Tax Administration: IRS Can Improve the Process for Collecting 100-Percent Penalties
GGD-89-94
Published: Aug 21, 1989. Publicly Released: Aug 21, 1989.
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Highlights
Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) collection of 100-percent penalties, assessed as 100 percent of the amount of withheld taxes which businesses failed to pay.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | To ensure that IRS uses collection resources more efficiently, the Commissioner of Internal Revenue should establish a milestone for completing, as quickly as possible, service-wide implementation of procedures for processing 100-percent penalty cases through ACS. |
Closed – Implemented
IRS completed nationwide implementation of procedures for processing 100 percent panalties through ACS on December 31, 1989.
|
| Internal Revenue Service | To help ensure that IRS uses collection resources as efficiently as possible, the Commissioner of Internal Revenue should revise the Internal Revenue Manual (IRM) to conform to the stated practice of obtaining financial information when responsible parties are identified during initial investigations and it is appropriate to do so. |
Closed – Not Implemented
IRS issued a memo reminding collection managers of existing procedures, but does not intend to revise IRM.
|
| Internal Revenue Service | To help ensure that IRS uses its collection resources as efficiently as possible, the Commissioner of Internal Revenue should establish appropriate controls to ensure that levy sources obtained during the 100-percent penalty investigations are documented in the IRS computerized levy source file so that they are readily available during the collection phase. |
Closed – Implemented
IRS identified system procedures revisions required and revised IRM accordingly.
|
| Internal Revenue Service | To help ensure that IRS uses its collection resources as efficiently as possible, the Commissioner of Internal Revenue should develop a procedure to ensure that financial statements obtained during the investigations are available on the ACS computerized database to facilitate processing of 100-percent penalties through ACS. |
Closed – Implemented
IRS developed and implemented procedures to ensure that financial data obtained during penalty investigations is input to the ACS database.
|
| Internal Revenue Service | To improve accounting and internal controls, the Commissioner of Internal Revenue should establish milestones for: (1) completing the development of procedures to systematically provide collection employees with the information needed to accurately determine the status of delinquencies; and (2) developing a way to more accurately report the accounts receivable balance as it relates to 100-percent penalties. |
Closed – Implemented
IRS is reporting 100 percent penalties separately. However, this may not result in the most accurate representation of accounts receivable because some penalties are collectible. Further work in this area will be done under the IRS financial audit.
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Topics
Accounting proceduresDebt collectionDelinquent taxesFinancial recordsFines (penalties)Government collectionsInformation systemsInternal controlsManagement information systemsTax nonpayment