Fed Report: IRS Bungles Hunt for Unpaid Taxes


The IRS failed to take all required steps for collecting unpaid taxes from people it can’t locate in over half the cases that investigators studied, potentially costing the government a pile of lost revenue, according to a federal report released Monday.

The study does not estimate exactly how much money the IRS might collect if its workers were conducting all the research they are supposed to perform to find the taxpayers.

The investigators wrote that in 2012, the IRS declared $6.7 billion in unpaid taxes to be uncollectable — involving nearly 483,000 tax returns — because it couldn’t find the taxpayers. Of that total, the investigators estimated that $1.9 billion was in returns on which agency workers failed to conduct all the required probing to find the people who owed the money.

“We believe that additional revenue may have been collected on some of the approximately $1.9 billion in delinquent accounts if the managers had ensured that all required research steps were taken by their employees prior to closing the cases,” the report said.

In a study of 250 cases involving self-employed people and small businesses, investigators said that 57 percent of the time, they found no evidence that agency workers had completed all required research before declaring the money uncollectable.