Will IRS Lighten up on Structuring?

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By law, you must report to the IRS bank transactions of $10,000 or more.  It is one government tool for curbing white collar crimes.  Manipulating deposits so that they come just under the reporting requirement is called “structuring,” and it is illegal.  The IRS can seize bank accounts without notice to the account holder when structuring is suspected, and they have done so freely in the past, even if the money is obtained legally.

It is obvious to Commissioner Koskinen that this policy is way too harsh.  Today the commissioner apologized to taxpayers who have not been treated fairly “under the code.”  I don’t know how to take this apology.  It seems a little half-hearted to me.  It’s like saying, “we are sorry for seizing the accounts of law-abiding citizens, but we were only doing what we are permitted to do under the code.”  And it’s not necessarily a win for taxpayers until some changes are made to the code.  Semantics aside, it looks like a step in the right direction.

IRS Collecting Less Revenue "By Force" . . . For Now

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According to the latest TIGTA report, enforcement revenue is down at the IRS.  Enforcement revenue is the money collected through enforced collection activities rather than through voluntary compliance.  Enforcement revenue is down because the IRS has decreased the overall number of enforced collection actions (i.e., lien, wage garnishment, bank levy, property seizure).  The number of enforced collection actions is down because the number of IRS enforcement personnel is down.  And the number of enforcement personnel is down because the funding that the IRS used to receive for these positions is down as well.  According to TIGTA:

The 13 percent reduction in enforcement revenue correlates to the 14 percent reduction in the number of enforcement personnel … since Fiscal Year 2010, approximately 8,000 full-time IRS positions have been lost—about 5,000 from front-line enforcement personnel.

But who are considered enforcement personnel?  Auditors?  Revenue Officers?  Call center personnel?  All of the above?  One news source suggests that these 5,000 lost “enforcement” positions are auditor positions, but I would take it to mean something broader than that.  The TIGTA report does not specify.  I think it matters, because 5,000 lost auditor or revenue officer positions is rather significant, and could realistically be responsible for the 13 percent drop in enforcement income.  However, 5,000 fewer Automated Collection Department phone operators would result in extended hold times, but probably not a drastic drop in enforcement revenue.

Maybe 13 percent is not enough to make an appreciable difference from the perspective of a tax practitioner.  The IRS is supposedly issuing fewer liens and levies, but I sure haven’t seen this to be the case.  And it is certainly not something we can count on continuing for too long.