The federal government is itself a tax delinquent, owing approximately $45 million in employment taxes, according to a report from a Treasury Department watchdog.

The Treasury Inspector General for Tax Administration said the delinquent tax payments by federal agencies could adversely affect state and local government bodies, including school districts, in addition to harming the image of the feds. "It is critical to the image of the United States that federal government entities be held to the same standards as private employers," said the TIGTA report.

TIGTA acknowledged that the Internal Revenue Service has improved its efforts to collect delinquent employment taxes from government entities. But the inspectors blamed the IRS for not routinely tracking information on how cases are resolved or gathering data on the causes of the delinquencies.

A special unit in the IRS's Brookhaven Campus in Holtsville, N.Y., deals with cases of delinquent government employment taxes, but TIGTA complained that management information about the cases is not comprehensive enough to allow for sufficient oversight. The report points to a lack of comprehensive guidelines and procedures to guide the assignment, control and resolution of cases. As of December 2006, cases involving 99 government agencies owing $5.8 million had been awaiting resolution for over a year.

TIGTA recommended better coordination, information sharing and procedures. IRS officials told TIGTA they agreed with the recommendations in the report and said they were taking steps to improve their management of the casework.

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