IRS' Accounts Receivable Inventory

T-GGD-90-60: Published: Aug 1, 1990. Publicly Released: Aug 1, 1990.

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GAO discussed the Internal Revenue Service's (IRS) growing accounts receivable inventory. GAO noted that: (1) the reported amount of money owed the federal government in assessed but unpaid taxes grew from $24 billion in 1983 to $66 billion in 1989; (2) IRS failure to collect billions of dollars in delinquent taxes could result in significant tax revenue losses and could have a serious negative impact on voluntary taxpayer compliance; (3) the accounts receivable inventory is growing faster than IRS ability to collect it; (4) as the IRS accounts receivable inventory gets older, IRS will need to use its most costly collection techniques; and (5) IRS cited such economic factors as increasing numbers of returns filed, tax receipts, and inflation as reasons for the growth in the accounts receivable inventory. GAO believes that IRS needs to: (1) better focus its efforts on collecting more from existing accounts; (2) reduce its backlog by collecting what is owed as quickly and equitably as possible; (3) improve its financial and management information system so that it can report more accurately on the inventory; (4) ensure that its tax system modernization reduces the amount of incorrect information that gets into the system; and (5) take a service-wide approach that focuses on the prevention of delinquencies.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Action was taken to publish a hearing record.

    Matter: To assist IRS, the Senate Committee on Governmental Affairs may wish to ask IRS to lay out its collection goals for the next several years. Within the context of protecting taxpayers' rights, the goals should include well-defined time frames, financial targets, and an aggressive approach to reducing the inventory.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The recommendation in the testimony was too general for specific actions and followup. IRS is moving in that direction.

    Recommendation: In the short term, IRS should better focus its efforts to collect more from existing accounts.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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