The Washington Times - September 27, 2012, 09:13AM

Federal agencies may be exempt from paying corporate income taxes but they still have other tax obligations such as withholding and paying employment taxes for their workers, and a new audit released Thursday found they owe $14 million in unpaid taxes.

The Treasury Inspector General for Tax Administration, the watchdog that oversees the IRS, found 126 delinquent federal accounts spread across 70 agencies. Forty of those accounts were at least three years past due.

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Meanwhile, 18 agencies failed to file altogether or were delinquent on filing employment tax returns.

“Federal agencies must comply with the same filing and paying standards that apply to all American taxpayers,” said J. Russell George, Treasury Inspector General for Tax Administration.

The $14 million appears to be a major improvement over the past. The audit said in 2005, federal agencies owed $406 million in tax delinquencies.

The IRS said in a statement that’s good progress, but it is still trying to do more.

“The IRS is committed to ensuring timely collection of the billions of dollars of employment taxes that federal agencies are required to withhold and pay for their employees each year and has seen substantial progress in this area,” the agency said.

Auditors redacted all details of which agencies were delinquent, citing exemptions from freedom of information laws.