The Internal Revenue Service charged taxpayers with $88,576 more in penalties than it should have, according to an audit from the Treasury inspector general for tax administration.
The IRS keeps track of individuals and businesses that have an outstanding balance at the agency and as of September 29, 2015 there were 9,145 of these accounts. Of these, 7,497 had an outstanding balance, 253 had a credit balance, and 1,395 had fully paid their balance and were waiting for their account to be closed.
The IRS uses a combination of manual and systemic computing to determine a failure-to-pay penalty, which is the amount in penalties and interest an individual or business should pay if they have an outstanding account at the agency. Auditors found that the IRS had errors in their computing formula.ADVERTISING"Our analysis of the open Automated Non-Master File accounts as of September 29, 2015, identified errors in the formula the Automated Non-Master File uses to calculate penalties," the auditors said. "The IRS overassessed failure to pay penalties totaling $88,576 on 153 open accounts and underassessed failure to pay penalties totaling $354,153 on 227 accounts."
In addition, the IRS did not apply a penalty to 85 accounts, which would have totaled more than $1.7 million in penalties.
The IRS keeps track of individuals and businesses that have an outstanding balance at the agency and as of September 29, 2015 there were 9,145 of these accounts. Of these, 7,497 had an outstanding balance, 253 had a credit balance, and 1,395 had fully paid their balance and were waiting for their account to be closed.
The IRS uses a combination of manual and systemic computing to determine a failure-to-pay penalty, which is the amount in penalties and interest an individual or business should pay if they have an outstanding account at the agency. Auditors found that the IRS had errors in their computing formula.ADVERTISING"Our analysis of the open Automated Non-Master File accounts as of September 29, 2015, identified errors in the formula the Automated Non-Master File uses to calculate penalties," the auditors said. "The IRS overassessed failure to pay penalties totaling $88,576 on 153 open accounts and underassessed failure to pay penalties totaling $354,153 on 227 accounts."
In addition, the IRS did not apply a penalty to 85 accounts, which would have totaled more than $1.7 million in penalties.