Summary: Most of the Internal Revenue Service's (IRS) $214 billion in unpaid assessments as of September 1997 are not taxes receivable and are not collectible. Of this balance, $76 billion consists of write-offs, which are typically more than six years old and have no potential for collection. Write-offs consist primarily of corporate income and payroll taxes owed by bankrupt or defunct businesses, including failed financial institutions connected to the savings and loan and banking crises of the 1980s and early 1990s. Another $48 billion of the unpaid assessments represents compliance assessments, which are amounts that IRS has identified as owed to the federal government but which have not been agreed to by taxpayers or a court. Many of these unagreed assessments result from IRS' various compliance efforts, such as examinations and audits. The lack of acknowledgement by the taxpayer or courts of the amounts owed and evidence of little or no payment activity on compliance assessments, diminish prospects for collection. Only $90 billion of the balance of unpaid assessments represents taxes receivable under federal accounting standards. These are amounts that either taxpayers or the courts have agreed are owed to the federal government. However, of this amount, only an estimated $28 billion will likely be collected. The accounts comprising this $28 billion show evidence of both willingness and ability of the part of taxpayers to pay. Growth in the overall unpaid assessments balance reported by IRS in the past several years is largely due to the accrual of interest and penalties.
