Contractor Employees Have Millions of Dollars of Federal Tax Debts

Source: Treasury Inspector General for Tax Administration (TIGTA), Reference Number: 2013-10-082, August 30, 2013

From the press release:
Although the Internal Revenue Service (IRS) requires its employees to file their Federal tax returns on time and pay any Federal tax debt, hundreds of the employees of IRS contractors are not held to that same standard, according to a report published today by the Treasury Inspector General for Tax Administration (TIGTA). … TIGTA’s review identified weaknesses in the IRS’s existing practices that allowed contractor employees with Federal tax debts and instances of nonfiling to go undetected after the IRS initially granted staff-like access because the IRS does not continuously monitor contractor employee tax compliance in the same way it monitors IRS employee tax compliance. Instead, the IRS reviews contractor tax compliance only once every five years or if the contract employee has longer than a two-year break in service. … TIGTA found that as of June 14, 2012, 691 (5 percent) of the 13,591 IRS contractor employees reviewed by TIGTA had $5.4 million in Federal tax debt. These debts were either agreed to by the taxpayers or affirmed by the court. Of the 691 contractor employees, 352 were not currently on a payment plan to resolve their tax debt. Most of the contractor employees appeared to have been compliant when their initial staff-like access was granted. However, at least 319 contractor employees had tax debt assessed after they were granted staff-like access, and these employees were not currently on a payment plan. Under IRS policy, these 319 contractor employees were not eligible for staff-like access and should not have had access to IRS facilities, systems and data….