The Treasury Inspector General for Tax Administration found the IRS could close its Federal Employee/ Retiree Delinquency Initiative (FERDI) cases much faster if it includes more payment types in its Federal Payment Levy Program and switches from manually processing cases to the Automated Collection System found in the IRS’ other collection programs.
The audit said most FERDI cases close successfully with full repayments or installment agreements for back taxes, but noted speed could help more efficiently collect the $3.54 billion owed for fiscal year 2014 from the 304,665 current and former feds that need to pay.
TIGTA ran the audit because it was concerned by the number of delinquent feds and retirees increasing by approximately 14 percent since 2010. It also stemmed from the amount owed to the IRS from FERDI cases increasing by an additional $119 million in the same amount of time.
Aside from certain payment types excluded from FPLP collections such as “bankruptcy or military service men and women in combat zones,” TIGTA said the IRS could expand its reach by including payment types that don’t fall under “a legal or articulated policy basis” including military retirement payments.
TIGTA noted that including more payment types under FPLP could increase FERDI revenue by approximately $18.3 million over the next five years.
According to TIGTA, moving FERDI cases to automated collection with ACS’s systemic levy process “could result in potential benefits such as faster case resolutions and smaller manual inventory sizes” if FPLP levy attempts fail or don’t pay the full amount owed.
IRS officials agreed with the recommendation to expand language for the types of payments FPLP can use in collections, but said switching to ACS systemic levies was unnecessary because the “majority of manually worked FERDI cases will be included in the FPLP after the programming changes.”
TIGTA credits the IRS in the audit by noting federal employee and retiree delinquency rates were at a five-year low from 2010 to 2014 at a 3.1 percent average. TIGTA said outreach efforts to delinquent current and former feds, requiring them to be tax compliant as a condition of employment and prohibiting FERDI accounts from going to the IRS’s Collection Queue — where they could get lost in the shuffle — helped its overall success.