Treasury Inspector General Report on Delinquent Employment Taxes
The Treasury Inspector General for Tax Administration issued a report on May 23, 2014 on its audit of the IRS’s efforts to assess Trust Fund Recovery Penalties on Employers who were delinquent in submitting their withheld employment taxes. The Treasury found the IRS was not always timely or adequate in its actions. As background, employers are required to withhold taxes from their employees (income taxes, Social Security taxes, and Medicare taxes) and hold them in trust until they are remitted to the IRS. Currently, $14.1 billion is the level of delinquent employment taxes owed to the IRS and deemed collectible. Another $24.9 billion is deemed uncollectible and is inventoried by the IRS but not pursued. If a business does not send in its withheld taxes, the IRS has the ability to assess appropriate individuals within the business for these delinquent taxes under the Trust Fund Recovery Penalty (TFRP). The IRS actions to do this were the ones reviewed in the Treasury audit. There is need for improvement in this process and the IRS indicated it will take the recommended steps to improve with one exception. 8% of the time the TFRP could not be pursued because the ‘assessment statutes expired before the cases were assigned to revenue officers’. The IRS felt it was a matter of manpower and the Treasury agreed by stating that ‘since the limited resources cannot be resolved with the current budget constraints, we are not making a recommendation to address this issue at this time’. Here is another example of monies left uncollected because the President and the Congress are fighting over the budget and the direction of the IRS. The President and Congress need to increase funding to the IRS in the FY2015 budget and have them focus on collecting the monies owed to the US government. Given that the IRS generates $7 to $17 in added revenues for every $1 added to their budget, only foolish acting people would not add dollars to the IRS budget. Unfortunately, we have a lot of politically motivated folks in Washington D.C. taking these foolish actions. Stop this nonsense and fully fund the IRS.
Harry Pukay-Martin
