IRS Writes Off $6.7 Billion without Checking

You’ve probably heard the horror stories of how the IRS pursues taxpayers to collect on alleged tax debts. Now we’re hearing that the IRS also writes off tax debts without making much effort at all. And there appears to be no real logic behind which approach is taken.

The Treasury Inspector General for Tax Administration (TIGTA) – the watchdog for the IRS – recently announced that a review of IRS collection procedures revealed that $6.7 Billion in uncollected tax revenue was written off as uncollectible without completing the necessary steps to verify that the debts were in fact, not collectible.

What’s surprising about the report is that the IRS claims the money wouldn’t have been collected anyway. But that’s the irony. No one verified the debts weren’t collectible to start with so how could the IRS know. Seems it was more of a procedural approach to full work queues – write off the debts so they weren’t clogging the work flow any longer.

And at $6.7 Billion, it may just be small enough to not matter to the IRS Commissioner or Congress. To you or me, those are HUGE numbers but in the grand scheme of big government it may never see another headline. The IRS collects $2.4 Trillion annually (more or less). So we’re talking about just under 0.03% of the total revenue collected. And at that level, the IRS Commissioner may just decide to ignore the issue.