IRS, taxpayers hit by uneven interest on late returns

As tax day approaches, the Internal Revenue Service is not consistently using the same standards to fine late-filing taxpayers and losing millions of dollars in revenue, according to a new report. The report, issued today by J. Russell George, Treasury inspector general for tax administration, showed that the IRS is charging interest on the penalty for only some accounts but for most accounts interest is not being assessed. Congress authorized the IRS to charge a penalty on tax accounts when they’re past due. “By not acting on previously reported recommendations [to charge interest on penalties], the IRS is forgoing a minimum of $171 million annually in lost revenue,” Mr. George said in a statement. “This program, as implemented by the IRS, results in some taxpayers’ paying interest on the penalty, while most others do not. Some of the affected taxpayers are the very ones the IRS is trying to minimize tax burden on, such as disaster victims and combat zone veterans.”