IRS Lacks Budget to Better Educate Taxpayers on IRA Minimum Distribution Rules
A new government report urges the Internal Revenue Service to do a better job of educating and notifying taxpayers about provisions of the tax code requiring them to begin taking minimum distributions from their Individual Retirement Arrangements when they reach a certain age, but the IRS responded that it lacks enough money in its budget to do so.
The report, from the Treasury Inspector General for Tax Administration, noted that taxpayers are required to begin withdrawing a minimum amount from certain types of IRAs when they reach age 70½. When taxpayers do not make these withdrawals, a loss of tax revenue occurs.
In previous audits, TIGTA has recommended that the IRS develop a strategy to address retirement provision noncompliance. In addition, there is congressional interest in educating taxpayers with respect to IRA provisions and not unreasonably penalizing them for innocent mistakes.
In its review, TIGTA found that, in response to prior TIGTA recommendations, the IRS has developed a broad-based strategy that focuses on educating taxpayers and individuals about IRA rules and notifying potentially noncompliant taxpayers of the minimum distribution requirement, a significant improvement from TIGTA’s prior reporting. However, the IRS could also take steps to improve its strategy, TIGTA found. Read more on Accounting Today.