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5.1.30.9
(09-21-2007)
Strategic Approach Case Example - Unable to Locate, Large Dollar Liability
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On large dollar cases, once initial investigation reveals that the taxpayer cannot be easily located, a key strategy to case
resolution becomes one of locating and collecting against taxpayer assets. Hopefully this will lead to finding the taxpayer
in the process. It is important that the investigation does not stall when the taxpayer is not located. Instead, attention
needs to be refocused on locating the assets so they can be used to collect the liability.
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It is important to develop a strategy on the sources of information that will be the most effective to identify assets for
enforcement. Assets can be traced through a thorough review of some of the following sources of information:
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Internal Sources
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Bank Account records
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Accurint / DMV
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Credit Report
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Public Records:
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Internal Sources
Tax Return - Review the tax return information using RTVUE/BRTVU or order the return. Assessments are based on taxable income.
One of the questions that needs to be answered is what the taxpayer did with the income. If the taxpayer converted the income
to real property or personal property then the status or disposition of the property must be determined. Review returns to
identify:
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Interest - bank accounts, mortgage interest received.
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Dividends - stock.
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Schedules:
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C - business income and depreciation
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D - stock sales
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K - passive income/loss (partnership, s-corporation or trust interest)
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A - itemized deductions
Income Documents - Review and analyze all IRP information available. The starting point for identifying assets can be summoning
records for sources of income identified on IRP, such as Forms 1099 from bank and brokerage houses. Mortgage interest paid
always means there is real property. If mortgage interest paid stops, then the mortgage is generally either satisfied or the
property has been transferred. If IRP documents indicate mortgage interest paid by the taxpayer and there is no real property
in the local public records, then the property is either being held in another name or located elsewhere. Compare the IRP
and RTVUE for inconsistencies which may indicate a nominee entity is involved. Pay attention to all payee addresses and follow
up on them with a public record research.
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Bank Account Records
Although levy of the bank account(s) may be appropriate, the key component is the information that can be obtained by summoning
the bank records to locate additional assets.
If the location of the taxpayer’s bank account(s) is not known from a review of internal sources, it will need to be traced
back by summoning payees of the taxpayer. These can include mortgage payments, rent payments, utility payments, and car payments.
Some sources of information will not only provide the link to the taxpayer’s bank account(s), but also may have loan applications
on file.
When reviewing and analyzing the bank statements and checks look for the following:
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Checks issued in regular amounts on a monthly basis to a creditor. This may indicate the taxpayer is making installment payments
on an asset.
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Checks written to a payee that would indicate ownership of an asset. For example, payments to a marina would indicate boat
ownership.
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Funds being transferred off shore.
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Wire transfers.
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Funds being transferred into or out of the account from another bank account. Bank records from the new accounts should be
summoned.
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Public Records
The term public record includes many federal, state and local government records. Public records searches are completed with
the objective of locating assets and also tracing back to the taxpayer’s bank account(s). County records will include property
tax payments, personal and real property records, escrow companies, and assets listed in civil divorce files.
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Real property records – Pay particular attention to documentary tax stamps on deeds. Review any transfer of property by the
taxpayer to verify that it is an arm’s length transaction.
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Property tax records – Will be useful in identifying the taxpayer’s bank account and determining the entity making the payments.
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Lawsuits – Lawsuits frequently involve property and rights to property and may be useful to uncover assets.
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Divorce files – The files may be helpful by identifying asset distribution. The former spouse may also be a source of information
about the taxpayer and any assets.
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Closed bankruptcy files – Review the files for the inventory of assets.
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Internet – Conduct a general search of the taxpayer on the internet using a search engine. If the taxpayer owns a web site,
the web site should be thoroughly investigated.
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Accurint / DMV
Conduct a thorough analysis and review of Accurint and DMV research. Secure the title history on a vehicle when appropriate.
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Credit Report
A credit report will provide information relating to credit transactions such as mortgages, automobile loans and credit cards.
Information is provided giving the status of these accounts, some of which may be satisfied. Pay attention to inquiries. These
may appear when a bank account is opened or a credit/loan application is submitted. Consider issuing a summons to:
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All new loans requesting the loan application and recent payment instruments.
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Existing mortgages and automobile loan payments requesting recent payment instruments.
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Credit card accounts requesting statements that will reveal where and on what the taxpayer is spending money.
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