GAO Reports  
T-AIMD/GGD-99-256 August 02, 1999

Payroll Taxes: Billions in Delinquent Taxes &
Penalties Due But Unlikely to Be Collected

Pursuant to a legislative requirement, GAO discussed the results of its work on payroll taxes owed to the federal government and the associated trust fund recovery penalties (TFRP) assessed against individuals responsible for the nonpayment of these taxes.

GAO noted that: (1) at September 30, 1998, $49 billion in cumulative unpaid payroll taxes were owed by nearly 2 million businesses, and $15 billion in TFRPs had been assessed against and remained owed by, 185,000 individuals responsible for the nonpayment of payroll taxes; (2) the majority of these unpaid payroll taxes and associated TFRPs will unlikely be collected; (3) nearly 25,000 individuals with outstanding TFRPs were responsible for withholding but not forwarding payroll taxes to the government at more than one business; (4) a significant number of both businesses with unpaid payroll taxes and individuals with outstanding TFRPs are also receiving billions of dollars in federal benefits and payments; and (5) several factors, including financial management system deficiencies and internal control weaknesses, ineffective taxpayer education and early warning programs, and federal and state laws, affect the Internal Revenue Service's ability to enforce compliance and pursue collection of unpaid payroll taxes.

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