Computer glitch lets 18% of million-dollar tax deadbeats off the hook

Josh Smith

While common sense tells you that the people who owe the most taxes deserve the most attention, several computer errors left 18% of accounts owing more than $1 million to sit un-pursued.

A recent investigation by the Inspector General found three major programming errors, that combined, affected 448 accounts worth $1.2 billion. The report estimates that had the IRS actively made efforts to collect on these accounts they would have been able to recover $12.1 million last year.

The good news is that the IRS already fixed two of the errors that sent these accounts to IRS purgatory; including one issue which also affected at least 2,439 accounts owing more than $50,000. The bad news is that the IRS hasn't fixed the final issue, and as of right now is trying to find out if it is worth the cost of fixing it.

Commenting on the third problem, the Inspector General's report stated that, "As a result, individuals who owe a combination of tax assessments, interest, and penalties that could far exceed $1 million can have their accounts linger in the Queue or remain shelved while others who may owe less have their accounts accelerated to the field for investigation and possible enforcement action."

Even if the IRS fixes the final software issue, don't expect it to go much toward the national debt; the estimated $12.1 million that could have been recovered last year is only a fraction of the $110 million owed by these 27 taxpayers.

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