NCPA - National Center for Policy Analysis

A Nicer I.R.S. Faces Challenge Of Collecting Taxes

October 11, 1999

Ordered by Congress to drop the heavy-handed actions that were infuriating taxpayers, the Internal Revenue Service has been falling down in its responsibilities to collect delinquent taxes, say observers. Agency insiders say it is following an all-or-nothing policy on collections -- rather than negotiating settlements, as it did in the past.

  • Two years ago, the agency collected $30 billion from delinquent taxpayers.
  • While there is no updated tally on recent collections, anonymous IRS agents report that billions of dollars are going uncollected today.
  • While the government used to seize as many as 1,000 houses a year for nonpayment of taxes, it has not seized one in 14 months.
  • Since 1990, the number of tax returns filed has increased 13 percent, to 226 million this year -- but the number of tax collectors has been cut 19 percent, to about 6,800.

The IRS is interpreting new rules handed down by Congress as requiring an all-or-nothing stance on back taxes. It was customary in the past to reach negotiated settlements and work out payment schedules with taxpayers. Now the IRS is demanding full payment.

If the taxpayer is unable or unwilling to comply, the agency is setting the cases aside as temporarily uncollectable. Then, calculating that the agency is unlikely to act before the 10-year statute of limitations runs out, many big tax delinquents are opting to take their chances and pay nothing.

Source: David Cay Johnston, "IRS Is Allowing More Delinquents to Avoid Tax Bills," New York Times, October 10, 1999.


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