IRS May be Losing Billions from ignoring inaccurate earnings statements

This is a stupid Federal government trick, but is more about waste than corruption. In my opinion, the government probably loses a lot more due to waste, fraud & abuse compared to corruption.

It seems that the IRS receives LOTS of inaccurate earnings statements that cannot be matched to taxpayer ID's like social security numbers. Thus a contractor might earn $100,000 from a customer and the reporting document has accuracy errors. Then, the Inspector General in the Treasury office found that maybe half of the un-researched documents could be matched to taxpayers, and many had not filed any tax return. AND, the IRS didn't make any effort to match many of the earnings statements, thus losing a chance to find taxpayers who did not file tax returns, but earned significant funds.

One of the problems with government is that losses are not the agencies money, and their wages don't depend on resolving losses, so many government agencies never implement accounting controls to catch these types of problems. You might say the agency should be outsourced and the service provider would definitely install procedures to identify possible losses.

Now, this would be fine if we could all get the same break legally. I am all in favor of giving government the least amount of money from taxpayers.
vj
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IRS may lose billions through bad IDs

By JIM ABRAMS, Associated Press Writer 2 hours, 14 minutes ago

WASHINGTON - The Internal Revenue Service may be losing hundreds of millions of dollars because it won't spend the time and money to match millions of income statements with incorrect or missing identification numbers to existing tax accounts, an IRS watchdog said Tuesday.
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The Treasury Inspector General for Tax Administration said that in 2004 the IRS received about 3.8 million miscellaneous income statements reporting some $150 billion in earnings that could not be computer-matched to a filed tax return because of missing or erroneous ID numbers.

The inspector general's office, which does oversight of the tax agency, looked at a sampling of these mismatched IDs and calculated that some 6,000 of these individuals had not filed 2004 tax returns despite having income statements indicating they earned more than $100,000. That translates into some $630 million in income, it said.

Much of the income involved compensation for nonemployees such as independent contractors reported on unusable miscellaneous income statements.

The office said that it looked at 620 income and wage statements with mismatched names and ID numbers reporting more than $60,000 in earnings. Using IRS automated data systems, it was able to manually match half of those to taxpayer accounts in IRS records.

It urged that Congress pass legislation, backed by the administration, that would require employers to verify the accuracy of ID numbers for the employees they hire. The office also recommended that the IRS do more to investigate high-dollar miscellaneous income and wage statements with mismatched names and IDs.

The IRS, in response, said it supported the legislation but concluded that the cost of manually tracking down mismatched names and IDs might exceed that of the benefits.

"The IRS's opposition to this recommendation is confounding," said Inspector General J. Russell George, adding that their audit showed that increased examination of statements would more than pay for itself in increased revenue.

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