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GGD-90-120 1 (1990-08-31)

handle is hein.gao/gaobabqjj0001 and id is 1 raw text is: GAO United States General Accounting Office Washington, D.C. 20548 General Government Division B-240560 August 31, 1990 The Honorable J. J. Pickle Chairman, Subcommittee on Oversight Committee on Ways and Means House of Representatives Dear Mr. Chairman: On May 9, 1990, you asked us to provide information about the timeli- ness of Internal Revenue Service (iRs) deposits of tax payments. As dis- cussed with the Subcommittee, this report deals specifically with the lost interest associated with delays in depositing individual income tax payments around April 15 each year, a time when ins' 10 service centers receive a large number of such payments. Results in Brief Our analysis of deposit activity at the Cincinnati and Philadelphia Ser- vice Centers showed that the two centers averaged about 7 days to deposit about $6 billion in individual income tax payments received between April 15 and May 7, 1990. ins officials said that they needed additional time to make deposits during this period because ms processes returns on a first in, first out basis, and it does not have the staff or equipment to more quickly handle the large volume of returns it receives in mid-April each year. One way 1RS could reduce deposit times and increase government interest earnings would be to isolate and expedite the deposit of large tax payments. For example, our results for the two centers showed that tax payments of $5,000 or more accounted for about 70 percent of the potential interest earnings during this period, but less than 8 percent of the volume. We estimate the government could have earned additional interest of about $6.2 million if the two centers had deposited payments of $5,000 or more within 24 hours-the time IRs officials believe is achievable if they focus on the large payments. Although our results cannot be generalized to Is' other eight centers, iRs officials said that similar results could be expected at any center. This report (1) discusses several approaches rns might use to isolate and expedite the deposit of large tax payments and (2) provides some infor- mation on the advantages and disadvantages of each. s needs to assess those approaches, and any others it might identify, and adopt one that strikes an appropriate balance between costs and benefits. GAO/GGI9I-120 Deposita of Large Tax Payaents Page I

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