Treasury Inspector General for Tax Administration
September 22, 2010
TIGTA - 2010-57
Contact: Karen Kraushaar
WASHINGTON - The Internal Revenue Service (IRS) Collection Field function did not always take appropriate collection actions before and after closing in-business trust fund accounts as currently not collectible, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
Trust fund taxes are employment taxes, such as Federal income, Social Security and Medicare taxes, that an employer holds in trust for the employee until those taxes are paid to the U.S. Department of the Treasury. Employers are required to file employment tax returns and make matching contributions for the amounts withheld for Social Security and Medicare taxes.
The collection of taxes through employment tax returns is a significant source of revenue for the Federal Government. As of September 30, 2009, the total IRS inventory of currently not collectible amounts included almost $20.7 billion of unpaid employment taxes from business taxpayers. Of that total, approximately $1.1 billion (roughly 5 percent) were from in-business taxpayers.
"While in-business taxpayers represent a relatively small portion of the business accounts declared currently not collectible, there is an increased risk that additional trust fund liabilities will accumulate, potentially creating a larger problem," said J. Russell George, the Treasury Inspector General for Tax Administration.
TIGTA made four recommendations to the IRS in its report, and the IRS agreed with all of those recommendations.
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