Federal Agencies Fail to Pay Taxes

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.


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