The U.S. Department of Justice (DOJ) has reminded employers of their responsibility to collect and pay over to the IRS, taxes withheld from their employees’ wages, which account for approximately 70 percent of annual revenue collected by the Service. When last measured, under reported and unpaid employment taxes represented approximately $72 billion of the overall tax gap. As of September 2015, more than $59 billion of tax reported on employment tax returns remained unpaid, DOJ reported.
“Employers who comply with our nation’s tax laws are entitled to a level playing field,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Those individuals and entities that fail to withhold employment tax, or withhold and fail to pay employment taxes over to the IRS, not only steal from their employees and the U.S. Treasury, but gain an unfair competitive advantage over businesses down the street and across the country. The Department and its colleagues in the IRS have increased their efforts in this area, and are holding delinquent employers accountable,” she added.
“Fairness in the employment tax arena is an important part of the nation’s tax system,” said IRS Commissioner John Koskinen. “The IRS is committed to working with the Justice Department to protect this important area, and there’s a long list of efforts we’ve taken in both civil and criminal investigation areas when employers try to evade their legal responsibilities and, in the process, gain an advantage over their competitors who are honoring their legal responsibilities. In addition, the IRS is taking new steps to identify and contact employers falling behind on their payments before they file their tax returns, offering to assist them earlier in the process to head off steeper interest and penalty charges. This effort not only provides an important service, it could help prevent the need for future enforcement activity, he added. (DOJ Press Release: Justice Department Reminds Employers of Their Employment Tax Responsibilities, May 17, 2016.)
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