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Ghost Employers, Beware!

By Jeffrey M. Glassman on November 17, 2021
While famed ghostbusters Venkman, Stantz, and Spengler may not be a threat to what the IRS is calling “ghost employers,” the IRS Office of Fraud Enforcement just might be. According to the IRS, “ghost employers” are people who give their employees a W-2 but don’t file employment tax returns or provide payroll information to the Social Security Administration.

At a recent conference hosted by accounting organizations AICPA and CIMA, the Commissioner for the IRS Small Business/Self Employed Division’s Collection organization reportedly listed ghost employer issues as high-priority for the recently-created Office of Fraud Enforcement (see below for more details). The IRS is also focusing enforcement efforts into (a) those who underreport income in the gig economy, sometimes by earning income under different names or providing services on virtual platforms; (b) document backdating; and (c) conservation easement overvaluation.

The Office of Fraud Enforcement was created in 2020 to “detect and deter fraud while strengthening the National Fraud Program.” Notably, the head of the Office of Fraud Enforcement has focused his more than 20-year IRS career in criminal investigation. This was highly unlikely to be a mere coincidence.

As of this post, Congress has not passed the “Build Back Better” bill. But if Congress were to pass the bill as currently-drafted, the IRS would receive another $80 billion over the next decade—and almost $45 billion is dedicated to enforcement efforts. Regardless, even without this funding, the IRS will continue to prioritize enforcement efforts.

If you have one of the issues noted above, please be aware that your issue is high priority for the IRS and you should contact experienced tax counsel for guidance as soon as possible.

If you would like to discuss this post or any other criminal or civil tax matter, please contact me at 214-749-2417 or by email at jglassman@meadowscollier.com.