GAO

United States General Accounting Office

Report to the Subcommittee on 

Government Management, Information 

and Technology, Committee on 

Government Reform, House of 

Representatives

August 1999 UNPAID PAYROLL 

TAXES

Billions in Delinquent 

Taxes and Penalty 

Assessments Are 

Owed 

GAO/AIMD/GGD-99-211

Page 1 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

United States General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-281574 Letter

August 2, 1999

The Honorable Stephen Horn

Chairman

The Honorable James Turner

Ranking Minority Member

Subcommittee on Government Management, Information

 and Technology

Committee on Government Reform

House of Representatives

The Honorable Dennis Kucinich

House of Representatives

This report responds to your request for information on payroll taxes owed 

to the federal government and the associated trust fund recovery penalties1

assessed individuals responsible for the nonpayment of these taxes. You 

asked that we determine (1) the extent to which payroll taxes are not 

remitted to the federal government, (2) the magnitude of the trust fund 

recovery penalties assessed against individuals of organizations that 

withheld federal payroll taxes from employees’ salaries but did not forward 

them, (3) the extent to which individuals who have not remitted payroll 

taxes are responsible for not paying these taxes at multiple businesses,

(4) the extent to which businesses and individuals who failed to pay payroll 

taxes are also receiving federal benefits or other federal payments, and

(5) the factors that affect the Internal Revenue Service’s (IRS) ability to 

enforce compliance or pursue collections in this area. 

Results in Brief According to IRS records, at September 30, 1998, nearly 2 million 

businesses owed about $49 billion in payroll taxes, or about 22 percent of 

IRS’ $222 billion total outstanding balance of unpaid tax assessments. The 

businesses that failed to remit withheld payroll taxes were typically in 

wage-based industries and had few available assets from which IRS could 

recover these taxes. They were usually small, closely held businesses using 

1

The IRS can assess a trust fund recovery penalty against an individual, such as a corporate officer, 

whom it determines was willful and responsible for not forwarding to the government federal payroll 

taxes withheld from employees’ salaries.

Letr
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a corporate structure, but this varied throughout the country. Our review 

of about 200 unpaid payroll tax cases and interviews with IRS revenue 

officers throughout the country indicated that the most common types of 

businesses or industries with unpaid payroll taxes included construction 

companies and restaurants, although other types of businesses (including 

computer software, child care, and professional services such as legal, 

medical, and accounting firms) also have unpaid payroll taxes. Most 

unpaid payroll taxes are not fully collectible, and there is often no recovery 

potential as many of the businesses are insolvent, defunct, or otherwise 

unable to pay.

According to IRS records, as of September 30, 1998, trust fund recovery 

penalties of about $15 billion had been assessed against, and continue to be 

owed by, approximately 185,000 individuals found to be willful and 

responsible for the nonpayment of payroll taxes withheld from employees. 

These individuals are typically officers of a corporation, such as the 

president or treasurer. IRS records do not include data on the frequency of 

cases in which IRS does not assess a trust fund recovery penalty against 

such individuals. Additionally, long-standing deficiencies in IRS systems, 

particularly the failure to link related taxpayer and business accounts, 

result in errors in IRS records that have led to the collection of amounts 

that have already been paid. As with unpaid payroll taxes, most trust fund 

recovery penalty assessments are not fully collectible and there is often no 

recovery potential. Many of the individuals assessed these penalties are in 

bankruptcy, have no available assets, are unable or unwilling to pay, or 

cannot be located.

IRS records indicate that nearly 25,000 individuals, or over 13 percent of 

the individuals assessed trust fund recovery penalties, were responsible for 

the nonpayment of payroll taxes at more than one business. These records 

also indicate 29 cases in which the same individual was assessed a trust 

fund recovery penalty for more than 12 separate businesses. 

Individuals responsible for the nonpayment of payroll taxes and businesses 

that owe payroll taxes receive significant federal benefits and other federal 

payments. We estimate that about 16,700 businesses and individuals with 

unpaid payroll taxes and trust fund recovery penalty assessments, 

respectively, received an estimated $7 billion in federal payments over a 3 

month period. We also estimate that 12,700 businesses with unpaid payroll 

taxes and individuals with outstanding trust fund recovery penalties had 

about $3.5 billion in outstanding Small Business Administration guaranteed 

loans at September 30, 1998. Finally, we estimate that about 18,800 

Letr
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individuals with outstanding trust fund recovery penalty assessments at 

September 30, 1998, were receiving $212 million annually in Social Security, 

Railroad Retirement, federal retirement, and federal civilian salaries. 

Several factors affect IRS’ ability to enforce compliance and pursue 

collections of unpaid payroll taxes. Financial management system 

deficiencies and other internal control weaknesses affect the completeness 

and accuracy of taxpayer accounts, making it difficult for IRS to manage its 

unpaid assessments. While IRS has a Federal Tax Deposit (FTD) Alert 

Program designed to identify early potential tax delinquencies, IRS field 

representatives noted that the alerts (1) typically are not received in the 

field early enough to prevent employers from accumulating substantial tax 

delinquencies or (2) resulted in revenue officers unnecessarily contacting 

taxpayers who had already made their required payments. IRS field 

representatives also noted that certain IRS procedures, limited resources, 

and federal and state laws limit enforcement and collection efforts. For 

example, IRS is prohibited by law from sharing information on delinquent 

taxpayers with state licensing authorities responsible for granting licenses 

for new and existing businesses.

Additionally, federal law does not prevent businesses or individuals from 

receiving federal payments or loans when they are delinquent in paying 

federal taxes. The Debt Collection Improvement Act specifically excluded 

unpaid tax assessments from its provisions for pursuing collections on 

outstanding federal receivables. The Department of the Treasury is 

developing a mechanism to pursue collection of outstanding federal 

receivables as mandated by the Debt Collection Improvement Act through 

various collection efforts and the use of offsets against tax refunds, federal 

benefits, and other federal payments. Treasury also intends to include the 

collection of unpaid tax assessments in these efforts under the authority of 

the Taxpayer Relief Act of 1997. However, Treasury and other affected 

agencies are trying to address complex implementation issues in order to 

avoid undue harm to individuals. Most importantly, there is the need to 

address IRS’ significant financial management system deficiencies and 

internal control weaknesses to ensure that taxpayers are not unduly 

harmed by inappropriate levies of federal benefits and other payments to 

repay taxes that have already been collected.

The IRS stated that it concurred with the issues raised in this report.
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Background Employers are required to withhold from their employees’ salaries amounts 

for individual federal income taxes and for Federal Insurance Contribution 

Act (FICA) taxes, which include Social Security and hospital insurance 

(Medicare) taxes. In 1998, the FICA taxes withheld consisted of 6.2 percent 

of the employee’s gross salary up to $68,400 for Social Security taxes and 

an additional 1.45 percent of the gross salary for hospital insurance. 

Employers are also required to match the amounts withheld from the 

employee’s salary for Social Security and hospital insurance taxes. The 

amounts withheld from the employee’s salary for federal individual income 

and FICA taxes, along with the employer’s matching portion of FICA taxes, 

comprise business payroll taxes.2

 

Employers are generally required to remit payroll taxes periodically 

through the FTD system. The frequency of these deposits depends on the 

amount of taxes due and the frequency of the employer’s payroll. 

Employers must deposit payroll taxes either (1) semiweekly if their total 

tax liability is more than $50,000 during a 12-month period ending June 30 

of the prior year or (2) monthly if their total tax liability is $50,000 or less 

during this same 12-month period. Employers are generally required to file 

a quarterly tax return (Tax Form 941) to report federal payroll taxes. 

Additionally, employers are required to report employees’ earnings to the 

Social Security Administration (SSA) annually.

The Federal Old Age and Survivors Insurance and Federal Disability 

Insurance trust funds were established to fund the various Social Security 

benefit programs, and the Federal Hospital Insurance trust fund was 

established to partially fund the Medicare program. By law, these trust 

funds receive amounts for FICA and Self-Employment Contribution Act 

(SECA) withholdings.3

 The Department of the Treasury has statutory 

responsibility for maintaining these trust funds and, through the IRS, is 

responsible for collecting the money that is dedicated to these trust funds. 

Most business payroll tax payments are made directly to Treasury through 

2

Federal unemployment taxes are also paid by employers. However, these taxes are not included in the 

unpaid payroll taxes discussed in this report.

3

SECA taxes are Social Security and hospital insurance taxes required to be paid by self-employed 

individuals. Self-employed individuals were required to pay 12.4 percent on net earnings from 

self-employment up to $68,400 in 1998 if their earnings were more than $400 for the year and 2.9 percent 

of net earnings for hospital insurance taxes. Payments are generally required to be remitted quarterly. 

Issues related to self-employment taxes were addressed in the report Tax Administration: Billions in 

Self-Employment Taxes Are Owed (GAO/GGD-99-18, February 19, 1999) and are outside the scope of 

this report.
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financial institutions and are deposited into the general revenue fund, 

where they are then distributed to the various trust funds. IRS receives the 

related payment data submitted by taxpayers and is responsible for 

maintaining records of both tax assessments, based primarily on tax 

returns, and taxes collected.

The information IRS receives at the time it collects several types of tax 

payments, including those for Social Security and hospital insurance, is not 

sufficient to allow IRS to attribute these payments to specific trust funds, 

nor could IRS’ current systems accept and process such data if it were 

received. Additionally, under Title 42 U.S.C. sections 401 and 1395i, 

amounts to be transferred by Treasury to the Social Security and hospital 

insurance trust funds are determined by applying the applicable FICA 

and/or SECA tax rate to wage amounts certified by the Commissioner of 

Social Security. Because wage information is provided only quarterly to 

IRS and only annually to SSA, initial distributions to the trust funds are 

based on estimates prepared by Treasury’s Office of Tax Analysis (OTA) 

and SSA’s Office of the Chief Actuary, with adjustments subsequently made 

as a result of the SSA Commissioner’s certifications. 

SSA’s Office of the Chief Actuary develops estimates of total fiscal year 

employment tax revenue to be distributed to the Social Security and 

hospital insurance trust funds. SSA sends these estimates to OTA twice 

each year for use in the federal government’s budget process and to 

determine monthly estimates of FICA and SECA taxes to be transferred 

from the general revenue fund to the trust funds. Monthly, OTA prepares 

and submits to Treasury’s Financial Management Service (FMS) a 

document instructing FMS on the amounts to be transferred from the 

general revenue fund to the trust funds. FMS uses this document to 

process the initial distributions to the trust funds daily. Treasury’s Bureau 

of Public Debt (BPD) records these distributions on the books and records 

of the trust funds.

Subsequent to this initial distribution, the SSA Commissioner certifies 

quarterly the amounts that should ultimately be distributed to the trust 

funds. In making this certification, SSA uses two sources of wage data: 

(1) the wage and earnings statements (W-2s and W-3s) filed by employers 

and self-employed individuals annually with SSA and (2) payroll tax return 

information (Tax Form 941, quarterly information IRS transmits on tape to 

SSA). The certification is sent to FMS, which uses it to prepare 

adjustments for the difference between the initial distributions and the SSA 
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Commissioner’s subsequent certification. BPD records these adjustments 

on the books and records of the trust funds.

Figure 1 provides an overview of the process of collecting, distributing, and 

certifying payroll tax revenue for the Social Security and hospital insurance 

trust funds.

Figure 1: Overview of the Process for Distribution of FICA and SECA Tax Revenue to Trust Funds

As discussed above, the amounts distributed to the trust funds through 

both the initial distribution of payroll taxes and the subsequent 

certification/adjustment process are not based on actual amounts of tax 

revenue collected but rather on estimates of total tax liability derived from 

wage information. This ensures that individuals who work and have taxes 

withheld to pay into the Social Security program—or their spouses and 

qualified dependents—receive the appropriate level of program benefits 

when the individuals retire, become disabled, or die. Consequently, the 

Taxpayera

Payment/

Filing

$

Tax payments

 a Employers and self-employed individuals

Deposit tax

payments in

general fund 

Collection/

Accounting 

IRS

FMS

SSA

Estimation

Certification

Estimation

OTA FMS

Distribution/

Adjustment

Recording/

Accounting 

BPD

Investment in Treasury

securities/payment of

benefits 

Record

FICA/SECA

taxes in 

master file

Process tax returns 

and send payroll

tax data to

SSA monthly

Chief actuary

develops 

estimate 

of 

FICA/SECA

semiannually 

Calculate 

monthly

estimates 

of

FICA/SECA 

tax 

Prepare journal

entry to 

record

estimates 

Record entries into

- Federal Hospital 

Insurance

- Federal Old Age and

Survivors Insurance

- Federal Disability

Insurance Trust 

funds

941

Employer's 

Quarterly

Federal Tax 

Return 

W2, W3

Annual Wage and

Earnings 

Statement 

Calculate 

the certified 

amounts

quarterly 

Prepare journal 

entry to adjust 

OTA estimates 

to certified 

amounts 

quarterly
B-281574

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amounts distributed to the Social Security and hospital insurance trust 

funds are based on the wages an individual earns, not the amount the 

employer actually forwards to the government. 

While the majority of businesses pay the taxes withheld from employees’ 

salaries as well as the employers’ matching amounts, a significant number 

of businesses do not. This creates a situation in which the general revenue 

fund subsidizes the Social Security and hospital insurance trust funds to 

the extent that Social Security and hospital insurance taxes owed are not 

collected. Over time, the amount of this shortfall, or subsidy, is significant. 

As of September 30, 1998, the estimated amount of unpaid taxes and 

interest in IRS’ $222 billion unpaid assessments balance was approximately 

$38 billion for Social Security and hospital insurance taxes.4

 While this 

amount excludes unpaid payroll taxes no longer in the unpaid assessments 

balance due to the expiration of the statutory collection period,5

 it 

nevertheless provides an indication of the cumulative amount of the 

subsidy provided from the general fund.

When businesses withhold money from an employee’s salary for federal 

income taxes and the employee’s FICA obligation, they are deemed to have 

a responsibility to hold these amounts “in trust” for the federal government. 

To the extent that withholdings are not forwarded to the federal 

government, the business is liable for these amounts, as well as its 

matching FICA contribution. Individuals can also be held personally liable 

for the amounts withheld from an employee’s salary for federal income 

taxes and the employee’s FICA obligation. Under Section 6672 of the 

Internal Revenue Code, such individuals who are determined by IRS to be 

“willful and responsible” for the nonpayment of these amounts can be 

assessed a “trust fund recovery penalty” (TFRP). To be found willful and 

responsible, the individual would have to be proven to be in a position to 

(1) directly or indirectly prevent the payment of these withheld taxes to the 

federal government or (2) divert the payment of these withheld monies for 

other means, such as paying other creditors. It should be noted that the 

4

This estimate includes both FICA and SECA taxes but does not include federal income tax 

withholdings, which are a component of the reported $49 billion in unpaid payroll taxes at

September 30, 1998. Accrued interest is included in this amount because assessments distributed to the 

trust funds earn interest at Treasury-based interest rates, similar to IRS’ interest accruals.

5

The statutory collection period for collecting taxes is generally 10 years from the date of the 

assessment. However, this period can be extended or suspended under a variety of circumstances, 

such as agreements by the taxpayer to extend the collection period, bankruptcy litigation, and court 

appeals. Consequently, some tax assessments can and do remain on IRS’ records for decades.
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deliberate intent or desire to defraud the federal government is not 

necessary for IRS to assess a TFRP. For example, an individual in a 

business who decides to pay the business’ monthly rent payment instead of 

remitting employee withholdings to the federal government can be found to 

be willful and responsible and thus assessed a TFRP. Typically, these 

individuals are officers of a corporation, such as a president or treasurer. 

More than one individual can be found willful and responsible for a 

business’ failure to pay the federal government withheld payroll taxes and 

thus be assessed a TFRP. The amounts assessed against each individual 

can vary depending on the extent to which each individual was determined 

to be willful and responsible for multiple periods of unpaid taxes. 

Additionally, the business itself is still liable for the entire amount of the 

unpaid payroll taxes. However, IRS policies require that it only collect the 

unpaid tax once. For example, if, after the IRS assesses a TFRP against an 

officer of a corporation, the business pays the entire balance of the unpaid 

payroll taxes, the officer would no longer be liable for the TFRP 

assessment. Similarly, if two officers are each assessed TFRPs related to 

their business covering the same period of unpaid payroll taxes and one of 

the officers makes a partial payment, the liabilities of both officers, as well 

as the liability of the business, are to be reduced by the amount of the 

payment. 

Objectives, Scope and 

Methodology

The objectives of our review were to address the issues raised by the 

Subcommittee on Government Management, Information and Technology, 

House Committee on Government Reform, and through subsequent 

discussions with the requesters’ offices, regarding unpaid payroll taxes and 

trust fund recovery penalties. To address these issues, we identified the 

following questions we needed to answer:

• To what extent are payroll taxes not remitted to the federal 

government?

• What is the magnitude of the trust fund recovery penalties assessed 

against individuals who withheld but did not forward payroll taxes to 

the government?

• To what extent are individuals found responsible for withholding but 

not paying payroll taxes at more than one business?

• To what extent do businesses and individuals responsible for 

withholding but not paying payroll taxes receive federal benefits or 

other federal payments?
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• What factors affect IRS’ ability to enforce compliance or pursue 

collections in this area?

To answer these questions, we used a combination of (1) analyses6

 of data 

maintained on IRS’ automated systems, (2) detailed reviews of about

200 unpaid payroll tax and trust fund recovery penalty case files,

(3) automated comparisons of IRS records of unpaid payroll taxes and trust 

fund recovery penalties with disbursement and loan records of FMS and 

the Small Business Administration (SBA), and (4) structured interviews 

with IRS revenue officers and Collection Division group managers 

throughout the country. Additionally, we interviewed IRS personnel at the 

National Office, obtained and reviewed available IRS information on 

employment tax programs and initiatives, reviewed IRS’ statistical 

information from our prior reports on employment tax issues, and 

reviewed IRS’ collection policies and procedures and the laws that affect 

IRS’ use of enforcement tools.

We did not assess the controls, completeness, and accuracy of IRS, FMS, 

and SBA records. Furthermore, assessing the effectiveness of the IRS, 

FMS, and SBA practices for verifying and correcting erroneous Taxpayer 

Identification Number (TIN), Employer Identification Number (EIN), and 

name data was beyond the scope of this assignment. Nor did we attempt to 

identify and correct all problems relating to duplicate, misused, or 

erroneous TIN, EIN, and name data. Finally, we did not specifically audit 

the data in IRS’ systems used in our various macro analyses.

We performed our work from November 1998 through May 1999 in 

accordance with generally accepted government auditing standards. We 

requested comments on a draft of this report from the Commissioner of 

Internal Revenue. The Commissioner provided us with written comments 

which are discussed in the “Agency Comments” section and are reprinted 

in appendix II.

For more details on the scope and methodology of the assignment, see 

appendix I.

6

See appendix I for a discussion of the types of analyses performed and the IRS data sources used.
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To What Extent Are 

Payroll Taxes Not 

Remitted to the 

Federal Government?

According to IRS records, as of September 30, 1998, businesses owed the 

federal government about $49 billion in payroll taxes. This represents 

about 22 percent of the $222 billion in IRS’ inventory of unpaid tax 

assessments as of September 30, 1998. The $49 billion includes about $19 

billion in unpaid tax assessments and another $30 billion in penalties and 

interest.

Although unpaid payroll taxes are less than a quarter of IRS’ outstanding 

balance of unpaid assessments at September 30, 1998, they comprise over 

50 percent of IRS revenue officers’ caseloads in many regions of the 

country. Consequently, they represent one of IRS’ most significant 

enforcement challenges.

The Number and Age of 

Delinquent Payroll Taxes 

Are Significant

IRS records show that over 1.8 million businesses owe the total unpaid 

payroll taxes for more than 4.9 million separate tax periods or quarters. 

Nearly 50 percent of the businesses with outstanding payroll taxes are 

delinquent for more than one quarter. While some of these businesses have 

only one or two quarters of unpaid payroll taxes owed the government, 

others have in excess of 40 quarters of delinquent payroll taxes. Table 1 

profiles the number of businesses with multiple quarters of delinquent 

unpaid payroll taxes.

Table 1: Businesses With Multiple Quarters of Unpaid Payroll Taxes 

a

Consists of taxes, penalties and interest. 

Source: IRS business master file.

As the table illustrates, a significant number of businesses have multiple 

tax periods of unpaid payroll taxes. These multiple periods of unpaid 

payroll taxes go back a number of years, as shown in the following figure. 

Unpaid payroll taxes

Number of businesses Number of quarters

Outstanding balancea

(Dollars in billions)

1,702,177 1 to 6 $26.4

158,106 7 to 20 21.0

5,281 21 to 40 1.5

86 Over 40 0.1

Total -- $49.0
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Figure 2: Percent of Delinquent Quarters of Unpaid Payroll Taxes by Age

The age of these quarters of unpaid payroll taxes and their outstanding 

balances are further illustrated in table 2. 

Table 2: Delinquent Quarters of Unpaid Payroll Taxes and Their Outstanding 

Balances by Age

a

Consists of taxes, penalties and interest. 

Source: IRS business master file.

Over 52 percent of the 4.9 million in delinquent quarters of payroll taxes 

predate 1994. The outstanding balance of these delinquent quarters of 

Unpaid payroll taxes

Tax years Number of quarters

Outstanding balancea

(Dollars in billions)

1994-1998 2,348,838 $14.4

1988-1993 2,198,493 25.4

1980-1987 407,619 9.0

Before 1980 3,491 0.2

Total 4,958,441 $49.0

1980-1987

Before 1980

1994-1998

1988-1993

0%

8%

48% 44%
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payroll taxes totals over $34 billion and represents over 70 percent of the 

total balance of unpaid payroll taxes in IRS’ inventory of unpaid 

assessments at September 30, 1998. Additionally, over 8 percent of the 

delinquent quarters of payroll taxes predate 1988. The outstanding balance 

of these delinquent quarters of payroll taxes, about $9 billion, represents 

over 18 percent of the total balance of unpaid payroll taxes at

September 30, 1998.

Potential Collectibility of 

Unpaid Payroll Taxes Is Low

Our previous work on IRS’ unpaid assessments7 has shown that older 

delinquent taxes have little likelihood of collection. Furthermore, because 

IRS continues to accrue significant amounts of interest and penalties on 

these delinquent taxes as they age, additional amounts that will not be 

collected are added to IRS’ balance of unpaid assessments. IRS records 

indicate that over 60 percent of the $49 billion outstanding balance of 

unpaid payroll taxes at September 30, 1998, consists of interest and 

penalties.

IRS’ business master file—its detailed record of business taxpayer 

accounts—contains codes reflecting the status of each given taxpayer’s 

account by tax period. These codes provide some insight into the potential 

for collecting on a given taxpayer account. Codes in many of the 4.9 

million delinquent payroll tax accounts indicate little potential for 

collection. For example, nearly 1.4 million of the delinquent payroll tax 

accounts (28 percent) have codes indicating that the businesses which owe 

these taxes are no longer in existence. Similarly, for 487,000 delinquent 

payroll tax accounts (10 percent), IRS records indicate that the businesses 

that owe these taxes are insolvent or IRS has been unable to locate or 

contact them. For 444,000 delinquent payroll tax accounts (9 percent), IRS 

records indicate the businesses do not have the resources to pay the 

amounts owed, and 189,000 (4 percent) are owed by businesses in 

bankruptcy or other litigation proceedings. Consequently, these records 

would indicate that the majority of the unpaid payroll taxes owed the 

federal government are not likely to be collected.

Our review of a statistical sample of 690 unpaid tax assessments selected 

as part of our audit of IRS’ fiscal year 1998 financial statements reinforces 

this conclusion. Of the 690 unpaid tax assessment accounts selected for 

7

See Internal Revenue Service: Composition and Collectibility of Unpaid Assessments

(GAO/AIMD-99-12, October 29, 1998).
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review, 191 of these cases, with outstanding balances of about $121 million, 

were unpaid payroll taxes or associated TFRPs.8

 In our review of these 

cases, both we and IRS determined that about 9 percent of the outstanding 

balances would likely be collected.

Types of Businesses With 

Unpaid Payroll Taxes

There are many types of businesses with delinquent payroll taxes. IRS 

records break out these unpaid payroll taxes into broad categories by 

business type. For example, IRS’ business master file includes the 

following categories: exempt organizations, partnerships, corporations, 

federal filers, state or local governments, and sole proprietorships. Within 

these broad categories, corporations represent about 56 percent of the 

total number of unique businesses with unpaid payroll taxes. Sole 

proprietorships represent the second most significant category, about 29 

percent of the total, and partnerships represent the third most significant 

category, about 7 percent.

Our review of the 191 unpaid payroll tax cases and discussions with IRS 

revenue officers throughout the country identified additional 

characteristics of the businesses that have failed to forward payroll taxes 

to the federal government. These businesses are typically in wage-based 

industries, with few assets available as a potential collection source for the 

IRS. They are usually small, closely held businesses using a corporate 

structure, but this can vary by region of the country. For example, revenue 

officers in the New England area informed us that 80 to 95 percent of the 

businesses comprising their unpaid payroll tax caseloads were 

corporations. Conversely, revenue officers in Arkansas and Oklahoma told 

us that corporate forms of business comprise only 20 to 30 percent of their 

unpaid payroll tax caseloads. 

Many of the revenue officers we interviewed noted that construction and 

restaurants were the most common types of industries that give rise to 

unpaid payroll taxes. However, in areas such as Dallas, Fort Worth, Tampa, 

and Central California, we were told that computer software and other high 

technology industries comprise a significant portion of the revenue 

officers’ unpaid payroll tax caseloads. Revenue officers also cited child 

8

While our sample of 690 unpaid assessment accounts is a representative sample, the 191 unpaid payroll 

tax and TFRP cases selected as part of this sample cannot be considered statistically representative of 

the entire population of such cases. Thus any analysis of these 191 cases cannot be projected to the 

entire population of unpaid payroll taxes and TFRPs. See appendix I of this report for additional 

details.
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care and professional services, such as legal, medical, and accounting 

firms, as other types of businesses that give rise to unpaid payroll taxes. 

Figure 3 presents the most common business/industries with unpaid 

payroll taxes identified in our review of the 191 cases. 

Figure 3: Most Common Businesses/Industries With Unpaid Payroll Taxes From 

Cases Reviewed

Other types of businesses noted in our review of the 191 unpaid payroll tax 

cases included (1) professional services, (2) consultants, (3) education and 

training, (4) computer software, and (5) child care.

A majority of the revenue officers indicated that the businesses with unpaid 

payroll taxes typically had quarterly payroll tax liabilities of between 

$10,000 and $50,000, were undercapitalized, and experienced serious cash 
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flow problems. A number of the revenue officers told us they believed that 

the lack of sound business management skills also contributed to 

businesses’ inability to pay their payroll taxes.

What Is the Magnitude 

of the Trust Fund 

Recovery Penalties 

Assessed Against 

Individuals Who 

Withheld But Did Not 

Forward Payroll Taxes 

to the Government?

According to IRS records, as of September 30, 1998, outstanding TFRPs 

assessed against individuals were about $15 billion. This amount includes 

initial assessments of about $9 billion and accumulated interest of about

$6 billion. IRS records indicate a total of about 237,000 separate TFRP 

assessments made against nearly 185,000 distinct individuals. 

To understand the relationship between the $49 billion in unpaid payroll 

taxes per IRS records at September 30, 1998, and the outstanding TFRP 

balance of $15 billion, it is important to note several points, some of which 

were discussed earlier. First, a TFRP assessment is only for the federal tax 

withholding and FICA taxes withheld from employees’ salaries; it does not 

include the business’ or employer’s matching FICA contributions. Second, 

a TFRP can be assessed against anyone found willful and responsible for 

the withholding and nonpayment of payroll taxes. If several individuals 

involved in a business are found willful and responsible, they can each be 

separately assessed a TFRP for the unpaid taxes. However, while TFRPs 

are assessed against one or more individuals and thus appear as separate 

unpaid assessments on IRS’ records, the total payroll taxes owed by the 

business are to be collected only once. This means that if the business 

responsible for the unpaid payroll taxes pays some or all of its delinquent 

taxes, or if one of several individuals assessed a TFRP covering the same 

delinquent tax period pays some or all of the assessment, the tax liability 

for all related parties should be reduced or eliminated from IRS’ records.

It is also important to note that the number and outstanding balance of 

TFRPs discussed above do not provide a complete picture of their 

magnitude or the individuals who withheld but did not forward payroll 

taxes to the government. Serious financial management deficiencies and 

internal control weaknesses, as well as policy decisions regarding when to 

assess TFRPs, affect the completeness and reliability of these amounts.
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System Deficiencies Affect 

the Completeness and 

Accuracy of TFRP 

Information

In our October 1998 report9 on internal control weaknesses at IRS, which 

was based on the results of our audit of IRS’ fiscal year 1997 custodial 

financial statements,10 we discussed serious financial management systems 

issues that affected IRS’ ability to effectively manage and accurately report 

on its unpaid assessments. One of the most serious issues we discussed 

related to the inability of IRS to link related taxpayer accounts to ensure 

that they all receive appropriate credit when a payment is made on one 

account. This is of particular concern with respect to unpaid payroll taxes 

and related TFRPs. The unpaid payroll tax of a business is maintained on 

IRS’ business master files while the TFRP assessed against an individual, 

or individuals, is maintained on IRS’ individual master files – a detailed 

record of individual taxpayer accounts. These two separate and distinct 

databases are not integrated. Consequently, if a payment is received from 

the business, there is no automated entry to record the reduction in the 

individual, or individuals’, TFRP account or accounts. This has led to 

instances where IRS has pursued collection against officers of a 

corporation for amounts that had already been paid.

IRS has attempted to correct this problem by manually entering a code on 

related taxpayer accounts to alert IRS personnel that related accounts exist 

and should be reviewed to ensure all transactions are appropriately 

reflected on each account. However, the use of these codes, referred to as 

“cross-references,” has not been effective in providing the compensating 

link between related taxpayer accounts. As shown in table 3, both our 

fiscal years 1997 and 1998 financial audits identified a high incidence of 

unpaid payroll tax cases with TFRPs assessed against individuals in which 

payments were not accurately recorded in all related accounts to reflect 

each responsible party's tax liability reduction.

9

See Internal Revenue Service: Immediate and Long-Term Actions Needed to Improve Financial 

Management (GAO/AIMD-99-16, October 30, 1998).

10See Financial Audit: Examination of IRS’ Fiscal Year 1997 Custodial Financial Statements

(GAO/AIMD-98-77, February 26, 1998).
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Table 3: Frequency of Payments Improperly Recorded to Related Taxpayer Accounts 

Identified in Fiscal Years 1997 and 1998

In our fiscal year 1998 audit, we also determined that this problem was not 

caused solely by the lack of an automated link between IRS’ business and 

individual master files. In 7 of the 54 cases we reviewed where payments 

were not properly recorded, IRS failed to credit one individual’s TFRP 

liability account for payments made by another individual who had also 

been assessed a TFRP for the same business’ unpaid payroll taxes. 

Additionally, in 52 cases where a TFRP was assessed (50 percent), a “cross 

reference” was not present in the master files to alert IRS personnel that 

the account was related to one or several other accounts. These problems 

have resulted in instances of unintentional taxpayer burden, such as 

inappropriate federal tax liens on taxpayers’ property, and affect the 

accuracy of reported balances of both the unpaid payroll tax and the 

associated TFRP.

Significant delays in recording payments also affect the completeness and 

accuracy of the reported amounts for both unpaid payroll taxes and TFRPs. 

In one instance, we found that payments were recorded to the individual’s 

account over 8 years after they had been received. Additionally, we found 

that IRS did not always assess responsible individuals TFRPs in a timely 

manner. Specifically, we found two cases in which IRS did not assess a 

TFRP against officers of businesses until 36 and 55 months, respectively, 

after the businesses filed their payroll tax returns. During this period, these 

officers received tax refunds. Had IRS assessed the TFRPs more promptly, 

it would have been able to retain, or offset, the refunds to recover a portion 

of the balance of the unpaid payroll taxes.

IRS is developing an automated system application to eliminate some of 

these deficiencies. This system application, called the Automated Trust 

Fund Recovery (ATFR) system, is being designed to automate the 

assessment and monitoring of TFRPs. The application is to divide the 

Cases reviewed where 

payments were not reflected 

on all related taxpayer 

accounts

Fiscal year

Number of unpaid payroll

tax cases reviewed where

a TFRP was assessed Number Percent

1997 83 53 64

1998 104 54 52
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TFRP process into two distinct but interactive parts, the district office and 

service center functions. The district office application, which is being 

developed first, is to include case inventory control, monitoring of 

assessment determination dates, and the calculation of the TFRP. An IRS 

National Office official we spoke with estimated that the system 

application will be implemented nationwide during fiscal year 2000.

Not All Individuals 

Responsible for 

Nonpayment of Payroll 

Taxes Are Assessed TFRPs

In addition to the serious financial management deficiencies and internal 

control issues that affect the integrity of IRS’ data on unpaid payroll taxes 

and TFRPs, IRS does not track or otherwise systemically maintain 

information on the number and dollar value of potential TFRPs that are not 

assessed. The number and dollar value of these unassessed penalties 

could be significant.

In determining whether to assess an individual a TFRP for unpaid payroll 

taxes, IRS considers a number of factors. First, IRS must be able to 

establish that an individual was, in fact, willful and responsible for the 

nonpayment of payroll taxes. Typically, individuals responsible for the 

nonpayment of payroll taxes are officers of a corporation, such as the 

president, treasurer, or controller. However, this is not always the case. 

For example, payroll clerks at businesses have been found liable for the 

nonpayment of payroll taxes and consequently assessed a TFRP. 

Some businesses operate in a fashion which allows an individual without 

direct responsibility to nonetheless indirectly influence the nonpayment of 

payroll taxes. Thus, establishing that an individual was both willful and 

responsible is not always easy. An example of this would be a corporate 

director who, by all established lines of authority, has no direct 

involvement in the day-to-day operations of the business but who, in 

practice, is heavily involved in the business’ operations. In one case we 

reviewed involving a technical school, the president and two chief financial 

officers of the school were each initially assessed TFRPs for the unpaid 

payroll taxes owed by the school. However, these officers appealed the 

assessments, arguing that a parent corporation, which was a firm based 

outside the United States, actually controlled how the school’s cash was 

spent. The appeals were successful and the TFRP assessments were 

subsequently removed.

In determining whether to assess a TFRP, IRS also considers the amounts 

involved and the cost associated with pursuing collection actions against 

the individual. If IRS concludes the amounts involved do not warrant the 
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cost of pursuing collection, it typically will not assess the TFRP. 

Additionally, IRS does not assess sole proprietors and partnerships TFRPs 

for unpaid payroll taxes. The IRS instead believes it can best pursue 

collection against the individual through his or her individual tax return 

filing. Finally, IRS also considers the potential to collect the assessment in 

determining whether to assess the TFRP. If the individual has few or no 

assets, low earnings, and no other visible means of paying the assessment, 

IRS may decide not to assess the TFRP. Consequently, the numbers and 

dollar value of outstanding TFRPs discussed above likely significantly 

understate the extent to which individuals are responsible for not 

forwarding payroll taxes to the federal government.

Collectibility Potential on 

TFRPs Is Not Considered 

Great

While IRS considers the potential for collection in determining whether to 

assess a TFRP, IRS’ records, our discussions with revenue officers, and our 

work on a sample of unpaid assessments performed as part of our audit of 

IRS’ fiscal year 1998 financial statements indicate that the potential for 

significant collections on TFRPs is not great. Status codes in IRS’ 

individual master files for about 76,000 (32 percent) of the 237,000 TFRPs 

assessed against individuals reflect conditions that minimize the likelihood 

of collection. These conditions include the following: (1) the individual 

cannot be located or contacted, (2) the individual is in bankruptcy 

proceedings or some other form of litigation, (3) the individual does not 

have the ability to pay the assessment, and (4) the individual is deceased. 

Discussions with revenue officers throughout the country have reinforced 

the conclusion that TFRP assessments are not highly collectible. Many 

revenue officers we interviewed believe that less than 30 percent of 

amounts assessed as TFRPs are ultimately collected. Of the 104 unpaid 

payroll tax cases we reviewed where TFRPs were assessed, we determined 

that only 8 cases had some potential for collectibility. 
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To What Extent Are 

Individuals Found 

Responsible for 

Withholding But Not 

Paying Payroll Taxes at 

More Than One 

Business?

IRS records indicate that, as of September 30, 1998, nearly 25,000 

individuals, or about 13 percent of the 185,000 individuals with TFRPs, 

have been assessed such penalties for unpaid payroll taxes at more than 

one business. As shown in table 4, about three-quarters of these individuals 

have TFRP assessments for two separate businesses, and about a quarter 

have been found responsible for the nonpayment of payroll taxes at three 

or more businesses. 

Table 4: Number of Individuals With Trust Fund Recovery Penalties for Two or More 

Businesses

Source: IRS UNLCER files and individual master file.

As table 4 illustrates, a significant number of individuals have been found 

willful and responsible for the nonpayment of payroll taxes at multiple 

businesses. In fact, IRS’ records indicate that seven individuals have been 

assessed TFRPs at 20 or more separate and distinct businesses. It is 

important to reiterate that these data may not provide a complete and 

accurate assessment of the degree to which such “multiple offenders” 

exist, due to the significant deficiencies in IRS’ financial management 

systems and internal controls discussed above, and the fact that IRS does 

not always assess an individual a TFRP. Additionally, these data cannot 

take into consideration those individuals who establish new businesses 

under other names or otherwise conceal their identity.

Our review of the 191 unpaid payroll tax-related cases and our discussions 

with revenue officers throughout the country confirm that a significant 

number of individuals have been found liable for the nonpayment of payroll 

taxes at more than one business. Of the 104 unpaid payroll tax cases we 

reviewed in which TFRPs were assessed against individuals, we found that 

Number of businesses Number of individuals

2 18,993

3 3,925

4 1,079

5 409

6 192

7-12 235

Over 12 29

Total 24,862
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30 (29 percent) involved individuals assessed TFRPs for more than one 

business. In one case, we found that an individual had TFRP assessments 

outstanding for four separate businesses and had been determined 

responsible for the nonpayment of payroll taxes at a fifth business. In all 

instances, the individual established and operated construction-related 

(electrical) companies in which he was both owner and president. Each 

company accumulated unpaid payroll taxes and then went out of business. 

Shortly after each company went out of business, the individual opened a 

new company in the same line of business. For the most recent business, 

the company has an installment agreement in effect with the IRS to pay the 

amounts of unpaid payroll taxes for that business; however, at the time of 

our review, IRS records showed that the company was substantially behind 

in its payments.

Most of the revenue officers we interviewed also noted that their caseloads 

included individuals with multiple TFRPs assessed against them. These 

individuals represented 1 percent to 60 percent of their caseloads. Several 

of the revenue officers included as “multiple offenders” individuals who 

had multiple TFRPs assessed against them for the same business. For 

example, a business may have been delinquent in paying payroll taxes 

throughout 1995, and an officer may have been assessed a TFRP for the 

unpaid taxes for that year. Subsequently, the business may have failed to 

remit withheld payroll taxes for 1997, and the same officer may have been 

assessed an additional TFRP for the 1997 unpaid taxes. 

Reasons Individuals 

Continue to Have Unpaid 

Payroll Taxes

Most of the revenue officers we interviewed believe the majority of the 

individuals responsible for not paying payroll taxes at multiple businesses 

do not flagrantly disregard their responsibility to forward such payments to 

the federal government. Most of the revenue officers stated that these 

individuals lack the skills necessary to properly manage a business. Many 

start up a business with little capital and quickly find themselves 

experiencing cash flow problems. In their struggle to stay in business, 

these individuals prioritize and direct their payments to those recipients 

without which the business would quickly fail, such as employee salaries, 

rent, and utilities. Eventually the business is unable to sustain even these 

payments, and it fails. Unfortunately, these individuals do not learn from 

some of the mistakes they make, and are soon opening and operating a new 

business in much the same manner. 

The revenue officers acknowledged, however, that some individuals 

intentionally disregard their responsibility to forward payroll taxes to the 
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federal government. One revenue officer noted a case in which an 

individual was ultimately determined to be responsible for not paying the 

payroll taxes at three businesses. This individual used family members to 

conceal his involvement in two of the businesses. He was the president of 

the first business and had the business assets listed in his name. After this 

corporation had accrued but not paid substantial payroll tax liabilities, the 

corporation went out of business and he established a new corporation, 

listing his wife as president and placing the assets in her name. He 

subsequently established a third corporation, this time listing his daughter 

as the president and placing the assets in her name. Both of these 

subsequent corporations also accrued significant unpaid payroll tax 

liabilities. The revenue officer ultimately determined that the individual 

was heavily involved in these two businesses through discussions with the 

individual’s wife and daughter, who identified him as having the day-to-day 

responsibilities for operating the businesses. 

Regardless of an individual’s intent, the failure to pay withheld payroll 

taxes has the same effect on the federal government. Whether an 

individual continues to exercise poor business judgment or flagrantly 

disregards his or her responsibility for paying withheld payroll taxes, the 

federal government incurs costs to pursue collection of the delinquent tax 

debt and loses revenue to the extent such taxes are not ultimately 

collected. Additionally, as discussed previously, to the extent payroll taxes 

are not paid, the general revenue fund subsidizes the Social Security and 

hospital insurance trust funds. As a result, less funds are available to 

finance other federal programs.

To What Extent Do 

Businesses and 

Individuals 

Responsible for 

Withholding But Not 

Paying Payroll Taxes 

Receive Federal 

Benefits or Other 

Federal Payments?

We found that businesses and individuals responsible for withholding but 

not paying payroll taxes receive substantial payments from the federal 

government, either for federal benefits or for other payment purposes, such 

as federal contracts or loans. We based this conclusion primarily on 

comparisons of IRS records of business unpaid payroll taxes and 

individuals assessed TFRPs with the Financial Management Service (FMS) 

payment and the Small Business Administration’s (SBA) loan records. We 

also found examples of such benefits and payments from our review of the 

191 unpaid payroll tax-related assessment cases from our fiscal year 1998 

financial audit.
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Federal Disbursement 

Records Indicate Delinquent 

Taxpayers Are Receiving 

Significant Federal 

Payments 

We matched IRS records of individuals with outstanding TFRPs with FMS 

payment records for Social Security benefits, federal civilian retirement 

benefits, federal civilian salaries, and Railroad Retirement Board (RRB) 

pension benefits. Based on this match, we estimate that about 18,800 of 

these individuals were receiving about $212 million in annual federal 

benefit payments while owing almost $2 billion in delinquent payroll taxes. 

Table 5 presents the benefits, the number of taxpayer matches, the 

estimated annual payments made to the taxpayers, and the taxpayers’ tax 

liabilities as of September 30, 1998.

Table 5: Delinquent Taxpayers Receiving Federal Benefits at September 30, 1998 

Source: GAO analysis of FMS payments and IRS’ records for trust fund recovery penalties.

We also matched FMS records of payments made to civilian vendors over a 

3-month period to IRS’ records of businesses with unpaid payroll taxes and 

individuals with outstanding TFRPs. Based on this match, we found that 

about 16,700 taxpayers with payroll tax liabilities of about $507 million at 

September 30, 1998, received about $7 billion in federal payments over this 

3-month period. Because of the sporadic nature of these payments, we did 

not attempt to estimate an annual amount for these payments.

Additionally, based on our matching of IRS records of businesses with 

unpaid payroll taxes with SBA’s records of outstanding loans as of 

September 30, 1998, we estimate that about 12,700 taxpayers with unpaid 

payroll taxes estimated at more than $295 million had received loan 

disbursements totaling about $3.5 billion. Further analysis disclosed that 

38 of these taxpayers, with outstanding TFRPs of about $1.6 million, 

received SBA loans estimated at $10.6 million after IRS had assessed the 

TFRPs. In addition, 1,719 taxpayers (businesses and individuals) with 

unpaid payroll taxes of about $31.6 million received SBA loans estimated at 

$448.7 million after accumulating these tax delinquencies.

Dollars in millions

Payment type Taxpayers

Estimated annual

payments

Tax liabilities at

September 30, 1998

SSA 18,199 $ 200.4 $ 1,902.0

Civilian Retirement 271 3.9 21.5

Civilian Salary 215 6.3 14.1

RRB 81 1.0 7.7

Total 18,766 $ 211.6 $1,945.3
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However, any conclusions drawn from this analysis must take into 

consideration the potential problems with the reliability and completeness 

of IRS data. As discussed earlier, serious deficiencies in IRS’ financial 

management systems and internal control weaknesses have resulted in IRS’ 

records not always portraying an accurate picture of taxpayers’ account 

status. To the extent that payments or credits for payments have not been 

recorded in a taxpayer’s account, the account may reflect an outstanding 

balance that no longer exists, possibly overstating the level of actual 

matches between IRS records and FMS payment records or SBA’s records 

of outstanding loans. Additionally, to the extent assessments have not been 

promptly recorded in IRS systems, the number of matches of taxpayer 

delinquencies to either the various FMS disbursement listings or SBA’s 

records of outstanding loans may be understated. Finally, the number of 

matches between IRS records and various FMS disbursement listings does 

not include those individuals responsible for not paying payroll taxes who 

were not assessed a TFRP. Consequently, there could be a significant 

number of individuals who were responsible for not paying a business’ 

payroll taxes and who have received, or are currently receiving, federal 

benefits or other federal payments that are not reflected in the above data.

Cases Reviewed Also 

Identified Delinquent 

Taxpayers Receiving 

Federal Benefits and 

Payments

In our review of the 191 unpaid payroll tax-related assessment cases 

selected as part of our unpaid assessments sample, we identified instances 

where either businesses with outstanding unpaid payroll taxes or 

individuals responsible for the nonpayment of these taxes were also 

receiving federal benefits or other federal payments. These included six 

cases in which businesses and individuals were receiving federal contract 

payments, three cases in which individuals were receiving Earned Income 

Tax Credit refunds, one case in which an individual was receiving Social 

Security benefits, and one case in which an individual received an SBA 

loan. In fact, in one case we reviewed involving a computer services 

consulting corporation, all of the company’s business involved contracts 

with the federal government, specifically the Health Care Financing 

Administration. Because the underlying case file documentation did not 

always include information on federal benefits or other federal payments, 

we were unable to determine the actual number of instances in which such 

benefits or payments were being received.

Revenue officers informed us that they had instances in their caseloads of 

businesses that had received or were receiving some form of federal 

benefit or payments, most notably SBA loans and federal contracts. Most 

of the revenue officers stated that the percentage of such cases was 
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relatively low, typically less than 10 percent. However, a few of the revenue 

officers indicated that the percentage of their cases involving businesses 

receiving SBA loans or federal contract payments was substantially higher. 

For example, several revenue officers noted that between 30 and 

40 percent of these cases involved businesses which received SBA loans. 

This reinforces the fact that federal benefits and other federal payments are 

being made to businesses and individuals who have unpaid payroll taxes.

What Factors Affect 

IRS’ Ability to Enforce 

Compliance or Pursue 

Collections in This 

Area?

Several factors affect IRS’ ability to enforce compliance with respect to the 

payment of payroll taxes and to pursue collections of unpaid payroll taxes 

from the businesses or the responsible individuals. These factors include 

(1) serious financial management system deficiencies and internal control 

weaknesses, (2) ineffective early warning and taxpayer education 

programs, (3) procedural limitations, (4) federal and state laws, (5) staffing 

resources and other factors IRS employees perceive as affecting 

enforcement and collections, and (6) the capability to offset federal 

benefits and other federal payments against the unpaid tax assessments.

Financial Management 

System Deficiencies and 

Internal Control 

Weaknesses Affect 

Accuracy of Taxpayer 

Account Status

As discussed previously, IRS’ financial management systems and internal 

controls do not provide timely, accurate, and complete information on the 

status of taxpayers’ accounts. The lack of an automated link or interface 

between IRS’ business and individual master files prevents IRS from having 

a complete record of related taxpayer accounts to ensure that all activity, 

such as collections, are properly recorded in all related accounts. Without 

this information, IRS has no assurance that its records for an individual 

taxpayer or business are complete and accurate. As discussed earlier, this 

has resulted in instances where IRS has pursued and collected amounts 

that were no longer owed. While IRS has made some progress in 

attempting to compensate for the lack of an automated interface between 

the two taxpayer databases, these efforts to date have not been fully 

effective in ensuring the accuracy of taxpayer accounts. Until adequate 

automated systems are implemented, significant ongoing resources will be 

required to compensate for these systems deficiencies. In addition, delays 

in assessing individuals TFRPs result in missed opportunities to collect 

amounts through such means as retaining or offsetting refunds against 

unpaid payroll taxes.
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Taxpayer Education and 

Early Warning Programs Are 

Not Considered Effective

IRS has two programs to prevent payroll tax delinquencies: the (1) Small 

Business Tax Education Program and (2) Federal Tax Deposit (FTD) Alert 

Program.

The Small Business Tax Education Program attempts to prevent payroll tax 

and income tax delinquencies by offering education programs and tax 

workshops to individuals wishing to start up a business. IRS started the 

small business tax workshop—a part of the Small Business Tax Education 

Program—in the early 1980s. According to IRS officials, during fiscal year 

1998, 1,912 workshops and education programs serving over 46,000 

individuals were held nationwide. IRS is also working to enhance the 

program through several other initiatives, including developing various 

workshops in coordination with SBA. Many of the revenue officers we 

interviewed nationwide noted that this program has not been very effective 

in reducing or preventing delinquent payroll taxes. Others noted that there 

has been little demand for taxpayer education, that the attendance at these 

workshops has been low, and that the individuals in most need of attending 

these workshops did not appear to be present. 

The FTD Alert Program, which was initiated in 1972, is intended to identify 

and prevent potential payroll tax payment delinquencies through early 

identification of required deposits under the FTD system that have not been 

made. Before the end of each quarter, IRS systems identify employers 

making semiweekly tax deposits who have failed to deposit their taxes 

during the quarter. The Alert Program targets larger employers (those who 

reported more than $50,000 in payroll taxes on their quarterly Tax Form 

941 filings during the previous 12-month period) who deposit semiweekly. 

Information regarding taxpayers who failed to make their deposits is 

transferred to tapes, which are sent to the service centers for printing of 

the alert notices and mailing to the respective district offices. 

IRS designates FTD alerts as mandatory or optional. Mandatory FTD alerts 

are generated for semiweekly depositors who have not made deposits 

during the current quarter or who have made them in substantially reduced 

amounts and were assessed an FTD penalty11 of at least $100 in each of the 

four prior quarters. IRS policy requires revenue officers to contact 

taxpayers as soon as possible after receipt of a mandatory alert. Optional 

FTD alerts are issued for taxpayers who have been assessed an FTD 

11Taxpayers are assessed a late penalty for failure to make timely FTD deposits.
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penalty of at least $100 in two of the four quarters or in only one of the four 

prior quarters if the amount owed for that quarter remains outstanding.

According to IRS records, over 44,000 FTD alerts were issued from

July 1, 1997, through June 30, 1998. About 38 percent of these alerts were 

mandatory, meaning IRS revenue officers were required to contact the 

taxpayer. The other 62 percent were optional FTD alerts and did not 

require contact with the taxpayer.

Some of the revenue officers we interviewed stated that FTD alerts were 

only marginally effective in preventing delinquencies. Some others noted 

that the alerts are not received in the field early enough to prevent 

employers from accumulating substantial delinquencies or to provide early 

warning of potential problems. For example, the criteria for issuing a 

mandatory FTD alert is that the taxpayer has been late in making required 

deposits in each of the prior four quarters. The repeated late payments are 

an indication of potential problems that revenue officers might be able to 

identify early if they are made aware of the late payments. Additionally, the 

time it takes to produce the alerts and send them to the district offices for 

assignment to revenue officers for follow up also adds to the delays in 

making contact with the taxpayer. By the time the FTD alerts are received 

and acted on, employers have fallen behind on current quarter tax deposits 

and are not likely to have the resources available to pay the previous tax 

delinquencies that precipitated the FTD alert. 

Some of the revenue officers also noted that the alerts received were often 

invalid or unproductive. Often the taxpayer’s case has already been 

designated as delinquent, or the taxpayer has actually gone out of business 

before the revenue officer makes contact. In other instances, the employer 

has already paid the delinquent payroll taxes between the time the FTD 

alert is issued and received in the field and the contact is made with the 

taxpayer. Some revenue officers also stated that the FTD alerts yield few 

collections compared to the effort expended in processing the alerts.

The revenue officers stated that IRS has no established procedures for 

early detection and prevention of delinquent payroll taxes other than the 

Small Business Tax Education Program and the FTD Alert Program. They 

noted that some district offices have used other early intervention 

techniques in the past to identify and prevent delinquencies, including 

contacting the employer after the initial delinquency has been identified or 

following up directly with the taxpayer immediately after the first notice of 

tax deficiency is sent to the taxpayer. However, at most districts, revenue 
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officers informed us that these types of early intervention techniques were 

no longer being used due to resource considerations.

Certain IRS Procedures 

Limit Collection and 

Prevention Efforts

According to various IRS Collection Division field personnel, another 

problem that inhibits IRS’ ability to collect delinquent payroll taxes and to 

prevent taxpayers from accumulating multiple payroll tax delinquencies is 

that the IRS’ Criminal Investigation Division (CID) and District Counsel do 

not prosecute taxpayers for failing to pay payroll taxes unless fraud is 

clearly evident. Some of these field personnel noted that even in instances 

where the taxpayers have multiple tax delinquencies, CID and the District 

Counsel appear reluctant to pursue prosecution. A few field personnel 

noted that IRS could seek injunctions through the U.S. Attorney’s Office to 

prevent taxpayers from accumulating multiple payroll tax delinquencies 

and that the District Counsel prefers not to seek such injunctions due to the 

time and expense required to prosecute such cases.

Federal and State Laws Also 

Inhibit Compliance and 

Collection Efforts

Federal and state laws also affect IRS’ ability to enforce compliance with 

respect to payment of payroll taxes or to pursue collections on delinquent 

payroll taxes. States, not the federal government, govern the incorporation 

of businesses, and state licensing authorities have the power to grant or 

deny business licenses for new and existing businesses. State licensing 

authorities can deny business licenses or license renewals for businesses 

which fail to pay state taxes, but they do not consider federal payroll tax 

delinquencies. This is in part because, in accordance with section 6103 of 

the Internal Revenue Code, disclosure of federal tax information without 

taxpayer consent is generally prohibited. IRS is precluded from sharing 

information such as the status of taxpayers’ federal tax accounts with the 

state licensing authorities. Consequently, the licensing authorities cannot 

consider, and do not have available to them, information on federal tax 

delinquencies in determining whether to grant, renew, deny, or suspend 

business licenses. This inhibits IRS’ ability to prevent individuals 

responsible for the nonpayment of payroll taxes from starting up a new 

business and repeating the practice.

According to some Collection Division field representatives, these legal 

disclosure prohibitions also limit IRS’ ability to use other options available 

to some state and local taxing authorities to bring delinquent taxpayers 

back into compliance with their tax obligations. Specifically, these 

representatives noted IRS’ inability to publish the names of delinquent 

taxpayers to increase compliance and generate collections, a process that 
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has been used with some success by a number of states and local taxing 

authorities. For example, Connecticut, Montana, and the District of 

Columbia publish information on delinquent taxpayers on Internet web 

sites. The type of information disclosed varies somewhat but can include 

the name of the taxpayer, responsible corporate officers, location, the 

types of state and/or local taxes owed (i.e., withholding or income), and the 

amounts owed. A Connecticut official, in particular, indicated that the 

delinquent taxpayer disclosure program instituted by the state has been 

quite successful, generating collections of about $25 million in delinquent 

state taxes between January 1997 and February 1998. 

One IRS field representative we spoke with also mentioned that in 

California, new businesses are required to post bonds for state payroll 

taxes as a prerequisite to the granting of a new business license. In this 

manner, the state is protected to some degree in the event of nonpayment 

of state payroll taxes. Other field representatives we spoke with noted that 

such a requirement with respect to federal payroll taxes prior to granting a 

business an employer identification number could provide similar 

protection to the federal government. This avenue is currently not 

available to the federal government.

According to some IRS field representatives, the agency’s ability to pursue 

collections of delinquent payroll taxes and associated TFRPs is also 

inhibited by the property laws of some states, as well as varying 

interpretations of bankruptcy laws. According to some representatives, 

IRS is unable to enforce collection of delinquent taxes and penalties in a 

number of states because state laws preclude attaching liens to, and 

seizing, personal property. In states where Tenancy by the Entirety12 laws 

exist, IRS is prohibited from attaching liens or seizing any personal 

property that is jointly owned by married couples when only one of the 

spouses is liable for the delinquent taxes. Currently, at least Alaska, 

Indiana, Missouri, New Jersey, New York, North Carolina, Ohio, Oregon, 

and Utah recognize Tenancy by the Entirety laws. Additionally, in states 

with Marital Joint Property laws, IRS can only apply a lien against, or seize, 

the delinquent taxpayer’s portion of jointly owned assets. Also, according 

to an IRS official, some businesses in bankruptcy can continue to 

accumulate additional delinquent payroll taxes. When a business is in

12Tenancy by the Entirety is one form of jointly held property where the property is co-owned with a 

spouse. Each spouse owns 100-percent of the property at all times.
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Chapter 1113 Bankruptcy Reorganization, the business can continue to 

operate at the bankruptcy judge’s discretion. This can result in the 

business incurring additional tax delinquencies.

Other Factors IRS 

Employees Cited As 

Affecting Enforcement and 

Collections of Unpaid 

Payroll Taxes

In addition to the factors discussed above, Collection Division field 

representatives cited other factors which, they believe, have or may have 

an effect on their ability to enforce compliance and pursue collections on 

delinquent payroll taxes and TFRP assessments. 

Several Collection Division field representatives stated that the current 

level of collection staff is not sufficient to effectively prevent, collect, and 

monitor delinquent payroll taxes and TFRPs. These representatives noted 

that due to high attrition and requirements to support other functions 

within the agency, an increasing number of payroll tax and TFRP cases are 

currently awaiting assignment to a revenue officer. Over the past two fiscal 

years, IRS has experienced a revenue officer attrition rate of about 10 

percent, translating into a net loss of 715 revenue officers. 

Some field representatives noted that revenue officers are increasingly 

being required to spend time supporting IRS’ Customer Service and other 

functional areas instead of working on collection issues. According to 

these representatives, revenue officers are required to provide assistance 

to taxpayers who walk into or phone the office with an inquiry or problem. 

An IRS National Office official we spoke with stated that the Collection 

Division spent about 410 full-time equivalents supporting Customer 

Service, collateral duties, walk-ins, automated data processing support, and 

other activities unrelated to collections during fiscal year 1998.

Collection Division field office representatives stated that they believe 

implementation of certain provisions of the IRS Restructuring and Reform 

Act of 1998 could also affect the agency’s enforcement and collection 

efforts. The act was enacted in July 1998 to, among other things, change 

the agency culture from one which emphasizes maximizing collections to 

one which provides service and assistance to taxpayers to meet their tax 

obligations. The IRS has publicly noted that, in the long run, the act should 

go a long way in improving the agency’s image with taxpayers and should 

actually result in improved taxpayer compliance. Nonetheless, Collection 

13In general, Chapter 11 is a reorganization proceeding of an individual, business, or other entity where 

creditors are paid under a plan.
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Division field office representatives stated that certain provisions in the act 

may impact IRS’ efforts to collect unpaid taxes. They said that certain 

provisions could lengthen the time it takes revenue officers to work cases 

and result in fewer cases being resolved. They also expressed uncertainty 

about how to operate under certain other provisions that, while intended to 

provide fairness to taxpayers, also contain penalties for not following the 

rules in these procedures. 

We did not assess or otherwise verify the issues the IRS field 

representatives raised with respect to the act. Additionally, as this report 

points out, significant financial management system deficiencies and 

internal control weaknesses have and continue to seriously impact IRS’ 

ability to effectively manage unpaid tax assessments.

Ability to Offset Federal 

Benefits and Other Federal 

Payments Has Yet to Be 

Achieved 

As discussed previously, a significant number of businesses with unpaid 

payroll taxes and individuals assessed TFRPs receive federal benefits and 

other federal payments that amount to billions of dollars annually. Federal 

law does not prevent businesses or individuals from receiving federal 

payments or loans when they are delinquent in paying payroll taxes. While 

IRS can retain, or offset, refunds otherwise due businesses or individuals to 

recover some or all of the delinquent taxes owed, up to this point it has not 

been able to systemically pursue other federal payments made to these 

taxpayers to recover the delinquent taxes. 

The Debt Collection Improvement Act (DCIA) of 1996 called for the 

centralization and aggressive pursuit of delinquent federal receivables, 

including delinquent loans and other forms of payments owed the federal 

government. The Department of the Treasury is developing a mechanism 

to pursue collection of outstanding federal receivables as mandated by 

DCIA. This includes establishing various collection strategies and efforts 

and using offsetting tax refunds owed businesses and individuals to 

recover the delinquent receivables. As part of this effort, the debtor offset 

program—which IRS had administered to offset certain nontax receivables 

such as student loans and child support against tax refunds—was shifted to 

FMS in January 1999.

DCIA specifically excluded federal taxes receivable and other unpaid tax 

assessments from its provisions. However, Treasury intends to include the 

collection of such amounts as part of the mechanism it is developing. 

Treasury intends to use as its legal authority a subsequently passed 

provision in the Taxpayer Relief Act of 1997, which grants IRS the authority 
B-281574

Page 32 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

to place a continuous levy on a delinquent taxpayer’s federal benefits to 

assist in recovering overdue taxes. This continuous levy has certain 

provisions to protect the taxpayer, such as limiting the levy to no more than 

15 percent of each benefit payment.

Treasury’s plan has been revised on several occasions, as it and other 

affected agencies try to address complex implementation issues to avoid 

undue harm to individuals. This will be of particular concern with respect 

to Treasury’s plan to include unpaid tax assessments as part of its federal 

payment offset efforts. There will be a critical need to address IRS’ 

significant financial management systems deficiencies and internal control 

weaknesses to ensure that taxpayers are not unduly harmed through the 

levying of federal benefits and other payments to repay amounts that have 

already been collected.

Agency Comments IRS stated that it concurred with the issues raised in this report and noted 

that it would use the report to assist in its efforts to correct system 

deficiencies affecting unpaid payroll taxes and associated trust fund 

recovery penalties. IRS stated that to correct these system deficiencies, it 

would need to replace its computer systems and underlying databases. In 

the shorter term, however, IRS stated that it is working to implement an 

automated process to reduce or eliminate delays in posting trust fund 

recovery penalty assessments and that these efforts will provide its service 

centers with the information needed to more promptly and accurately 

establish linkages to related accounts. IRS also stated it was developing a 

new process to better assist taxpayers in meeting their tax obligations.

We are sending copies of this report to Senator Ted Stevens, Senator 

Robert C. Byrd, Senator Orrin G. Hatch, Senator Max S. Baucus, Senator 

Fred Thompson, Senator Joseph I. Lieberman, Senator William V. Roth, 

Senator Daniel P. Moynihan, Representative Bill Archer, Representative 

Charles B. Rangle, Representative C.W. Bill Young, Representative David R. 

Obey, Representative Amo Houghton, Representative William J. Coyne, 

Representative Dan Burton, and Representative Henry A. Waxman, in their 

capacities as Chair or Ranking Minority Member of Senate and House 

Committees and Subcommittees. We are also sending copies of this report 

to the Honorable Charles O. Rossotti, Commissioner of Internal Revenue; 

the Honorable Jacob J. Lew, Director, Office of Management and Budget; 

and the Honorable Lawrence Summers, Secretary of the Treasury. Copies 

will be made available to others upon request.
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Please contact us at (202) 512-3406 or (202) 512-9110, respectively, if you or 

your staffs have any questions concerning this report. Other contacts and 

key contributors to this report are listed in appendix III.

Gregory D. Kutz

Associate Director

Governmentwide Accounting and

Financial Management Issues

Accounting and Information Management Division

James R. White

Director

Tax Policy and Administrative Issues

General Government Division
Page 34 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

Contents

Letter 1

Appendix I

Scope and 

Methodology

36

Appendix II

Comments From the 

Internal Revenue 

Service

40

Appendix III

GAO Contacts and 

Staff 

Acknowledgements

42

Tables Table 1: Businesses With Multiple Quarters of Unpaid Payroll Taxes 10

Table 2: Delinquent Quarters of Unpaid Payroll Taxes and Their 

Outstanding Balances by Age 11

Table 3: Frequency of Payments Improperly Recorded to Related

Taxpayer Accounts Identified in Fiscal Years 1997 and 1998 17

Table 4: Number of Individuals With Trust Fund Recovery Penalties

for Two or More Businesses 20

Table 5: Delinquent Taxpayers Receiving Federal Benefits at

September 30, 1998 23

Table I.1: FMS/SBA Record Matches by Benefits, Payment, and Loans 38

Table I.2: SSA, Vendor, and SBA Sampled Matches, Payments,

and Liabilities 39

Figures Figure 1: Overview of the Process for Distribution of FICA and SECA

Tax Revenue to Trust Funds 6

Figure 2: Percent of Delinquent Quarters of Unpaid Payroll Taxes

by Age 11

Figure 3: Most Common Businesses/Industries With Unpaid Payroll

Taxes From Cases Reviewed 14
Contents

Page 35 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

Abbreviations

ARDI accounts receivable dollar inventory

ATFR Automated Trust Fund Recovery

BPD Bureau of the Public Debt

CID Criminal Investigation Division

DCIA Debt Collection Improvement Act

EIN Employer Identification Number

FICA Federal Insurance Contribution Act

FMS Financial Management Service

FTD Federal Tax Deposit

IRS Internal Revenue Service

OTA Office of Tax Analysis

RRB Railroad Retirement Board

SBA Small Business Administration

SECA Self-Employment Contribution Act

SSA Social Security Administration

TIN Taxpayer Identification Number

TFRP trust fund recovery penalty
Page 36 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

Appendix I

Scope and Methodology ApenxIdi

To determine the extent to which payroll taxes are not remitted to the 

federal government, we analyzed data from IRS’ business master file and 

accounts receivable dollar inventory (ARDI) system as of

September 30, 1998, to identify (1) the total number of delinquent business 

tax periods involving unpaid payroll taxes, (2) the total number of unique 

businesses with unpaid payroll taxes, (3) the total dollar amount of unpaid 

payroll taxes (tax assessment, interest, and penalties), (4) the age of the 

unpaid payroll taxes in IRS’ balance of unpaid tax assessments, (5) the 

types of businesses that comprise the balance of unpaid payroll taxes, and 

(6) the current status of these businesses. We did not specifically audit the 

data in IRS’ systems used in our various macro analyses. We supplemented 

these analyses by developing a profile of the types of businesses with 

unpaid payroll taxes that were selected as part of a statistical sample of 

unpaid tax assessments in conjunction with our audit of IRS’ fiscal year 

1998 financial statements. While the sample of unpaid tax assessments was 

a representative sample, the 191 unpaid payroll taxes and trust fund 

recovery penalties selected as part of this sample cannot be considered 

statistically representative of the entire population of such cases. They 

were selected from the total population of unpaid tax assessments and not 

from a separate population of unpaid payroll taxes and trust fund recovery 

penalties. This approach was agreed to at the outset of the assignment 

with the requesters.

To determine the magnitude of the trust fund recovery penalties assessed 

against individuals that withheld but did not forward payroll taxes to the 

government, we analyzed data from IRS’ individual master file and ARDI as 

of September 30, 1998, to identify (1) the total number of outstanding 

TFRPs, (2) the total dollar amount of the outstanding TFRPs (penalty 

assessment and interest), (3) the total number of unique individuals with 

outstanding TFRPs, and (4) the current status of these individuals as 

reflected in IRS’ systems. Again, we did not audit the data used in our 

analyses.

To determine the extent to which individuals are responsible for 

withholding but not paying payroll taxes at more than one business, we 

analyzed information from IRS’ individual master file ARDI and UNLCER 

systems to determine the number of unique business identification 

numbers representing different businesses associated with each individual 

assessed a TFRP. We did not audit the data used in our analyses.

To determine the extent to which businesses with delinquent payroll taxes 

and individuals assessed TFRPs are receiving federal benefits, payments, 
Appendix I

Scope and Methodology

Page 37 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

or loans, we performed a match of data records from IRS’ ARDI with data 

records from FMS and SBA. The ARDI extract was as of

September 30, 1998. The FMS and SBA record extracts were as of May 

1998 and September 1998, respectively.

IRS’ ARDI extract was selected from taxpayer accounts that met its criteria 

of delinquent payroll tax and trust fund recovery penalties in fiscal year 

1998. It consisted of over 1.8 million taxpayers (businesses) that owed 

payroll taxes. The taxpayer records were extracted from IRS’ business 

master file, with a total outstanding balance of about $49 billion. The 

extract also contained about 185,000 trust fund recovery penalty taxpayer 

records from IRS’ individual master file with a total outstanding balance of 

about $15 billion.

The FMS extract contains records from several federal agency sources 

including SSA, civilian retirement annuity, RRB, civilian salaries, and 

vendor payments. FMS provided one month of records for SSA, federal 

retirement annuity, and RRB benefits. Civilian salary records and vendor 

payments contain 1 semi-weekly period and a 3-month period of data, 

respectively. We excluded from the FMS match any SSA payments made to 

dependent children; a surviving spouse, age 60 and older; a surviving 

divorced spouse, age 60 and older; a disabled surviving spouse; and a 

survivor receiving lump-sum death benefits. We completed the matching 

exercise using only the primary taxpayer identification number or 

employer identification number.

The SBA records we received were from three loan programs--the 7(a) 

Business Loan program and both Home and Business Disaster Loan 

programs--and represented loans in SBA’s inventory as of

September 30, 1998. SBA provided a total of about 457,000 records with a 

total disbursed loan value of about $48.2 billion. For our analysis, we used 

only the 7(a) Business Loans, which consisted of about 182,000 records 

with a total disbursed loan value of $39.3 billion.

Because the SSA, vendor payment, and SBA analyses were the results of 

samples, the estimates used in the report are subject to sampling errors. 

Sampling errors measure the extent to which estimates from samples of 

these sizes and structures can be expected to differ from the total 

population values. From the sample estimates, together with estimates of 

their sampling errors, interval estimates can be constructed with 

prescribed confidence that they each include actual population values. 

Each of our estimates is surrounded by a 95-percent confidence interval.
Appendix I

Scope and Methodology

Page 38 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

To evaluate the accuracy of our matches, we validated the Social Security 

numbers and employer identification numbers in all data matches (IRS, 

FMS, and SBA records). To check the accuracy of the civilian retirement, 

RRB, and civilian salary records, as well as the individual master 

file-matched SBA and vendor records, we performed a 100-percent 

verification of their entire universe. 

Table I.1 shows the results of the 100-percent verification test of the 

matched universe, the estimated payments/loan amounts, and the 

associated tax liability balances.

Table I.1: FMS/SBA Record Matches by Benefits, Payment, and Loans

Source: Our analysis of FMS benefits and payments, SBA loan records, and IRS records for unpaid 

payroll taxes and trust fund recovery penalties.

To validate the accuracy of the SSA records, as well as the business master 

file-matched SBA and vendor records, we calculated the 95-percent 

confidence level, using a representative sample of matched records from 

these universes. The vendor records were not estimated annually because 

of the sporadic nature of these payments.

Table I.2 shows the number of estimated taxpayer matches, the estimated 

payment/loan amounts, and the estimated outstanding tax liabilities 

associated with these matches.

Dollars in millions

Benefits, payments, 

and loan sources

Record

count

Taxpayer

matches

Payments and

loans paid to

taxpayers

Taxpayers’ tax

liabilities at

September 30, 1998

Civilian Retirement 2,324,200 271 $0.329 $21.5

Civilian Salary 2,026,150 215 $0.242 $14.1

RRB 745,546 81 $0.081 $7.7

Vendor (individual 

master file)

2,543,732 176 $0.441 $18.7

SBA (individual 

master file)

182,008 228 $16.500 $96.4
Appendix I

Scope and Methodology

Page 39 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

Table I.2: SSA, Vendor, and SBA Sampled Matches, Payments, and Liabilities 

Note: Upper and lower bounds for matched items as indicated in the footnotes are 95 percent 

confidence intervals.

a

Estimated matches by TIN and name. 

b

17,941 to 18,456.

c

15,860 to 17,207.

d

11,841 to 13,084.

e

16.6 million to $16.9 million.

f

6,901 million to $7,113 million.

g

3,091 million to $3,620 million.

h

1,882 million to $1,922 million.

i

160 million to $734 million

j $171 million to $386 million.

Source: GAO analysis of FMS benefits and payments, SBA loan records, and IRS records for unpaid 

payroll taxes and trust fund recovery penalties.

To determine the factors affecting IRS’ ability to enforce compliance or 

pursue collections of payroll taxes and TFRPs, we conducted structured 

interviews at all 33 IRS district office locations. These interviews were 

with revenue officers and group managers from IRS’ Collection Division. 

We also interviewed IRS personnel at the National Office. Additionally, we 

obtained and reviewed available IRS information on employment tax 

programs and initiatives. We also reviewed IRS’ statistical information 

from our prior reports on employment tax issues. Finally, we reviewed IRS’ 

collection procedures and policies and the laws that affect IRS’ use of 

enforcement tools.

Dollars in millions

Payment source

Record

count

Taxpayer

matchesa

Payments and

loans paid to

taxpayers

Taxpayers’ tax

liabilities at

September 30, 1998

SSA 40,108,592 18,199b $16.7e $1,902h

Vendor (business 

master file)

2,543,732 16,533c $7,007f $488i

SBA (business 

master file)

182,008 12,463d $3,355g $279j
Page 40 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

Appendix II

Comments From the Internal Revenue ServiceApenxIdi
Appendix II

Comments From the Internal Revenue 

Service

Page 41 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes
Page 42 GAO/AIMD/GGD-99-211 Unpaid Payroll Taxes

Appendix III

GAO Contacts and Staff Acknowledgements ApenIxdi

GAO Contacts Steven J. Sebastian, (202) 512-3406

Ralph Block, (415) 904-2150

Acknowledgements In addition to those named above, the following individuals made key 

contributions to this report: Paul Caban, West Coile, Marvin McGill, James 

Douglas, Patrick McCray, Arthur Davis, James Loschiavo, James J. 

Ungvarsky, Yong Meador, Darryl Meador, Julianne Hartman Cutts, Alvin 

Finegold, Pat Seaton, Catherine Arnold, Gloria Cano, Laurie King, Ellen 

Rominger, Rachel DeMarcus, Thomas Armstrong, Shirley Jones, and 

Andrea Levine.

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