Thursday, October 22, 2009
The Internal Revenue Service has a problem handling bounced checks from taxpayers. According to an audit report of the IRS’ “dishonored” check system, the agency gave out approximately $20 million in refunds during the first six months of 2008 to Americans whose tax payments never cleared their banks. The trouble stemmed largely from the slow processing of payments by IRS employees, taking on average 40 days instead of the required 21 days per agency rules.
Exacerbating the million-dollar mistake were the economic stimulus payments the government distributed to Americans. Many taxpayers who owed money to the IRS erroneously assumed it would simply keep their stimulus checks in lieu of tax payments. Instead, the IRS sent out stimulus payments to people who still owed on their taxes.
-Noel Brinkerhoff
Inadequate Controls Over Dishonored Checks Put Millions of Dollars at Risk for Erroneous Refund Issuance (Treasury Inspector General For Tax Administration) (PDF)
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