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

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.

What is Employer Sponsored Coverage?

The term "employer-sponsored coverage" refers to health insurance obtained through an employer—the most common way Americans get insurance. Employer-sponsored coverage includes not only insurance for current employees and their families, but can also include retired employees. Further, federal law gives former employees the right to stay on their employer's health insurance, at their own expense, for a time after leaving a job. That, too, is employer-sponsored coverage.

Read More

Brought to you by TurboTax.com

How to Pay Employer Federal Taxes

As an employer, there are a number of federal taxes you need to pay that relate to your employees.

Read More

Brought to you by TurboTax.com

Video: How to Claim the Affordable Care Act Premium Tax Credit (Obamacare)

The Affordable Care Act Premium Tax Credit is a new refundable tax credit that can lower your monthly health insurance premiums. If you qualify for the tax credit, you can claim the Premium Tax Credit throughout the year to lower your monthly health insurance premiums, or claim the credit with your tax return to either lower your overall tax bill or increase your tax refund.

Read More

Brought to you by TurboTax.com

Getting Divorced

If you're going through a divorce, taxes may be the last thing on your mind, so we're here to help. We've got tips for you on which filing status to choose after the divorce, who can claim the exemptions for the kids, and how payments to an ex-spouse are treated for tax purposes.

Read More

Brought to you by TurboTax.com
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.