Washington, D.C. -- A recent report from the Treasury Inspector General for Tax Administration found that the IRS's penalty actions against employers who don't remit payroll taxes are oftentimes neither timely nor adequate.

When a business does not remit trust fund taxes withheld from its employees, the Internal Revenue Service can collect the unpaid taxes from the individuals responsible by assessing a "trust fund recovery penalty" when appropriate.

TIGTA found that the IRS's TFRP actions were not always timely or adequate in 99 of the 265 cases it reviewed in a statistically valid sample of cases. For 59 of the 99 cases, the untimely actions averaged more than 500 days to review and process the penalty assessment. Among the problems, TIGTA found incomplete investigations, unsupported collectibility determinations and expired assessment statutes.

The IRS plans to make programming changes in its Automated Trust Fund Recovery system to ensure it works more efficiently, and it will provide additional training to managers.



Washington, D.C. -- The Internal Revenue Service has introduced an online tool that will allow users to check on whether a foreign financial institution has registered for the Foreign Account Tax Compliance Act.

The FFI List Search and Download Tool is located on the IRS's FATCA Web site. The tool can be used to search for the name of a specific foreign financial institution and find out if it has registered under FATCA.

The law has attracted controversy abroad amid concerns that it violates other countries' banking secrecy laws. However, after delays, some changes in regulations by the IRS and the Treasury Department, and a series of intergovernmental agreements between the Treasury and tax authorities in other nations, the requirements are beginning to take effect this year.



Washington, D.C. -- The Internal Revenue Service said that it is now allowing some suspended or disbarred tax practitioners to obtain or renew preparer tax identification numbers and prepare federal tax returns for compensation as a result of recent court decisions in the Loving v. IRS case.

In light of the decisions and the injunction, the IRS Office of Professional Responsibility has determined that a suspension or disbarment from practice before the IRS may not include a restriction on return preparation for compensation, and that access to the PTIN required for such services may no longer be blocked based on discipline under Circular 230.

The OPR has sent letters to the individuals who currently are suspended or disbarred from practice before the IRS as a result of OPR disciplinary action, informing them of their change in status. The IRS said that any individual who has been suspended or disbarred in a Circular 230 proceeding who does not receive the notice may determine their status by calling the main OPR number, (202) 317-6897.



Washington, D.C. -- The Internal Revenue Service is considering expanding a program under which it delays tax refunds for up to six months for delinquent taxpayers.

A new report released by the Treasury Inspector General for Tax Administration noted that the IRS has the authority to delay issuing income tax refunds for up to six months while it investigates tax return delinquencies from other tax years. Holding the tax refund encourages taxpayers to resolve their delinquent filing obligations earlier, the report noted.

IRS management had earlier considered expanding the program by lowering the dollar threshold required to put a tax refund on hold. The exact amount of that threshold and where it would be expanded were redacted from the public version of the report.

However, the IRS has not expanded the threshold because of limited resources.

TIGTA pointed out that taxpayers who become compliant with their prior-period filing requirements could remain compliant in future years and reduce the need for additional enforcement resources in subsequent filing seasons.

TIGTA recommended that the IRS consider opportunities to expand the use of the program as resources become available, and develop specific performance measures to compare the actual results with management's goal to improve filing compliance.

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