The IRS Has Over $ 1 Trillion in Frozen Credit Accounts.

Here are some figures from a report issued by the Treasury Inspector General for the United States (TIGTA),  Further Actions Are Needed to Resolve Millions of Dollars of Frozen Credits in Taxpayer Accounts, dated September 26, 2014 (Reference Number: 2014-30-089).

Number of Tax modules in credit status (payments exceeding assessments) at the end of Fiscal Year 2012 [total dollar amount]:
Business Master Files :  10.1 million modules [$883 billion]
Individual Master Files: 1.5 million modules [$305 billion]

Number of Tax modules in credit status (payments exceeding assessments) at the end of Fiscal Year 2013 [total dollar amount]:
Business Master Files :  10.2 million modules [$977 billion]
Individual Master Files: 15.6 million modules [$392 billion]

These numbers are not just "millions" but "hundreds of billions". This is a much more interesting story about FROZEN than the animated tale about Princesses Elsa and Anna. The truth is that the IRS is sitting on a big chunk of the economy.  This story almost slipped by me.  I would have noticed a TRILLION DOLLARS in credits but they only said MILLIONS in the title of their report.

The federal budget deficit for fiscal year 2015 (Oct 2014 through Sept 2015) is projected to be only $564 billion (per Kimperly Amadeo, US Economy Expert)  It looks to me like the IRS has got it covered, sort of.

The TIGTA report discusses how these funds are being handled by the IRS and made a series of recommendations regarding nonfiler and bankruptcy training, turning off backup withholding under certain conditions, monitoring nonfiler referrals, decision documentation, working civil penalty credit transcripts, aging frozen credits and evaluation of procedures.

The IRS responded to more than one recommendation by stating they were in agreement with the recommendation but that corrective action will not be taken because of limited information technology resources.

- Mark S Gleason CPA
  www.lakes-cpa.com