In an effort to decrease the estimated $59 billion that's missing in employment taxes from over the years and remind employers that they have not paid unemployment taxes, the IRS is implementing a series of new civil programs to reach out to delinquent taxpayers. The IRS is using three forms of notifications in this system – a "903 Letter," a telephone call and an in-person visit. Each of these notifications is intended to tag the taxpayer as having knowledge of the payment and filing requirements in the event the IRS takes criminal action against the employer down the road.
The IRS is now using the Electronic Federal Tax Payment System (EFTPS) to receive notifications within two to three days after an employer misses an employment tax payment. From there, the IRS will determine which form of notification will be most effective with the delinquent taxpayer.
This is all part of the effort to crack down and reduce the amount that the IRS loses in unpaid employment taxes year over year, which has grown recently due to different types of fraudulent activity from employees. In fact, the IRS estimates that it's experienced a 28 percent decline in employment tax collections between 2010 and 2014.
According to a recent article by Forbes, by subscribing to the IRS' EFTPS alerts, employers can catch fraudulent behavior, which could involve a worker pocketing money from employment taxes and then covering their tracks by fabricating data, hiding notices from the IRS and lying to IRS revenue officers.
These IRS alerts, combined with a thorough, holistic employment tax filing process, can help set businesses up for successful tax filings throughout the year and help them avoid any unexpected visits from the IRS.
Click here to learn about ADP's Employment Tax module that can help employers simplify processes, minimize risk and improve overall compliance by complementing in-house payroll processes.
The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional. Such information is by nature subject to revision and may not be the most current information available.
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