Due to the Lack of Enforcement, Taxpayers Are Avoiding Billions of Dollars in Backup Withholding

The Commissioner, Small Business/Self-Employed Division, should establish a Service-wide information returns backup withholding enforcement strategy. This should include specific time frames and actions that will be taken to identify and enforce payer noncompliance with backup withholding provisions.

The Commissioner, Small Business/Self-Employed, should evaluate and document the criteria used to exclude information returns with missing or incorrect TINs from payer notification.

The Commissioner, Small Business/Self-Employed Division, should update payer identification and notification processes to include Forms 1099-G with missing or incorrect payee TINs.

The Commissioner, Small Business/Self-Employed Division, should update all applicable publications, instructions, and website information to include Forms 1099-G as the payments relate to backup withholding provisions.

The Commissioner, Small Business/Self-Employed Division, should include specific actions that will be taken to address information return reporting of income under a deceased individual TIN as part of the IRS's development of the information returns compliance strategy.