IRS Program Intended to Help Employers Avoid Payroll and Employment Tax Penalties

Complying with Employment Taxes

Interest and penalty charges related to payroll and employment tax problems can be very costly for employers, especially small businesses and family owned businesses. The Internal Revenue Service (IRS) has a new program to help employers comply with employment taxes and avoid crippling fees.

Early Interaction Initiative

The Early Interaction Initiative identifies employers who are falling behind on their taxes. The IRS will monitor employers’ federal tax deposits to identify patterns of declining or late payments. After identifying at risk employers, the IRS will then provide information and guidance on complying with payroll and employment tax regulations in an attempt to help employers avoid interest and penalty charges.

“Employers play a key role in our tax system, and we want to offer them the information and assistance they need to carry out that responsibilities,” said IRS Commissioner John Koskinen in a statement. “With early interaction, we will be able to offer help weeks or even months sooner, when it can often do the most good.”

Increase in Employment Tax Investigations

With two-thirds of federal taxes coming from the payroll tax system, collecting employment taxes is a priority for the IRS. While the new monitoring system will help some small and family owned businesses avoid excessive fees and penalties, there may also be an increase in the number of employment tax investigations initiated by the IRS.

If your business is being investigated by the IRS or Massachusetts Department of Revenue, you may face stiff interest and penalty fees, or even criminal prosecution. You should talk with an experienced tax attorney if you are contacted by the IRS or DOR regarding late federal tax deposits or other employment tax issues. The authors of this blog, D. Sean McMahon and Bill Lovett are both experienced in representing clients in civil and criminal employment tax matters.

Boston Tax Attorney Blog Authors

Sean McMahon is a former Senior Attorney with the IRS Office of Chief Counsel and a former Special Assistant United States Attorney for Massachusetts and New Hampshire where he was responsible for tax cases. Sean has more than ten years of experience investigating and defending IRS and state tax matters and excels at resolving difficult and complex tax disputes.

Bill Lovett is a former federal prosecutor with the Department of Justice (DOJ) Tax Division where he worked closely with the Internal Revenue Service (IRS) to investigate tax controversies and prosecute tax crimes. He has more than fifteen years of experience investigating and defending tax controversies.

Read the IRS Press Release

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