Tax Administration

Erroneous Penalties for Failure to File Returns or Pay Taxes Can Be Reduced Gao ID: GGD-90-80 April 13, 1990

GAO reviewed Internal Revenue Service (IRS) tax penalty assessments, abatements, and statistics.

GAO found that: (1) IRS correctly granted 91 percent of abatements; (2) 29 percent of abatements were needed to correct IRS assessment errors; (3) erroneous assessments were primarily caused by IRS processing errors; (4) IRS needed better documentation on abatement decisions; (5) strengthened IRS internal controls would reduce the number of erroneous assessments; and (6) IRS could better explain and categorize penalty abatement statistics to differentiate between penalty adjustments and reasonable-cause abatements.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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