Report: Like many Americans, federal agencies behind on taxes

In its never-ending search for tax scofflaws, it appears the IRS needs to take a closer look at the federal government. In a report released today, a Treasury Department watchdog office says that 70 federal agencies owed about $14 million in unpaid taxes as of the end of last year. Federal agencies are exempt from paying federal income taxes, but they are responsible for turning over employment taxes, mainly Social Security and Medicare taxes, that their employees must pay. The Treasury Inspector General for Tax Administration says 40 of these delinquent tax accounts totaling about $2.6 million were still open three years after being identified, and in 80% of those cases, the investigations had been suspended. The offending agencies were not identified. The $14 million isn’t a lot compared to the $768 billion in employment taxes the IRS collected in 2011. But Inspector General J. Russell George says emphatically, “Federal agencies must comply with the same filing and paying standards that apply to all American taxpayers.” Nonetheless, cracking down on delinquents is complicated by IRS policies that do not allow enforcement actions against federal agencies and by restrictions against penalizing or imposing interest on agencies that are behind in making their payments. Read the full story here; and see the complete report here.