The Internal Revenue Service will pay $400.7 million to settle allegations that it violated federal tax law by illegally withholding tens of millions of dollars in income from Americans.
The settlement will resolve an audit by the Treasury Inspector General for Tax Administration, which concluded that the IRS inappropriately collected and disclosed more than $400 billion in taxes from taxpayers, and that its officials failed to protect taxpayers’ privacy.
The IRS, in a statement Thursday, said it agreed to pay the IRS $100 million in civil penalties for the actions it took to prevent taxpayers from being defrauded.
The IG found that the agency inappropriately withheld money from taxpayers to avoid paying the federal income tax, as well as a variety of penalties.
The Justice Department and the IRS agreed to resolve all claims, and the agency agreed to cooperate with the IRS in future investigations, it said.
The case was filed by the conservative group Americans for Tax Reform, which filed a complaint in 2014.
The IG said the IRS should have acted to stop the improper withholding of tax money.
