Tax Administration: Administration of the Bad Check Penalty
GGD-87-52BR
Published: Mar 30, 1987. Publicly Released: Apr 17, 1987.
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Highlights
GAO reviewed the Internal Revenue Service's (IRS) administration of the bad check penalty on taxpayers' checks to determine: (1) the number of bad checks returned to IRS; (2) the extent to which IRS assessed the penalty against such checks; and (3) the extent to which penalty assessments covered the costs of processing bad checks and assessing penalties.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Since the bad check penalty has remained unchanged since 1954, Congress may wish to consider whether the penalty is still appropriate and the extent it should serve as a deterrent or to recover processing costs. Regarding processing costs, Congress may wish to consider whether costs should be recovered in total or on a per-check basis. | According to a Joint Committee on Taxation staff member, Congress has considered the issue, but does not intend to act at this time because: (1) the additional revenue generated from increasing the penalty would be so small; and (2) processing costs are recovered in total. Since Congress does not intend to act on this recommendation, GAO should drop it from the system. |
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Administrative costsFines (penalties)Income taxesTax administrationTaxpayersTaxesInformation resources managementPostal servicePrivate sectorVoluntary compliance