Improving the Collection of Debts Owed the Government

Gao ID: 115860 July 20, 1981

GAO supports the purpose of Senate bill 1249 to increase the efficiency of Government-wide efforts to collect debts owed to the United States. Federal agencies recently reported that receivables from U.S. citizens and organizations exceeded $139 billion at the start of fiscal year 1981. It was reported that $24 billion of this amount was delinquent, of which $13 billion represented delinquent taxes. For fiscal year 1979, agencies wrote off as uncollectable receivables of more than $1 billion. These statistics are probably understated. Debt collection has received low priority, and present Government collection methods are expensive, slow, and ineffective when compared with commercial practices. Unless Federal agencies are provided with the essential collection tools, hundreds of millions of dollars will continue to be needlessly lost. GAO fully supports a requirement that applicants for Federal monies which may result in an indebtedness furnish their social security numbers. GAO also supports a provision for Internal Revenue Service (IRS) disclosure of certain outstanding tax liabilities of Federal loan applicants, and it supports the permission of disclosure of IRS tax debtor address information to other agencies to locate a debtor for collection purposes. This disclosure would permit Federal agencies to fully carry out their collection responsibilities, and any possible invasion of taxpayer privacy would be minimal. GAO supports a provision in the bill which would provide for the use of an interest rate on delinquent taxes that is more closely tied to the commercial money market, and it would be willing to support a provision for more frequent adjustment of the rate. GAO would like to see the bill include a provision for offset of delinquent debts against Federal tax refunds due to debtors. The necessary safeguards to protect debtors against arbitrary offset actions can and must be instituted, and the offset procedures should be thoroughly tested prior to full implementation. GAO favors legislation requiring IRS to offset nontax debts on the basis of interagency agreements, with the Attorney General having a consultation role in the development of such agreements.

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