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TREASURY INSPECTOR GENERAL PRESENTS IRS WITH CLUE

April 22, 2004

One function of the the Treasury Inspector General for Tax Administration apparently is to be a source of clues for the clueless.

TIGTA this week released a report on the IRS's "Lead Development Center," or "LDC", an office set up as a central bureau to identify abusive tax shelter promotors and monitor efforts to shut them down.

The report says the LDC effectively tracks promoter leads that it identifies, but that it neglects one important tool of promoter identification:

   Our review showed the LDC is not
   performing Internet research,
   independent of referred leads, to
   identify promoters.     

Why not? Well, they apparently are just too darn busy:

   The primary reason for not proactively
   monitoring the Internet is that leads
   received from other sources provided
   sufficient work for the LDC staff.  

So the IRS National Office can't make time for a someone to sit around running internet searches for flaky tax shelters? We assumed they already had; the Tax Update web statistics regularly list visitors from IRS who have entererd the names of known abusive shelters in their search engines (Anderson's Ark! Anderson's Ark!). Apparently they were rogue agents or something.

The TIGTA report kindly provided a clue for the IRS:

   We recommended the Director,
   Compliance, SB/SE Division, ensure the
   LDC becomes more proactive in
   researching the Internet to
   independently identify promoters of
   abusive tax schemes.  

   Management’s Response:  The
   Commissioner, SB/SE Division, agreed
   with our recommendation.  The SB/SE
   Division LDC Program Manager will
   continue to work with the SB/SE
   Division Strategy, Research, and
   Performance Management function to
   complete the current research study
   involving evaluation of LDC needs,
   identification of software, testing of
   software, and review of software
   suitability.  Also, the SB/SE Division
   LDC Program Manager will implement
   a process within the LDC to research
   the Internet and independently identify
   promoters of abusive tax schemes.

While the report doesn't document this, perhaps TIGTA will also provide the IRS with some key resources to help them with this "internet" thingie.

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