Federal agencies owe about $14 million in unpaid taxes, the Treasury Inspector General for Tax Administration has said in noting that while agencies are exempt from income tax they are not exempt from meeting employment tax deposits such as for Social Security and Medicare taxes, and related reporting requirements.
As of last December 70 federal agencies with 126 delinquent tax accounts had unpaid tax debt, and 18 agencies had not filed or were delinquent in filing 39 employment tax returns, TIGTA said.
It said the IRS has not fully developed a process to resolve aged federal agency delinquent tax accounts and identified 40 aged federal agency delinquent tax accounts totaling about $2.6 million that were still open after three years.
Further, information provided by management does not provide sufficient details about the causes of federal agency delinquencies in order to be effectively used to enhance outreach and educational efforts, according to the IG.
It said insufficient controls over the processing of federal agency cases permitted the use of enforcement actions that violated IRS policies.
IRS management agreed with recommendations including to strengthen the procedures for resolving delinquent tax accounts and assisting federal agencies with understanding and meeting their tax responsibilities.
