Tax Administration:

IRS Needs to Assess Options to Make Faster Deposits of Large Tax Payments

GGD-90-120: Published: Aug 31, 1990. Publicly Released: Oct 2, 1990.

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Pursuant to a congressional request, GAO reviewed the timeliness of Internal Revenue Service (IRS) deposits of tax payments to determine the lost interest associated with delays in depositing individual income tax payments around April 15 each year.

GAO found that: (1) the Cincinnati and Philadelphia Service Centers received and deposited about 2.5 million remittances, worth a total of about $6 billion, from April 15 to May 7, 1990; (2) IRS deposited remittances received around mid-April in an average of 7 days, instead of the 24-hour deposit average it achieved when receipts were at normal levels; (3) IRS doubted that it would be cost-effective to purchase additional equipment and hire the additional staff necessary to meet an annual surge in receipts; (4) having a separate mailing address for large tax payments could help IRS reduce deposit times; and (5) expediting the deposit of large tax payments could increase government interest earnings.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: GAO recently issued a report (GGD-93-64) that provided an update on this issue. That report noted inadequate IRS progress in implementing the 1990 GAO recommendation and has its own recommendations. Those recommendations will, in effect, supersede the 1990 recommendation.

    Recommendation: To reduce the time it takes to deposit large tax payments and increase the government's interest earnings, the Commissioner of Internal Revenue should assess various options, including the ones discussed in this report, and adopt one that strikes an appropriate balance between administrative costs, taxpayer impact, and potential benefits. That assessment should be completed in time to allow IRS to implement the adopted approach in time for the filing season beginning January 1, 1992.

    Agency Affected: Department of the Treasury: Internal Revenue Service


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