GAO Reports  
GAO/GGD-00-5 November 29, 1999

IRS Seizures: Limited Progress in Eliminating
Asset Management Control Weaknesses

Pursuant to a congressional request, GAO provided information on the Internal Revenue Service's (IRS) progress in eliminating asset management control weaknesses, focusing on: (1) the implementation of the IRS Restructuring and Reform Act's mandate to remove revenue officers from the asset sale function; and (2) other internal control weaknesses identified in GAO's 1992 testimony.

GAO noted that: (1) as of October 1999, IRS had not finalized its plans for removing revenue officers from its process for selling seized assets; (2) after the passage of the Restructuring Act, IRS organized a study group to consider establishing a specialist position for both managing and disposing of assets after they were seized by revenue officers; (3) the group has been meeting and is considering the scope of the new position; (4) however, the scope of the position, including the extent to which private sector contractors may be used to manage and sell seized property, a position description, or procedures for governing the specialists' actions, has not been finalized; (5) GAO's review of a representative sample of 1997 nationwide seizure cases, selected as part of GAO's overall review of weaknesses in IRS' seizure processes, showed that the fundamental internal control weaknesses GAO identified in 1992 remained; (6) more specifically, GAO's review of case files showed the following: (a) similar to 1992, sufficiently complete information to establish accountability over assets was not always recorded by revenue officers when assets were seized; (b) as in 1992, IRS' security arrangements for seized assets were, in some instances, minimal or nonexistent; (c) similar to 1992, IRS' sale practices provided little assurance that the maximum possible sales proceeds were achieved; and (d) although installed after 1992, IRS' automated seizure information system still did not provide IRS management with information useful for establishing accountability over seized assets or monitoring the management and sales of the assets; and (7) regardless of the results of IRS' decisions on contracting out all or part of the asset management and sales function, IRS will remain responsible for assuring that assets are appropriately managed and sold.

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