Sigma Tax Pro provides information on IRS efforts to focus on employment tax compliance

Between March 25th and April 5th the IRS has indicted a dozen individuals in an effort to make sure businesses are complying with employment tax requirements.  Half of these individuals have been sentenced for employment tax crimes. With 72% of all revenue collected by the IRS coming from payroll taxes, this effort has become a serious problem, and subsequently a major focus for the IRS.  

Payroll taxes are a key component of the tax system.  When individuals attempt to cheat the system, it ends up creating an unfair future environment for those who are actually abiding by the law.  Because of this, the IRS is working diligently to ensure stability and fairness through a heavy focus on compliance in payroll taxes.

Mitch Elbarki, CEO of Sigma Tax Pro states that there is “… significant potential for penalties, a lot of times criminal, that can be avoided altogether by business owners simply paying the payroll taxes that they owe…or at the very least contacting the IRS to learn how to catch up on owed taxes if need be.”  Elbarki further states that “…tax professionals with clients who own businesses, should advise these clients of the risks of not accurately reporting payroll taxes.” One example of a penalty by not complying with payroll taxes is the Trust Fund Recovery Penalty; this results from the improper collection and remittance of payroll taxes to the IRS.

Business owners are responsible for understanding what it means to be payroll tax compliant.  Put simply, employers need only to deposit and record/report payroll taxes correctly.  By failing to do so, not only are business owners cheating the system, they are cheating their employees and future taxpayers that rely on this taxation for future funding and building.