In July 2001, the Internal
Revenue Service computer program was updated to permanently
abate the portion of the tax, penalty , and interest
that remains unpaid when the amount is less than $5.00.
Since that time, costs of processing notices to taxpayers
on balance due accounts has increased
Proposal:
Increase the tolerance level
to $25.00 and update the notices informing taxpayers
of changes to their account using a statement similar
to the current notice for balance dues of less than
$5.00.
Response Notes:
Compliance functions in both W&I
and SB/SE reviewed the proposal but do not plan to implement
the recommendation. A cost analysis of IRS Balance Due
Notices showed the cost of a single notice ranging from
45 cents to $4.79 depending on the type of notice. The
cost of administering the account increases if more
than one balance due notice is sent from $5.68 to $12.33
depending on the amount of review of notices required.
IRS also incurs additional cost in administering the
account. In addition, IRS analyzed the number of accounts
with balance dues less than $25.00. Based on the volume
of accounts and the costs of processing, IRS would loose
revenue by raising the abatement amount to $25.00. Further
research will be conducted to determine if the abatement
amount should be raised higher than $5.00 but less than
$25.00.
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