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IRS CAN’T BALANCE ITS BOOKS FOR A 4TH CONSECUTIVE YEAR

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Even after spending more than $3 billion on new computers, the Internal Revenue Service for the fourth consecutive year cannot reconcile its records of more than $1.4 trillion collected annually from American taxpayers, congressional auditors said Thursday.

"Fundamental persistent problems remain uncorrected," Gregory Holloway of the General Accounting Office told the Senate Committee on Governmental Affairs.The chairman of the committee, Sen. Ted Stevens, R-Alaska, raised the possibility of Congress appointing an outside control board to run the IRS, similar to the board now overseeing the District of Columbia government.

"The agency that is so strict on the way Americans keep their books cannot itself pass a financial audit," Stevens complained.

Reporting on fiscal 1995, auditors said the IRS:

- Cannot reconcile the accounting records it keeps on individual taxpayers with the $1.4 trillion in revenue it collected or the $122 billion in refunds it paid.

- Cannot substantiate the amounts it reported collecting for various types of taxes - income, Social Security and excise.

- Cannot determine the reliability of its $113 billion estimate of overdue taxes owed.

- And cannot verify a significant portion of its $3 billion payroll.

Responding to the criticism, the IRS's new chief financial officer, Anthony Musick, who began work three months ago, said the IRS has made "significant improvements" in its financial performance since the GAO's first audit in 1992. However, he acknowledged, "there is still much to do."

He said the IRS has a detailed plan for correcting deficiencies and would continue intensive efforts to follow through.

He acknowledged that the GAO audit was disturbing. But he also insisted that the accounting problems do not mean the money the agency collects and spends "has simply disappeared or somehow been misappropriated."

He also said other quality-control systems insured that each individual taxpayer's account was accurate.