still active after their first year, and of that number, how many actually are a real threat to IRS personnel?

Seasonal tax return preparers are not Enrolled Agents.

To become an Enrolled Agent requires passing several exams and involves CEUs every year. And it is not cheap. Well, cheaper than a law or accounting degree, but still, it is not something a 'one shot wonder' would usually consider shooting for based on the time they invest being a paid preparer.

[Duke2Earl]

In addition to what others have said, when I retired I had at least 3 CAF numbers for me... including a misspelling of my name and a bad address. And yes, I did inform them of the duplications but seemingly nothing was done. Further, I am no longer representing clients before the IRS but I bet my CAF numbers are still in the system so the 2.3 million number is basically wrong.

[notorial dissent]

My confusion, I was confusing two different things, and misremembering something said from several years ago.