Legislative Change Needed To Enable IRS To Assess Taxes Voluntarily Reported by Taxpayers in Bankruptcy
GGD-83-47
Published: Jun 20, 1983. Publicly Released: Jun 20, 1983.
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Highlights
Pursuant to a congressional request, GAO was asked to examine the effects of bankruptcy laws on tax administration. GAO reviewed the impact that the 1978 Bankruptcy Reform Act's restriction on tax assessments is having on the Internal Revenue Service (IRS) and bankrupt taxpayers.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should amend the Bankruptcy Code to allow IRS to assess the taxes reported by bankrupt taxpayers on their returns. | Treasury's proposal was included in its fiscal year 1988 legislative package, which was submitted to the Office of Management and Budget in January 1987, but no further action was taken as of October 31, 1987. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should modify the automated IRS collection procedures to prevent sending collection notices that would violate the protection afforded taxpayers by the Bankruptcy Code. |
A new computer program was implemented as part of a major reprogramming effort at the service centers. New bankruptcy closing codes are now in effect.
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Topics
Accounting systemsBankruptcyCollection proceduresInternal controlsTax administrationTax returnsTaxpayersTaxesBankruptcy reformAccounting