Improvements to the Nonfiler Program Could Help the Internal Revenue Service More Effectively Address Additional Nonfilers Owing Billions of Dollars in Taxes

The Small Business/Self-Employed Division's Director, Collection Inventory Delivery and Selection, should work with the Director, Corporate Data in Information Technology Applications Development to develop and implement additional controls and procedures, such as defining expected record counts and documenting results, to ensure that programming revisions are adequately implemented and effective to properly identify delinquent taxpayers with and without extensions of time to file. In addition, ensure that identified anomalies are researched until resolved and that the details regarding the anomalies and the actions taken to resolve them are documented.

The Small Business/Self-Employed Division's Director, Collection Inventory Delivery and Selection, should implement additional controls over NIA group reviews of current year CCNIP counts compared to prior year counts, including managerial review of the results of the comparison and mandatory documentation of the review and approval of all variances over an established threshold.

The Small Business/Self-Employed Division's Director, Collection Inventory Delivery and Selection, should determine and document which nonfiler cases are high-priority cases, including High-Income Nonfiler (HINF) with and without expired extensions, that must be identified and addressed during the CCNIP in any given year. In fiscal years with considerable resource constraints, ensure that HINF cases with expired extensions are addressed in the same manner as HINF cases without expired extensions and that such cases are appropriately considered and allocated resources.

The Small Business/Self-Employed Division's Director, Collection Inventory Delivery and Selection, should analyze the population of TY 2013 High-Income Nonfilers (HINF) with expired extensions identified as not having filed a tax return and notify those taxpayers of the requirement to file the TY 2013 tax return. If resources do not allow for the notification of the entire population, document the analysis performed to determine the percentage of number of TY 2013 HINFs with expired extensions should be notified.

The Small Business/Self-Employed Division's Director, Collection Inventory Delivery and Selection, should develop a strategy for evaluating and improving the effectiveness of the delinquency notice, which may include tracking the reasons for taxpayer inquiries at IRS call sites.