IRM PDT and CAU Designations for Problem Taxpayers (6/17/21)

In Hogan  v. Commissioner (T.C. Dkt Docket No. 11229-15 Bench Opinion dated 6/9/21), here, the Tax Court (Judge Buch) rejected the taxpayer’s request for interest abatement on tax liabilities.  Hogan had previously pled guilty to tax evasion.  All of the commotion about tax liability and interest arose from that event.  There was nothing particularly interesting or of precedential value (hence the bench opinion).  But I noted that Hogan complained about being designated a “Potentially Dangerous Taxpayer.”  The relevant portions of the transcript (pp. 13 & 15-16):

Mr. Hogan was displeased with having been labeled as a potentially dangerous taxpayer or PDT. The Commissioner uses the designation of PTD to "identify taxpayers who represent a potential danger to employees." Internal Revenue Manual, 25.4.1.1.1 (Oct. 31, 2018). Mr. Hogan learned of this designation through a request under the Freedom of Information Act. He argues that this designation resulted in unfavorable treatment during the appeal process. He did not direct us to any error or delay resulting from his designation as a potentially dangerous taxpayer.

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Regarding his designation as a potentially dangerous taxpayer, Mr. Hogan failed to meet his burden at every level. He did not establish that there was an error in designating him as a PDT. Even if that were erroneous, he did not establish that the designation caused any error, delay, or additional interest. And given his repeated efforts to avoid payment, he clearly did not establish that he would have paid his tax earlier.

Having not recalled paying any attention to the PDT designation, I did a Google scholar search and found nothing of interest.  I recommend that readers of this blog interested in the PDT designation, read the IRM here discussing the PDT Program and the related Caution Upon Contact ("CAU") designation.  Key excerpts are:

25.4.1.1.1 (10-31-2018)
Background

In 1984, the IRS Commissioner assigned IRS Inspection the responsibility of developing a program to improve the Service's ability to identify taxpayers who represent a potential danger to employees. Inspection developed the Potentially Dangerous Taxpayer (PDT) program, which included the PDT System database. Inspection was then given responsibility for administering the program.

Inspection became the Treasury Inspector General for Tax Administration (TIGTA) in 1999. Most of Inspection’s previous duties, including the administration of the PDT program, were transferred to TIGTA. Due to TIGTA’s statutory role and responsibilities, however, it was agreed that the administration and maintenance of the PDT program be transferred back to the IRS. IRS established the Office of Employee Protection (OEP) in February 2000 to administer and maintain the PDT program and fulfill other employee safety recommendations. TIGTA, however, retains its investigatory role in the PDT program.

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25.4.1.2 (12-17-2020)
The PDT Program

(1) The designation of Potentially Dangerous Taxpayer (PDT) must be based on verifiable evidence or information. There must also be a nexus to tax administration.

(2) Taxpayers must be identified by Social Security Numbers (SSN) and/or Employer Identification Numbers (EIN).

(3) Association with a PDT or membership in a group, some of whose members advocate violent protest against our tax system, does not by itself fulfill the criteria for designation as a PDT.

(4) The following criteria have been established for determining PDT status. The behavior/activity/incidents at issue must have occurred within the ten-year period immediately preceding the time of classification as potentially dangerous:

• Criteria # 1) Individuals who, within the past 10 years, have physically assaulted an IRS employee, a former employee, a contractor, or an immediate family member of an IRS employee, a former employee or a contractor;

• Criteria # 2) Individuals who, within the past 10 years, have intimidated or threatened an IRS employee, a former employee, a contractor, or an immediate family member of an IRS employee, a former employee, or a contractor through specific threats of bodily harm, a show of weapons, the use of animals, or through specific threatening behavior (e.g., stalking, etc.);

• Criteria # 3) Individuals who, within the past 10 years, have been members of, or affiliated with groups that advocate violence against IRS employees, where advocating such violence could reasonably be understood to threaten the safety of Service employees or impede the performance of Service duties;

• Criteria # 3b) Individuals who, within the past 10 years, have advocated violence against IRS employees where advocating such violence could reasonably be understood to threaten the safety of Service employees and/or impede the performance of Service duties;

• Criteria # 4) Individuals who, within the past 10 years, have committed the acts set forth in any of the preceding criteria, but whose acts have been directed against employees or contractors of other governmental agencies; or

• Criteria # 5) Individuals who are not classified as PDT’s through application of the above criteria, but whose acts within the past 10 years have demonstrated a propensity for violence.

Note: The preceding criteria were approved by Chief Counsel. Adherence to the criteria is essential to ensure compliance with the Privacy Act. If a particular situation represents a borderline case in the application of the above criteria, the determination should be made in favor of the PDT designation (erring on the side of caution) for the protection of Service employees.

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25.4.1.3 (01-02-2020)
Reporting to TIGTA

(1) Employees will promptly report assaults, threats, harassment, or forcible interference incurred during, or related to, the performance of official duties to their local Treasury Inspector General for Tax Administration (TIGTA) office. Visit the Office of Employee Protection (OEP) website at https://portal.ds.irsnet.gov/sites/vl003/lists/employeeprotection/landingview.aspx for TIGTA Field Division contact information.

(2) Employees will report the incident to TIGTA if a threat to Service personnel is believed to exist, even if the information does not meet the established criteria.

(3) Employees will report information to TIGTA about individuals who are dangerous, but where no specific incident has occurred involving an IRS employee, e.g., the taxpayer was recently convicted of assault, if there is a relevance to tax administration.

* *  *  *

25.4.1.6 (12-17-2020)
PDT Indicator versus CAU Indicator 

(1) If a PDT case meets Caution Upon Contact (CAU) criteria rather than PDT criteria:

a.  The Chief, Office of Employee Protection will make a "No PDT" determination on the PDT case.

b. The referring employee's IRS Manager will be notified of the "No PDT" determination and the intent of initiating a CAU case.

c. Once the PDT case is closed, an OEP Specialist will initiate a CAU case.

d. The Chief, Office of Employee Protection will make a "Yes CAU" determination on the CAU case.

e. The referring employee and his/her manager will be notified of the CAU determination.

* *  * *

25.4.1.7 (01-26-2021)
Power of Attorney (POA) Information

1. An IRS employee, who is assigned a case for which there is a POA and there will be contact with that POA, has a "business need to know" whether the POA has been designated as a PDT or CAU. The IRS employee can utilize IDRS to ascertain whether the POA has been designated as a PDT or a CAU, just as the IRS employee does for any taxpayer, as long as the IRS employee does not access any of the POA's other tax information.

2. IDRS Command Code "ENMOD" can be used to determine if the POA has been designated as either a PDT or a CAU. If an IRS employee does not know the POA's SSN and/or EIN needed to utilize "ENMOD" , he/she can use Command Codes "NAMES" or "NAMEI" to obtain the POA's SSN - OR - "NAMEE" or "NAMEB" to obtain the POA's EIN. For assistance in using these Command Codes, please consult the "IRS Processing Codes and Information" handbook (Document 6209) or other IDRS resources.

3.If an IRS employee is unable to determine if the POA has been designated as either a PDT or a CAU utilizing IDRS, the IRS employee may utilize the link to OEP’s EPS e-Trak Database at: https://etrak7.web.irs.gov/etrak-privacy/page.request.do?page=eps.caf.lookup. The IRS employee is to enter the POA’s Centralized Authorization File (CAF) number into the CAF Number search field.

a. If the POA has been designated as a PDT or CAU, or if a case on the POA is in Pending status, the POA’s information will appear, along with the PDT or CAU criteria met.

b. If the POA has not been designated as a PDT or CAU, or if there are no cases on the POA in Pending status, no information will appear.

4. If an IRS employee does not have access to a computer to utilize IDRS or OEP’s EPS e-Trak Database, the IRS employee may contact OEP. The IRS employee will give the POA’s name, address and CAF number to an OEP Specialist who will utilize OEP’s EPS e-Trak Database and determine if the POA has been designated as either a PDT or a CAU.