The payroll tax compliance campaign resulted in IRS visits to nearly 100 businesses suspected of having serious employment tax compliance issues and about 50 law enforcement actions related to employment tax crimes.
The IRS has announced the results of a national two-week education and enforcement 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 [IR 2019-71, 4/11/19].
What the campaign found
Payroll taxes are a priority area for the IRS. Nearly 72% of all revenue collected by the IRS are payroll taxes withheld by employers, making noncompliance among the biggest problems for the U.S. tax system. Between March 25 and April 5, the IRS Field Collection and IRS Criminal Investigation (CI) undertook a special campaign to shore up this area of compliance.
“The IRS is committed to compliance in the payroll tax arena, which helps ensure fairness and faith in our tax system,” said IRS Commissioner Chuck Rettig.
Nearly 100 business owners suspected of having serious employment tax compliance issues were visited by the IRS and informed on ways to catch up with back payroll taxes, how to stay current and the potential for civil and criminal penalties. The Trust Fund Recovery Penalty (TFRP) is one example of the legal ramifications of not collecting, accounting for and paying payroll taxes to the IRS when required.
The IRS CI worked with the Department of Justice (DOJ) Tax Division and U.S. attorneys around the nation to focus on about 50 law enforcement actions related to employment tax crimes. During the two week period, the IRS CI indicted 12 individuals, executed four search warrants and saw six individuals or businesses sentenced for crimes associated with payroll taxes. About two dozen more enforcement actions are planned in the weeks following the campaign.
The IRS has several tools to bolster payroll tax compliance including educational outreach, data analytics, civil investigations by highly trained revenue officers, as well as harsher measures such as lawsuits, seizures and criminal referrals to IRS CI.
More resources on complying and managing employment taxes and IRS CI can be found on the IRS’s website.