GAO: 21% Of Taxpayers Will Under withhold In 2018
Over a fifth of taxpayers (21 percent) will under withhold their taxes in 2018 under changes mandated by the Tax Cuts and Jobs Act, according to a recent report from the federal Government Accountability Office.
The GAO report was assessing the impact of a provision of the TCJA that allowed the federal withholding allowance to be set by the Treasury and the IRS, as opposed to being set by law. The number of under withheld taxpayers under the new law is only three percentage points higher than the GAO estimate of what it would have been under previous law (18 percent).
The report also said that more documentation is needed regarding how the Treasury Department and the IRS updated withholding tables in the wake of tax reform.
“There is limited documentation of Treasury’s and IRS’s roles and responsibilities,” the GAO reported. “According to IRS officials, IRS did not document the process to update the withholding tables because it was routine and straightforward. However, federal internal control standards require agencies to document responsibilities through policies.”
“Documenting the process for updating withholding tables will help Treasury and IRS ensure that it is implemented consistently in the future, for example, if staff with experience in updating the tables were to leave Treasury and IRS,” the report added.
Additional changes to withholding tables are expected next year.
The Treasury and IRS agreed with the GAO recommendation. The report also outlined Treasury and IRS outreach efforts to spread awareness of taxpayers’ need to check withholding's in the wake of reform.
Provided By: Accounting Today