$40 Billion Written Off by IRS as Uncollectible
The Internal Revenue Service estimated Tuesday that less than half of $87 billion in past-due taxes is collectible and acknowledged that one or more federal agencies occasionally have been delinquent to the tune of $100 million or more.
The collectible amount “is going to be tens of billions of dollars,” IRS Commissioner Fred T. Goldberg Jr. told the House Ways and Means oversight subcommittee. “Whether it’s $30 billion or $40 billion, it’s a lot of money.”
“You don’t know?” Chairman J. J. Pickle (D-Tex.) asked.
“That’s correct,” Goldberg said.
Members of the subcommittee said they have information that at least one federal agency has been on the list of deadbeats, being so far behind in turning over tax collections to the IRS that the agency was listed as delinquent. Rep. Byron L. Dorgan (D-N.D.) said he was told the agency was late in handing over $250 million in taxes it had withheld from employees.
In answer to questions, Goldberg would only confirm that a federal department had been included on a list of delinquents of more than $100 million.
“That takes the definition of a tax deadbeat to a new low,” Dorgan complained after the hearing. He speculated that the agencies may have deliberately delayed making the tax payments to temporarily avoid a budget crunch.
When a private employer delays a tax payment, the IRS can impose a stiff penalty plus interest. But the law does not allow the IRS to penalize another federal agency.
At issue at the hearing was the IRS’s accounts receivable--taxes, interest and penalties that both sides acknowledge are owed but have not been paid. The IRS says the total of accounts receivable is about $87 billion, a figure that is growing by about $11 million a day.
Goldberg said about $25 billion of the $87-billion accounts receivable is considered currently not collectible and unlikely to be collected in the future. An account is given this label when, for example, a corporation goes out of business or the IRS determines that an individual is unable to pay.
Much of the $62 billion represents errors on the part of IRS or the taxpayers or duplications, said Jennie S. Stathis, a director of the General Accounting Office.
“While the amount that is collectible may be overstated by as much as half, the growth is significant and represents a serious problem,” Stathis said. She said accounts receivable have skyrocketed from about $24 billion in late 1983.
Goldberg said the government loses between $2 billion and $3 billion each year because a six-year statute of limitations, setting the time during which the government must bring a case against a delinquent taxpayer, has expired.
