GAO Reports  
GAO-01-711 July 20, 2001

Tax Administration: Millions of Dollars Could Be Collected
If IRS Levied More Federal Payments.

The Internal Revenue Service (IRS) seeks to apply the law fairly to all taxpayers. Under the continuous levy program, however, taxpayers who receive federal payments are treated differently depending on whether the payments are made by the Federal Management Service (FMS) on behalf of other agencies or directly by the agencies themselves. Delinquent taxpayers receiving payments from FMS generally are subject to continuous levy, while those receiving payments directly from federal agencies are not. Although it may prove impractical to treat similarly all delinquent taxpayers who receive federal payments, progress--and substantial additional revenues--could be achieved in this area. FMS plans to include salaries at the U.S. Postal Service and salaries and retirement payments at the Defense Department (DOD) in the continuous levy program. There are similar plans to include all vendor payments from the Postal Service, DOD, and the Centers for Medicare and Medicaid Services. Discussions among FMS, IRS, and the agencies could ensure that all of these payments all included in the continuous levy program as soon as possible. These discussions could also speed the inclusion of some categories of vendor payments. The continuous levy program could also benefit if IRS were to begin sharing with FMS the different names that businesses use for tax purposes--an approach that IRS already uses for individual taxpayers in the program. In the meantime, until the program is expanded to include more direct payments from agencies, IRS could take steps to ensure that all delinquent taxpayers receiving payments are subject to potential collection activity. DOD and CMS have data on hand that they could share with IRS to strengthen IRS' ability to identify taxpayers whose federal payments could be levied under the program.

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