More Firms Pocket Taxes, IRS Contends

A growing amount of tax money withheld from workers’ paychecks is being misused by employers, often never finding its way to the government, the Internal Revenue Service said Wednesday.

The total of these delinquent Social Security and income taxes rose by 49% from 1982 through 1987, to almost $3.73 billion, said William M. Wauben, IRS assistant commissioner for collections. About 338,000 employers have failed to pay or account for that sum.

Because withheld taxes account for 69% of all federal revenue, “even a slight decline . . . can have a devastating impact” on the government, Wauben said at a news conference.

The IRS also announced that although fewer individual taxpayers are filing their returns early this year, the pace is picking up. Through Feb. 26, a total of 30.2 million returns had been filed, down 4.9% from a year ago. But last week, the IRS received 6.7 million, up 3% from the same week in 1987.

The IRS speculates that taxpayers are delaying filing this year because of all the changes caused by a sweeping tax revision enacted in 1986.

The number of returns qualifying for refunds is down 4.5%, to 7.55 million this year, but the average refund has risen to $793 from $735 a year ago.

Wauben said employers’ failure to forward taxes withheld from workers’ checks often is caused by ignorance of the law, although in some cases withheld taxes are kept out of greed.