**GAO-08-1034T**                      Published: Jul 29, 2008. Publicly Released: Jul 29, 2008.                  

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## Highlights

GAO previously reported that federal contractors abuse the tax system with little consequence. While performing those audits, GAO noted that much of the tax abuse involved contractors not remitting to the government payroll taxes that were withheld from salaries. As a result, GAO was asked to review the Internal Revenue Service's (IRS) processes and procedures to prevent and collect unpaid payroll taxes and determine (1) the magnitude of unpaid federal payroll tax debt, (2) the factors affecting IRS's ability to enforce compliance or pursue collections, and (3) whether some businesses with unpaid payroll taxes are engaged in abusive or potentially criminal activities with regard to the federal tax system. To address these objectives, GAO analyzed IRS's tax database, performed case study analyses of payroll tax offenders, and interviewed collection officials from IRS and several states.

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## Topics

Tax Policy and Administration

Collection proceduresCost analysisCriminal activitiesDebtDebt collectionFederal taxesFinancial managementIncome taxesNoncompliancePayroll systemsProgram abusesTax administrationTax administration systemsTax lawTax nonpaymentTax return auditsTax returnsTax violationsTaxesTaxpayersVoluntary compliancePayroll taxes