The Treasury Inspector General for Tax Administration today released Designated Payment Codes Are Inaccurate and Ineffective (2012-30-026):

The IRS established Designated Payment Codes (DPC) to identify IRS enforcement actions or other events that result in taxpayers submitting subsequent payments on their balance due accounts. However, the IRS is not consistently or accurately applying DPCs, which reduces the IRS’s ability to assess the effectiveness of its collection actions. Ineffective use of IRS collection resources can unnecessarily burden the majority of taxpayers who fully and timely pay their taxes. …

TIGTA reviewed a statistical sample of 138 subsequent payments that posted to taxpayer balance due accounts. TIGTA determined that 106 (77%) of the 138 subsequent payments were processed without the required DPC. In addition, 11 (34 percent) of the 32 subsequent payments that had a DPC were not accurate. …  As a result, DPC data cannot be used to determine the effectiveness of collection actions, and some IRS reports used to monitor and report collection activities are not accurate.