The Treasury Inspector General for Tax Administration (TIGTA) recently released a report that found nearly $9 billion in backup withholding tax was not withheld for 2013 information returns with missing or incorrect taxpayer identification numbers. The IRS should have received nearly $5 billion in backup withholding for payments to these unidentified payees, but payers withheld only $1 million.

Enforcement of backup withholding requirements “is essential to ensuring that the Government is able to collect taxes on all appropriate income.” However, the IRS notified payers of their requirement in only 57% of the identified cases where information returns did not or incorrectly identified the payee. In 2013, over 2 million information returns were submitted for 1.6 million individuals who were deceased – reporting payments totaling over $4 billion.

To read TIGTA’s full report and the IRS’ response, click here.