The Internal Revenue Service just announced the results of a national two-week campaign to combat employment tax crimes featuring visits to nearly 100 businesses showing signs of potential serious noncompliance and taking several dozen legal actions against suspected criminals. Roughly two dozen more enforcement actions are planned in the weeks following the two-week campaign as well. Will your client be next?
Payroll taxes withheld by employers account for nearly 72 percent of all revenue collected by the IRS, making noncompliance in this area one of the biggest problems for the nation’s tax system. Payroll taxes are a priority area for the IRS, and IRS Field Collection and IRS Criminal Investigation (CI) undertook a special campaign to shore up this area of compliance during a two-weeks period between March 25 and April 5.
IRS revenue officers visited nearly 100 businesses around the country suspected of having serious issues with employment tax compliance. Business owners were advised on back payroll taxes, opportunities to get current and the attendant consequences for noncompliance, including significant civil and potential criminal penalties and personal liability for the delinquent taxes by company principals and other responsible parties through the trust fund recovery penalty.
Simultaneously and in a one-two punch fashion, IRS CI worked with the Department of Justice Tax Division and U.S. attorneys around the nation to focus on about 50 law enforcement actions related to employment tax crimes. During the same two weeks, IRS CI indicted 12 individuals, executed four search warrants and saw six individuals or businesses sentenced for crimes associated with payroll taxes.
In addition to these early numbers, the IRS announced that roughly two dozen more enforcement actions are planned in the weeks following the two-week campaign.
Employment tax non-compliance takes many forms, ranging from worker misclassification, to noncompliant accountable plans for per diem and employee reimbursements, to backup withholding on undocumented workers and workers for which a Form 1099 was not filed, to plain old failure to remit payroll withholdings, to name a few. With filing season coming to a close, the time is now to visit with your clients to make sure that they are informed of the severe consequences that can flow from employment tax noncompliance and that appropriate action is taken to reduce any risk exposure before the IRS knocks on their door.
If you have any other questions about this blog post or employment taxes, please do not hesitate to contact me at (214) 749-2464 or firstname.lastname@example.org.