Tax Insights

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IRS Initiative to Help Employers with Payroll Tax Compliance

The IRS recently launched a new initiative to assist employers who are falling behind on their payroll or employment taxes.The Early Interaction Initiative is designed to proactively address payroll tax compliance with an emphasis on precluding delinquencies and/or addressing delinquencies early.

Through the initiative, the IRS will identify employers who appear to be falling behind on their tax payments or have a history of late payments. IRS representatives will reach out to the employers through personal visits, recorded calls, and letters to offer helpful information and guidance, often even before an employment tax return is filed.

In the past, the IRS would not attempt to contact an employer until much later in the process, when the employer’s unpaid tax obligation and penalties have already begun to spiral out of control.

It is worth noting, however, that with this announcement comes the risk of fraudsters attempting to take advantage of the new initiative by posing as IRS representatives to gather sensitive personnel information. Be wary if anyone asks for employee records.The IRS will not request personal or financial information and does not call taxpayers with threats of lawsuits or arrest.

By Janet Berry-Johnson, CPA