Department of Taxation and Finance

Designation of Delinquent Tax Cases as Uncollectible

Each year the Department designates as uncollectible an average of more than $1 billion in overdue taxes. We examined a statistical sample of such taxes and found that Department records often did not indicate that the proper procedures had been followed in trying to collect the taxes. We also found that the records often did not indicate that the proper procedures had been followed in authorizing the taxes as uncollectible. In total, we estimated that the required collection and authorization procedures may not have been followed in designating as uncollectible between $625 million and $1 billion of overdue taxes. We also identified long delays in the actions taken by the Department to pursue overdue taxes; such delays increase the likelihood that overdue taxes will become uncollectible. We recommended certain improvements in Department operating practices. 94-S-54