The Internal Revenue Service has shelved hundreds of balance-due accounts for taxpayers who owe more than $1 million.
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Among the 448 accounts, 214 accounts were in a queue or in shelved status for more than a year. Using automated information systems and the IRSs fiscal year 2007 collection rate to review a statistically valid sample of 155 accounts, TIGTA determined that $12.1 million might be collectible from 27 taxpayers who owed a total of approximately $110 million.
TIGTA determined that three factors contributed to the large dollar accounts lingering in the queue or shelved status. First, IRS officials were working to resolve a programming flaw that allowed accounts to remain in shelved status even when the taxpayers account reached a balance of $1 million or more. Second, TIGTA found erroneous codes that were preventing some accounts from appearing in the group managers inventory in the IRSs Entity Case Management System. Third, the Entity system is currently programmed to identify and accelerate accounts with assessments of $1 million or more, but does not take into consideration the related interest and penalty accruals that continue to add to the total account balance owed until they are paid or otherwise satisfied.
TIGTA recommended that IRS officials make programming changes and explore the cost and benefits associated with changing the Entity acceleration criteria of $1 million to include penalties and interest accruals. In response, IRS officials agreed with the recommendations.