Yesterday, the Government Accountability Office (GAO) reported that more than 3,700 stimulus fund recipients owe more than $750 million dollars in federal back taxes. According to tax attorneys reviewing the report, a breakdown of back taxes owing reveals that $417 million dollars is in corporate taxes; and another $207 million dollars is in federal payroll taxes. The balance of back taxes owing comes from $133 million dollars of unemployment and excise taxes which wasn’t paid.
In what some tax lawyers are suggesting is a rather disappointing disclosure in the GAO’s report, The Recovery Act appropriated $275 billion dollars for various federal grants, loans and contracts, but has only paid out approximately 70% ($191 billion dollars) to date. Of the 191 billion dollars paid out, more than 12% of those payments ($24 billion dollars) went to recipients who now owe back taxes.
IRS attorneys point out the GAO’s recent report is the first real look at the tax records of stimulus money recipients. Included within the report, tax lawyers say the GAO gave fifteen (15) different examples of recipients against whom the Agency took collection and/or enforcement action. Significantly, tax lawyers say the report claims that approximately 35% (or a little more than $260 billion dollars) of the $750 billion dollars in back taxes owed relates to tax years prior to 2003.
The GAO says these numbers are not complete as the IRS doesn’t include stimulus recipients with unfiled returns in the Agency’s database, and the GAO’s investigation only covered recipients who complied with reporting requirements within the American Recovery and Reinvestment Act. Accordingly, IRS tax lawyers suggest the ultimate amount of back taxes owing could easily exceed a billion dollars.
If you owe back taxes and/or have unfiled returns, waiting to deal with your tax problems can be costly and may expose you to IRS wage garnishments, IRS levies and/or IRS liens. So don’t delay, get help from a competent tax attorney or other tax professional and get your unfiled returns completed and filed sooner, rather than later. Similarly, tax lawyers suggest that if you owe back taxes, paying what you can now to reduce the amount owing will help reduce continuing interest and penalties being added to what the back taxes you’ll be expected to pay.
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