IRS Fails Audit | AccountingWEB

IRS Fails Audit

The IRS needs a good accounting firm. According to congressional auditors, the governmental agency is doing a lousy job of keeping its own books.

Although the IRS improved a little last year, the General Accounting Office reports that the IRS continues to give improper refunds, is slow when it comes to fixing errors affecting taxpayers and is vulnerable to computer security issues. What’s even more disconcerting is that the branch responsible for incoming taxes can’t assure that its property or budget is properly tracked.

``This audit shows that IRS doesn't know how much money is coming in or where that money is going,'' said Sen. Fred Thompson, R-Tenn., chairman of the Senate Governmental Affairs Committee. ``It shows that IRS sends money back to people who owe taxes and makes erroneous assessments against those who don't.''

Another problem plaguing the IRS includes ineffective follow up on tax returns with potential underreported tax liabilities. In 1999, the IRS investigated 26 percent of 12 million returns which, combined, had a potential tax due of $15 billion.

Employee issues exist too. A less than stellar fingerprinting system allowed 65 people to be hired whose backgrounds, once they were checked, landed them in the unemployment line. There also were 37 allegations of employee theft totaling more than $1 million.

The IRS hopes modernization of computer systems will correct many of the problems the agency is encountering.

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