The problems, the report said, included failing to pursue alternatives to seizures, failing to notify taxpayers before seizures, taking assets worth little more than the costs of seizing them and, by ignoring mitigating circumstances, creating special hardships for taxpayers.

It also increases the IRS' responsibility to notify taxpayers when it is going to conduct enforcement action and creates other new procedural rights for taxpayers.

The Internal Revenue Service said yesterday that it would begin notifying taxpayers, most of them the working poor, if their requests for a refund were being frozen because a computer program had identified possible fraud.

Although the 1989 tax return forms had already been printed, critics say, there was still adequate time for the Division of Taxation to notify taxpayers in time for them to take advantage of the ruling on their 1989 returns.

IRS Criminal Investigation will then notify taxpayers or their representatives via fax whether or not they have been cleared to make a voluntary disclosure using the Offshore Voluntary Disclosures Letter.

But budget officials say that the fault is not the tax department's, which notified taxpayers of the change, and they estimate that low withholding is responsible for only $300 million of the shortfall.

Preliminary letters notifying taxpayers that they are late in filing or have underpaid are wrong as often as 15 to 20 percent of the time, accountants estimate.

Written Notice of Rights The legislation would force the I.R.S. to notify taxpayers in writing of their rights when they arrived to answer questions or for an audit.

I.R.S. to Notify Taxpayers if Refunds Are Frozen The Internal Revenue Service said that it would begin notifying taxpayers, most of the working poor, if their requests for a refund are being frozen because a computer program has identified possible fraud.