IRS Watchdog: Tax Agency Failed to Detect 133 Employees Behind on Tax Filings

WASHINGTON -- The Internal Revenue Service's government watchdog identified 133 employees with the tax collection agency who potentially did not comply with tax laws, but weren't located in a computer program designed to identify noncompliant staffers.

According to a new audit out Tuesday, the IRS is unable to detect all nomcompliance cases despite efforts to match employee payroll records against tax account records.

The Treasury Inspector General for Tax Assessment wrote that because the IRS didn't find these employees in its computers over the 2006-2007 period, it didn't take any action to address potential misconduct.

An IRS spokeswoman told The Associated Press that nearly half the cases were workers who filed late returns. Those workers were due a refund, though, and didn't owe the government taxes.

The audit noted that since 2004, the agency has annually identified more than 8,000 potential noncompliance cases. But after further review, it determined that about 3 percent of IRS employees -- or 3,200 -- are noncompliant each year. The agency employees roughly 107,000 people.

The IRS concluded that it would reduce its focus on compliance after a study it conducted determined that IRS employees were more compliant with tax law than the general taxpaying public. A 2007 Government Accountability Office report put compliance at about 81-84 percent annually over three decades.

However, it did agree to review the outstanding 133 cases to determine whether disciplinary action was needed. It would not agree to additional measures to locate missed cases.

The audit was undertaken after legislation was introduced in Congress that would call for firing 97,000 federal employees who are said to be in default on their taxes.

Click here to read the report.