A new report from a Treasury watchdog revealed that federal agencies owe approximately $14 million in unpaid taxes.
The report, by the Treasury Inspector General for Tax Administration, noted that as of the end of 2011, 70 different federal agencies had 126 delinquent tax accounts owing around $14 million, while 18 federal agencies had not filed or were delinquent in filing 39 employment tax returns.
Federal agencies are exempt from paying federal income tax, but not from employment tax deposits and related reporting requirements.
A TIGTA report in 2007 recommended that the Internal Revenue Service expand its efforts to make its fellow federal agencies compliant; the current report said that the IRS has not fully developed a process to resolve delinquent federal tax accounts. TIGTA identified 40 delinquent accounts that were still open after three years, on which the IRS had suspended collection efforts -- meaning the delinquent agencies are unlikely to voluntarily pay their outstanding liabilities.
“Federal agencies must comply with the same filing and paying standards that apply to all American taxpayers,” said Inspector General J. Russell George.
Update: In a statement, the IRS noted that the amount of delinquent taxes from federal agencies has dropped from $406 million in 2005 to the current $14 million -- or less than 0.03 percent of total tax deposits made by federal agencies.
2 Comments
This is the same IRS that will levy 15% from a Social Security monthly direct deposit for a widow known by the IRS to be in her 70's. The widow had long since become a non-filer because SS was her only income for many years. Then she fell sick and Medicare did not pay all the medical bills. Besides she was nervous about the downturn in the stock market. Along came the broker who sold off the last of the wealth left in her late husband's account - $50k of stock with a long-term loss. With no tax return filed to account for the transaction, the IRS ASSumed $50K pure profit in the short term at ordinary rates with the ASSumption making up to 85% of SS also taxable at ordinary rates. The poor widow just happens to have slid into dementia and no longer opens her mail. When a daughter finally realizes the dementia, obtains a POA, opens the mail, she cries in panic and seeks help or it will go on and on and on. Final Outcome: No tax due, levy removes, refund of erroneously collected 15% owed to taxpayer with interest. It really hurts to bill a client for such outrage.
Posted by: EnrolledAgent | September 28, 2012 11:09 AM
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So, if the gov't is owed $14mm by its agencies, its okay? The feds should set an example. If the feds do not respect the laws it created and lead by example why should the public.
Applying this justification of dropping collection action based on %'s to the public could probably eliminate 3/4ths of the collections activity and save the gov't money overall but, the IRS does not and will go after some widow of a deceased minister with no income for $600 to the point of seizure b/c she had saved that much for needed medical treatment.
Posted by: BrianL | September 28, 2012 9:41 AM
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