The Treasury Inspector General for Tax Administration (TIGTA) recently released a report on actions taken by the United States Internal Revenue to collect individual Federal income, Social Security, and Medicare taxes unpaid by businesses were not always timely or adequate.
TIGTA pointed out that tax are withheld by the employers from the employee’s salaries to cover individual trust fund taxes. But when an organization does not deduct trust fund taxes from its employees, the IRS collect the unpaid taxes from the individual by assessing a Trust Fund Recovery Penalty (TFRP). As of June 30, 2012, employers owed the IRS approximately USD14.1bn in delinquent employment taxes. TIGTA noted that TFRP actions were untimely, expired assessment statutes, incomplete investigations associated with installment a agreement.
IRS should focus internally the responsibilities to monitor TFRP cases and ensure that revenue officers take timely TFRP actions. TIGTA also recommends enhancing TFRP communication and training with completion and adequacy of scheduled system improvements and taking appropriate actions to implement the changes. IRS officials agreed with all of its recommendations and planned to take corrective actions.