IRS fails to pro­tect pri­vacy in prop­erty seizures

New black eye for agency

The Washington Times Weekly - - National - BY KELLAN HOW­ELL

The IRS has col­lected roughly $114 mil­lion in prof­its over the past four years from the sales of seized tax­payer as­sets, but failed in its obli­ga­tion to pro­tect those Amer­i­cans’ pri­vacy from po­ten­tial hack­ers and thieves, an in­ves­ti­ga­tion re­veals.

The Trea­sury in­spec­tor gen­eral for tax ad­min­is­tra­tion found that the agency’s prop­erty ap­praisal and liq­ui­da­tion spe­cial­ists failed to doc­u­ment per­sonal items found in seized ve­hi­cles and did not delete per­sonal in­for­ma­tion such as GPS and nav­i­ga­tion data or codes to garage door openers.

“If these sys­tems are not re­set to the orig­i­nal fac­tory set­tings, there is a risk that the third-party pur­chaser of the ve­hi­cle can gain ac­cess to the tax­payer’s per­sonal in­for­ma­tion or prop­erty. For ex­am­ple, the pur­chaser could use the ve­hi­cle nav­i­ga­tional equip­ment to lo­cate a tax­payer’s res­i­dence and then use the garage door opener to gain ac­cess to the home,” au­di­tors wrote in the re­port.

Although the as­set seizure cases sam­pled in the latest re­view were “prop­erly in­ven­to­ried, safe­guarded, and han­dled pro­fes­sion­ally,” a sim­i­lar au­dit two years ago found that 30 per­cent of IRS seizures of tax­payer prop­erty had not com­plied with the law.

Au­di­tors made sev­eral rec­om­men­da­tions to the IRS to bet­ter pro­tect taxpayers, in­clud­ing amend­ing IRS guide­lines to al­low tax­payer’s to re-en­ter seized ve­hi­cles to delete sen­si­tive per­sonal in­for­ma­tion from lo­ca­tion sys­tems and re­claim per­sonal items left in­side, a prac­tice that is pro­hib­ited.

In its re­sponse to the au­dit, the IRS said it would con­sider re­vis­ing its pro­ce­dures to al­low taxpayers to ei­ther re-en­ter the seized ve­hi­cle to re­set nav­i­ga­tion or garage door sys­tems or re­quest that, “at the tax­payer’s cost,” a trained third party en­ter the ve­hi­cle to clear the in­for­ma­tion.

Tax­payer ad­vo­cates say the num­bers and prac­tices re­vealed in the latest re­port re-em­pha­size the over­reach­ing power of the IRS, which watch­dogs have warned against for years.

“The level of cal­lous­ness dis­played by the IRS to­ward the per­sonal pri­vacy of those from whom they have seized as­sets is as­tound­ing,” said Richard Man­ning, pres­i­dent of Amer­i­cans for Lim­ited Gov­ern­ment. “First, they take their prop­erty, then rub salt in the wound by fail­ing to erase per­sonal in­for­ma­tion prior to re-sale with po­ten­tially dis­as­trous con­se­quences.”

When a tax­payer still owes out­stand­ing debts to the gov­ern­ment af­ter letters, tele­phone calls and per­sonal vis­its from IRS of­fi­cials, the agency will weigh the tax­payer’s abil­ity to pay a delin­quent bill and dis­cuss al­ter­na­tive pay­ment meth­ods such as in­stall­ment agree­ments or set­tle­ments. If the tax­payer still can­not make up the debt, the IRS has the au­thor­ity to take the tax­payer’s funds or prop­erty to pay the tax.

Such seizures and their ac­com­pa­ny­ing auc­tions brought in north of $22 mil­lion for the IRS in fis­cal year 2014, ac­cord­ing to the au­dit. That is down from nearly $31 mil­lion the pre­vi­ous year. The pro­ceeds are sup­posed to be ap­plied to taxpayers’ out­stand­ing tax li­a­bil­i­ties.

Un­til the IRS Restruc­tur­ing Re­form Act of 1998, rev­enue of­fi­cers were al­lowed to par­tic­i­pate in the sales of seized as­sets, which prompted taxpayers to file com­plaints that the IRS was over­ag­gres­sive in en­forc­ing tax law to en­rich its own rev­enue.

Thus, the IRS prop­erty ap­praisal and liq­ui­da­tion spe­cial­ists were brought in to over­see the sale of seized prop­erty and pro­tect taxpayers.

In its re­cent re­view, the au­di­tor at­tended six IRS auc­tions and re­viewed a sam­ple of 44 seizure cases. The au­dit found that the IRS agents worked ef­fi­ciently in selling off seized items.

But watch­dogs say the pol­icy omis­sions high­lighted in the re­cent re­port raise se­ri­ous con­cerns about how well taxpayers are be­ing pro­tected when their as­sets are seized.

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