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TIGTA exposes faults in operation of electronic payments system

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Business taxpayers in the US were not always told by the IRS when they were in breach of a new federal regulation enabling them to pay their taxes online or by telephone, a report from the Treasury Inspector General for Tax Administration (TIGTA) has found.

The Electronic Federal Tax Payment System (EFTPS), which allows businesses and individuals pay their federal taxes electronically via the internet or telephone 24 hours a day, seven days a week took effect on January 1 2011. And the Internal Revenue Service is supposed to operate the Federal Tax Deposit (FTD) Alert Program to help taxpayers manage their liabilities so they do not become unable to pay mounting debts that arise from their failure to use the electronic payments system in time.

However, while TIGTA found that the IRS had taken the necessary steps to inform businesses about EFTPS . The tax authorities sent an intention letter to 3.8 million taxpayers affected by the change in November 2010 and a mandate letter the following month to 1.4 million who had not yet activated their EFTPS enrolment or were still making deposits by coupon instead of electronically.

But TIGTA found that in a sample of 96 high priority FTD alert cases, revenue officers were often not assigned the alerts promptly and, when they were, did not always make timely contact with the taxpayers concerned.

“I am pleased by the IRS’s action to communicate and educate business taxpayers about this new regulation, but the Service must then ensure that revenue officers contact all business taxpayers about problems in a timely manner, since business taxpayers who are not contacted timely accrue more interest and penalties,” said J Russell George, the Treasury Inspector General for Tax Administration

The IRS said it agreed with, and would implement steps to comply with, TIGTA’s recommendations that it should create rules for timely group manager assignment of FTD Alerts to revenue officers and emphasise to group managers the need to ensure that revenue officers contact business taxpayers within 15 calendar days of FTD Alert assignments.



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