The IRS is taking a more aggressive stance regarding employment tax compliance violations. Payroll tax compliance is a priority for the IRS. IRS Commissioner Chuck Rettig underscored the importance of payroll tax compliance when he stated that “payroll taxes form a key part of our tax system… The IRS is committed to compliance in the payroll tax arena.” The IRS reports that payroll taxes withheld by employers account for more than 70% of the total revenue collected.
From March 25 through April 5, the IRS Field Collection and IRS Criminal Investigation Divisions carried out a special employment tax compliance campaign. IRS Revenue Officers conducted field visits of close to 100 businesses around the country that they suspected of having serious employment tax compliance issues. The IRS Revenue Officers informed the business owners that they visited of how they could become compliant with back payroll taxes, of how to stay current with their employment tax obligations and of the potential for civil and criminal penalties for employment tax compliance violations. During the two-week period, the Criminal Investigation Division undertook enforcement actions for crimes associated with payroll tax compliance as follows:
- 12 individuals were indicted;
- 4 search warrants were executed; and
- 6 individuals or businesses were sentenced for crimes associated with payroll taxes.
The Criminal Investigation Division indicated that roughly two dozen more enforcement actions are planned in the weeks following the campaign.
The IRS’ special employment tax campaign is indicative of the hard line that the IRS is taking with employment tax compliance violations. According to Don Fort, Chief the Criminal Investigation Division, “Employers know the rules – they must deposit and report employment taxes accurately – this is non-negotiable.” Darren Guillot, Director of IRS Field Collection Operations stated that “enforcement is never our first resort; but protecting this significant source of revenue to the nation deserves our best efforts, including reaching out to help businesses help themselves.”
For more information on employer withholding obligations, penalty risks and other tax matters, please contact Michele Weiss of Holtz, Slavett & Drabkin at 310-550-6200 or firstname.lastname@example.org.