Bad bookkeeping

Auditing the IRS


How much do Americans owe the Internal Revenue Service? Even the tax man doesn't know for sure. According to a June report from the Government Accountability Office, the IRS used two separate accounting systems to keep track of how much taxpayers owed in 2009. Comparing the two systems revealed a discrepancy of $8 billion.

The report concluded that the IRS's books had suffered "a breakdown in controls," finding a $5.1 billion "unexplained variance" between the money it recorded collecting and the money it actually took in. The agency in one case failed to properly record a taxpayer's $3 million payment.

The Government Accountability Office made 41 recommendations to clean up the IRS's internal accounting, warning that the nation's tax collectors are "at increased risk of not complying with requirements established in its annual appropriations act." At least now they know what it feels like to fail an audit.