IRS Fails to Police Contractors Who Are Behind on Their Taxes

Hundreds of contractor employees working for the Internal Revenue Service cumulatively owe as much as $5.4 million in delinquent taxes, a violation of the agency’s charge that requires it to ascertain that all full-time federal employees file tax returns and pay all taxes owed, an audit found.

As of June 14, 2012, about 5 percent of IRS contractor employees reviewed by the Treasury Inspector General for Tax Administration, or 691 of 13,591, held $5.4 million in federal tax debt, the audit said. All the debts were either agreed to by the taxpayers or affirmed in court. Of the 691 contractor employees who were behind on their taxes, 352 were not currently on a payment plan to resolve their debt, TIGTA found.

“Because many contractor employees have access to sensitive IRS systems and facilities, the IRS should address tax noncompliance for these employees in a similar manner as it would for its own employees,” said J. Russell George, Treasury inspector general for tax administration.

The reason for the weak enforcement, TIGTA determined, was the lack of continuous monitoring of contractors who are given access to agency systems similar to that of federal employees. Instead, the agency has been reviewing contractor tax debts every five years or if the employee had a gap of two years in service.

TIGTA made recommendations for more regular evaluation of contractors’ records and removal of contractors who fail to comply. Agency managers agreed with the recommendations.

(Image via Suzanne Tucker/Shutterstock.com)