GAO dings IRS on systems, monitoring

GAO dings IRS on systems, monitoring

Summary: Poor coding in the Internal Revenue Service's tax records has cost the U.S.


Poor coding in the Internal Revenue Service's tax records has cost the U.S. government about $2.4 billion in potential collections, according to a General Accountability Office report released Nov. 15.

At issue is how the IRS determines what tax payers are routed into the Federal Payment Levy Program (FPLP), which rounds up wayward taxpayers for collection purposes. Generally, the IRS monitors tax records with automated computer systems that troll returns. The GAO examined the IRS' procedures and systems and determined that the nation's tax collection agency only had a percent error rate, but poor monitoring procedures meant the IRS couldn't correct those mistakes. Overall, the IRS maintains over 24 million separate tax debt accounts.

"We estimate that over a half-million tax records with about $2.4 billion in tax debt were erroneously excluded from the FPLP, as of September 30, 2005," said the GAO.

And there's more:

The "IRS did not identify and correct the coding errors we found because it did not sufficiently monitor the timely updating of the status and transaction codes or the effect of computer programming changes. In our sample transactions, we found that IRS did not identify six computer-programming-related coding errors because it did not fully assess the effect of certain computer-programming changes on taxpayer account status codes. Similarly, IRS did not identify a bankruptcy-related coding error because it did not monitor the timely updating of the bankruptcy-related transaction codes."

In sum, the IRS has made decent progress with updating its systems from some well-publicized issues in 2003, but these run-ins with the GAO continue.

Topic: Software Development

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  • Dismantle the IRS

    It is my opinion that the way taxes are handled in the USA, the deep complexity of IRS regulations and processes, the necessity for most taxpayers to pay consultants to figure out their taxes each year, in short, the inherent unfairness of a tax system and laws that place the lion's share of the fiscal burden on those least able to afford it, all constitute taxation without representation and are therefore unconstitutional.

    The IRS should be dismantled, the tax laws should be reformed, possibly with a flat tax, the regulations revised such that anyone with a high school education can readily understand what is expected of them (Imagine a federal tax code encompassing 2 or 3 pages of regulations). A fair distribution of the tax burden would obviate fiscal concerns of this nature and wipe out the federal deficit.