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Millions of Taxpayers Took Early Retirement Distributions but Some Did Not Pay the Additional Tax, Claim an Exception, or Report the Income

Report Information

Date Issued
Report Number
2024-100-065
Report Type
Audit
Joint Report
Yes
Participating OIG
Treasury Inspector General for Tax Administration
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$0
View Report

Recommendations

The Commissioner, SB/SE Division, should collaborate with the IRS Office of Chief Counsel to develop guidance for the applicability and computation of the failure to file penalty for delinquent Forms 5329.

The Commissioner, SB/SE Division, should review a sample of tax returns in which the taxpayers had early distributions over $200,000, did not pay the additional tax, and failed to file Form 5329 to determine the appropriate compliance treatment.

The Commissioner, SB/SE Division, should coordinate with the Commissioner, Taxpayer Services, to *********** ********************************************************************

The Commissioner, SB/SE Division, should amend the AUR notice program to include alerting taxpayers who are potentially noncompliant with early retirement distributions *******

The Commissioner, SB/SE Division, should determine the appropriate compliance treatment for the 54 taxpayers who did not report the early retirement distributions as income on their tax returns and consider future compliance treatments for similarly situated taxpayers.