Tax Administration

Federal Contractor Tax Delinquencies and Status of the 1992 Tax Return Filing Season Gao ID: T-GGD-92-23 March 17, 1992

More than 5,700 federal contractors last year owed the government $773 million in back taxes and penalties--and another 1,100 were under investigation for not even filing returns--but the Internal Revenue Service (IRS) has been lax in collecting delinquencies from contract payments. While the 1986 Tax Reform Act requires federal agencies to report information on federal contracts, IRS still lacks procedures to fully use the information received and to ensure that all required information is properly reported. Further, IRS has not taken full advantage of contract payments as a way to collect delinquent taxes. On a related matter, GAO testified that its monitoring of the 1992 filing season indicates that the accuracy of telephone assistance has improved, but the public is still having difficulty reaching an assistor; getting forms and publications is harder this year; and, while IRS is doing a good job processing returns, the Earned Income Credit continues to cause problems.

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