Report: IRS gives up on billions in uncollected taxes

The IRS essentially gave up on securing some $16 billion in delinquent taxes in 2013, according to a new federal report.

{mosads}The Treasury Department’s inspector general for tax administration said that $16.1 billion was more than five times the $3.1 billion that the IRS unit charged with getting uncollected taxes actually gathered. In all, two of every five delinquent cases closed by the IRS ended with no revenues collected.

The inspector general said that the budget crunch at the IRS was at least partly to blame for the problem, but also said the tax agency needed to revamp its strategy for collecting delinquent taxes.

“By making better use of its limited collection resources and working these cases strategically, the IRS could successfully collect more taxes and further shrink the tax gap,” Russell George, the inspector general, said in a statement.

The IRS had a string of issues in collecting the delinquent taxes, George’s office found. The agency’s process involves contacting taxpayers through the mail, then trying to encourage payment through phone calls, to eventually placing liens or taking a taxpayer’s property.

But the inspector general found the agency doesn’t track how productive its agents are in bringing in revenue, nor does it give them specific goals — making it more difficult for the IRS to examine its own process for selecting the most promising cases.

In searching for revenue, the IRS also fails to take into account how old a case is, the financial situation of those involved or how frequently the agency has previously tried to collect from certain taxpayers.

The IRS said it generally agreed with the inspector general’s recommendations, and that it needed to take another look at its strategy for dealing with delinquent taxpayers. The inspector general advised that the IRS find better ways to measure the effectiveness of its efforts.

But the agency also questioned the sample of the cases the inspector general studied, even as it said it was “looking to make our collection notice process more effective and efficient.”