The Internal Revenue Service has been focusing efforts in recent weeks on payroll tax compliance, with revenue officers visiting nearly 100 businesses suspected of having serious issues with employment tax compliance.
IRS Field Collection and Criminal Investigation employees undertook a two-week campaign between March 25 and April 5 to ensure the businesses complied with the payroll tax requirements. Over the two-week period, the IRS Criminal Investigation unit indicted 12 individuals and executed four search warrants. A half dozen individuals and businesses were sentenced for crimes associated with payroll taxes. Approximately two dozen more enforcement actions are planned in the weeks following the two-week campaign as well.
The IRS noted that payroll taxes withheld by employers account for nearly 72 percent of all revenue collected by the IRS, so noncompliance can be a major problem.
“Payroll taxes form a key part of our tax system," said IRS Commissioner Chuck Rettig in a statement. “When individuals and businesses evade their employment tax obligations, it not only undermines our tax system, it also creates an unfair situation for people who are following the law. The IRS is committed to compliance in the payroll tax arena, which helps ensure fairness and faith in our tax system.”
The business owners who received visits from the IRS were told about ways to catch up with the payroll taxes they owe, how to stay current and the potential for civil and criminal penalties. The Trust Fund Recovery Penalty is one example of the legal ramifications of not properly collecting and remitting payroll taxes to the IRS.
“Employers know the rules—they must deposit and report employment taxes accurately—this is non-negotiable,” stated IRS Criminal Investigation chief Don Fort. "When employers fail to pay over the required employment taxes for whatever reason, they skip out on one of their most important responsibilities as a business owner. Not only are those employers cheating the system and their employees, they are cheating future generations relying on those taxes to help build the future.”
