TIGTA: IRS Missed Collecting $1.1 Million from Delinquent Federal Contractors

Chris Gaetano
Published Date:
Aug 18, 2017

The Treasury Inspector General for Tax Administration (TIGTA) faulted the IRS for improperly excluding certain federal contractors from the Federal Payment Levy Program (FPLP), which allows the service to systemically collect back taxes from Federal contractors at a minimal cost. In so doing, it has missed out on collecting about $1.1 million in back taxes. TIGTA found that 18 percent of the 45 individual Federal contractor accounts, and 28 percent of the 68 business Federal contractor accounts were improperly excluded from the program for more than one year. There were also three that were excluded due to programming errors. 

This was because, said TIGTA, the IRS made system changes to the Automated Collection System inventory, but did not apply the changes to modules already there. Further, the IRS did not correctly alert employees that they must manually update tax modules for this system when manually assigning cases specific to its inventories. 

TIGTA said the IRS should identify all tax modules that were improperly excluded from the FPLP and take action to include them; update the Internal Revenue Manual to include proper instructions for employees to manually update tax modules for FPLP inclusion when manually assigning cases to specific Automated Collection System inventories; ensure that programming changes are made to correct the problems with the systemic reversal of the FPLP exclusion; and work with the BFS to identify agencies that do not participate in the FPLP and establish a process to add those agencies.

In response to the report, the IRS agreed to identify and include modules improperly excluded from the FPLP; provide guidance to Automated Collection System employees to manually unblock cases when appropriate; request programming changes on the systemic reversal process of the FPLP exclusion; and meet with the BFS to discuss ways to identify agencies that do not participate, actions that can be taken to add those agencies to the FPLP, and a possible legislative proposal for increasing participation in the FPLP program

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