Federal Employment Tax Oversight: Preparing for Heightened IRS Enforcement

Description

The IRS once treated withholding tax compliance lightly, satisfied if audited taxpayers simply got current on deficiencies. That changed recently when huge budget deficits drove the Justice Department's Tax Division to designate employment tax abuse and fraud as a top priority.

The government is not only imposing tougher penalties during audits but also applying harsher civil penalties, such as tax liens. Cases seen as abusive are being forwarded to the IRS Criminal Investigation Division for prosecution. Taxpayers are already feeling effects of the tough new policy.

Companies and their advisors must anticipate rigorous IRS inquiries into the amounts of their withholding, classification of permanent workers and independent contractors, and other relevant issues. Thorough review of the company's compliance and staff knowledge of the new approach are essential.

Listen as our panel of experienced federal income tax advisors prepares you for the reality of toughened withholding tax enforcement. The panel will offer best practices for reviewing and improving your company's compliance.

Outline

1. Background on federal employment tax oversight to date
   1. Enforcement has been relatively light compared with corporate income tax
   2. Most cases handled on audit; penalties light
   3. Shift in priorities with federal budgetary plight in 2008 and 2009-06-19
   4. Senate committee urges more prosecution of employment tax abuses
2. The new IRS posture
   1. Designation of withholding tax as a top enforcement priority for the Justice Department Tax Division
   2. Business taxpayers immediately notice tougher stance by auditors
   3. Prospect of parallel civil penalties such as tax liens
   4. Prospect that some cases will be referred for criminal prosecution
3. Reexamining a company’s withholding tax compliance
   1. Record in on-time remittance of full amounts
   2. Classifications of staff as either permanent employees requiring withholding, or as independent contractors
   3. Nature of payments to employees: Cash or off-the-books

Benefits

The panel will analyze these and other critical areas of employment tax oversight and compliance:

• The reality of IRS investigations: What will it take for the Service to push a withholding tax matter into civil or criminal investigations?
• The current tenor of audits: What kind of approach can your company expect from the IRS now?
• The likely "red flags": What sort of classifications of employees and independent contractors, payment methods, etc. are likely to attract attention?
• The priorities for improving withholding tax compliance: What should your company tax department do first?

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