Enforcement campaign probes payroll tax compliance

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.

Payroll taxes withheld by employers account for nearly 72% of all revenue collected by the IRS, making noncompliance and cheating 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 conducted 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 informed about 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 is one example of the legal ramifications of not collecting, accounting for and paying payroll taxes to the IRS when required.

On the criminal enforcement side, 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 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, roughly two dozen more enforcement actions are planned in the weeks following the two-week campaign as well.

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 IRS.gov.