Summary: GAO reviewed the Internal Revenue Service's (IRS) accounts receivable from federal agencies for employment taxes to determine the: (1) extent and causes of delinquent tax payments; (2) options for improving the processing of federal agency employment tax payments; and (3) options for improving federal agencies' compliance with tax laws and regulations.
GAO found that: (1) IRS records inaccurately reported that 63 federal agency accounts owed $178 million in accounts receivable that had already been paid; (2) most agencies actually paid their taxes on time, and most errors were the result of the outdated and poorly designed tax payment process for intragovernmental fund transfers; (3) two-thirds of the agency accounts reviewed had at least one quarterly employment tax return that was filed late, complicating IRS reconciliation of return information with tax payments; (4) federal managers placed insufficient priority on filing federal tax returns and responding to IRS notices and inquiries; and (5) IRS needs to send notices to agencies when tax data do not reconcile and when agencies do not file returns, inform agencies of adjustments to their accounts, and provide assistance to agencies through training programs.
