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General government: Expanding the Federal Payment Levy Program to Collect Unpaid Taxes (2020-31)

The Internal Revenue Service should evaluate options to identify payments that are not automatically levied to collect unpaid taxes owed by federal contractors, which could increase tax collections.

Year Identified: 2020
Area Number: 31
Area Type: Cost Savings & Revenue Enhancement

1 Total Action(s)

Action 1
Addressed

The Commissioner of the Internal Revenue Service (IRS) should evaluate options to identify which contract payments federal agencies expect to be processed by the Treasury's Bureau of the Fiscal Service (Fiscal Service), including amending the reporting requirements for Form 8596 to require federal agencies to include information about whether contractor payments are expected to be processed by the Fiscal Service. If IRS amends Form 8596 reporting requirements, IRS should (1) systematically note this information on taxpayer accounts to help IRS identify which payments may be available for levy through the Federal Payment Levy Program and which payments may be available for other (i.e., manual) levies and (2) analyze these data to help identify agencies that do not participate in the automated program and inform its efforts to expand the number of agencies participating in the automated program.

Type
Executive Branch
Last Updated
March 31, 2020
Progress:

In October 2019, GAO met with representatives from IRS and the Bureau of the Fiscal Service to facilitate an exchange of information on non-Treasury disbursing offices, which include federal offices that do not process payments through the Fiscal Service. Further, while IRS told GAO it did not think amending the reporting requirements for Form 8596 would have an impact on the collection process, IRS also told GAO that it had worked with Fiscal Service to improve the process used to match federal tax debts against eligible payments via "enhanced matching logic." Specifically, IRS stated that in October 2019, Fiscal Service began using the enhanced matching algorithm to match all payments against the list of delinquent business master file taxpayers, prior to the release of any disbursements to payees. IRS told GAO that it anticipates that this will have a significant impact on the number of payments to federal contractors that are sent to the Federal Payment Levy Program for potential levy. By using available data to improve its detection and collection of qualifying federal tax debts owed by federal contractors, IRS

Implementing Entity:
Internal Revenue Service
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