Tax Collection and Enforcement Improvement Act of 1986

Tax Collection and Enforcement Improvement Act of 1986 - Title I: Collections and Enforcement Staff Enhancement - Requires the Secretary of the Treasury, within five fiscal years of the enactment of this Act, to reduce the level of delinquent debt by at least $5,000,000, through the strengthening of the collection activities of the Internal Revenue Service. Requires the Secretary to increase the collection staff by 1,500 employees in FY 1987. Requires the Secretary, within 180 days of enactment of this Act, to submit a plan to the Congress to reduce the growth of backlogged collections and increase collection of taxes. Provides that the plan is to detail the allocation of staff in all aspects of the collection process, based on projected workload and to include an estimate of future staffing needs. Authorizes appropriations to the Internal Revenue Service as necessary to carry out these requirements.

Directs the Secretary to increase by 1,000 in FY 1987 the Internal Revenue Service staff allocated to the information returns (document matching) program. Requires the Secretary to submit, within 180 days, a plan to strengthen the Information Returns Program, which shall include an estimate of staffing needs. Authorizes appropriations to carry out the program to strengthen the Information Returns Program.

Directs the Secretary of the Treasury to increase by 2,500 the Internal Revenue Service staff positions in the tax return examination and enforcement function area in each of FY 1987, 1988, and 1989.

Requires the Secretary, within 180 days of enactment, to submit a plan to increase the number of returns audited to at least two percent and to raise taxpayer compliance to 90 percent within the next five years. Provides that the plan shall recommend any additional staffing needs.

Requires the Secretary, within 60 days after the end of FY 1987, and each year following, to submit a report to the Congress on the status of tax collections and the level of delinquent debt.

Title II: Improvement of Collection Practices - Requires the Secretary to classify all delinquent accounts based on stage of collection, value, type of taxpayer, type of tax, source of delinquency, taxpayer collection history, and other such criteria as the Secretary deems necessary to better provide the Internal Revenue Service with information with which to manage the collection process.

Requires levy source information to be included with closing agreements or any such document that concludes an examination where the entire tax is not paid.

Authorizes the Secretary to use electronic funds transfers or payroll deductions to collect taxes when payment under installment agreements are delinquent.

Title III: Collection of Alcoholic Occupational Tax - Prohibits wholesale dealers in beer, wine, and distilled spirits from selling beer, wine, and distilled spirits to any retail dealer unless that retailer has paid the alcoholic occupational tax. Requires each wholesaler to keep records of the retailer's compliance with the alcoholic occupational tax. Requires the Secretary to match information on income tax returns to identify noncompliant retailers.