Revenue Officers Given 15 Days to Contact Employers Included in Federal Tax Deposit Alert Cases

The IRS Small Business/Self-Employed (SB/SE) Division has issued an internal memorandum that instructs its revenue officers to contact employers in Federal Tax Deposit (FTD) Alert cases within 15 calendar days [IRS Memorandum SBSE-05-0711-064, 7/1/11].

Background. The FTD Alert program (the Alert program) is a proactive process that provides for early intervention by the IRS when semiweekly depositor employers do not deposit and pay taxes withheld from employees. The Alert program identifies taxpayers that appear to be behind in making deposits of withholding taxes before their quarterly employment tax returns are due to be filed. FTD Alerts are computer-generated, and taxpayers' accounts will have a specific code indicating there is an Alert. If the Alert meets a certain probability level that there will be an underpayment of FTDs, the Alert is assigned to the IRS collection field inventory. Revenue officers in the collection field work Alert cases and contact the identified taxpayers in person to discuss the deposit requirements and obtain payments.

The Alert program can protect the federal government's interest by its early identification of a potential delinquent tax payment. It also serves the employer's interest by allowing IRS involvement before enforced collection action, such as a levy of a bank account, seizure of assets, or bankruptcy, becomes the sole remaining alternative for collecting the taxes owed.

In 2007, the Treasury Inspector General for Tax Administration (TIGTA) issued a report which said that revenue officers do not always promptly contact employers about federal tax deposit issues, and, therefore, more employers incur FTD penalties (see TIGTA Report, The Federal Tax Deposit Alert Program Helps Taxpayers Comply With Paying Taxes, but Alerts Can Be Worked More Effectively, Reference Number: 2007-30-180, 9/17/07). The new internal memorandum requires revenue officers to contact employers within 15 calendar days after a revenue officer receives a FTD Alert. A telephone call by the revenue officer that does not result in employer contact will not meet IRS requirements for timely contact. Leaving a message within this period is also not considered a timely contact. In these instances, revenue officers should make a field visit to the employer.