Despite a law passed 15 years ago, some Internal Revenue Service employees continue to use the designation "Illegal Tax Protester" and other similar designations in their case narratives, according to an audit just released by TIGTA (Treasury Inspector General for Tax Administration). While the IRS has not reintroduced an actual code for such designations, the audit found out of 257 million records, there were:
54 instances in which Enforcement and Deputy Commissioner for 45 employees referred to taxpayers as Operations Support. “Tax Protester,” “Constitutionally Challenged,” or other similar designations.
A similar audit in 2010 found 164 such instances, so the occurrence of such designations continues to drop. Congress enacted the law to prevent taxpayers from being stigmatized even after they comply with IRS regulations, and to prevent future bias by IRS employees towards prior offenders. The audit noted:
[t]he IRS has long disagreed with our determination that in order to comply with RRA 98 § 3707, IRS employees should not designate taxpayers as Illegal Tax Protesters or similar designations in case histories.
The decrease in such occurrences, however, indicates the IRS is attempting to comply, if somewhat reluctantly.