The Internal Revenue Service (IRS) has just announced the results of a two-week education and enforcement campaign regarding the payment of payroll taxes. Here, the experts in Human Capital Management (HCM) and Payroll Management Technology at Wise Consulting detail these results, discuss the implications for CEOs, company presidents and business management employees and provide insights into how businesses can avoid compliance issues.

IRS Payroll Tax Campaign Leads to Enforcement Actions

The IRS recently concluded a national, two-week education and enforcement payroll tax compliance campaign which has resulted in several dozen legal actions against individuals suspected of non-compliance. IRS revenue officers visited nearly 100 businesses across the country that were suspected of non-compliance concerns. Business owners were educated on ways to catch up with back payroll taxes and avoid non-compliance as well as provided information on the penalties for non-compliance. Revenue officers also partnered with the Department of Justice Tax Division to indict 12 individuals and execute four search warrants—over the course of the two-week period, six individuals or businesses were also sentenced for crimes related to payroll taxes. Approximately two dozen more enforcement actions are scheduled in the weeks following this campaign.

Payroll Tax Non-Compliance Can Have Long-Lasting Consequences for Business Owners

According to IRS officials, enforcement actions are not the desired first step in managing payroll tax non-compliance, but it is an important part of ensuring payroll taxes are filed and paid properly. According to Darren Guillot, Director of IRS Field Collection Operations, “Enforcement is never our first resort, but protecting this significant source of revenue to the nation deserves our best efforts, including reaching out to help businesses help themselves.” Don Fort, Chief of IRS Criminal Investigation, describes payroll taxes as “non-negotiable,” and those who fail to pay these taxes are, “[not only] cheating the system and their employees, they are cheating future generations relying on those taxes to help build the future.”

Penalties for payroll tax violation vary widely depending on the nature and duration of the violation, but business owners could face fines (based on a percentage of the taxes owed) or a felony charge and jail sentence. If a business files for bankruptcy, payroll taxes cannot be discharged in bankruptcy proceedings, and depending on the way a business is legally structured, payroll taxes and fines associated with non-compliance can become a personal financial obligation for the business owner.

Payroll Tax Non-Compliance Often Comes from Poorly Executed Business Models

While there are a percentage of business owners that willfully avoid filing and paying payroll taxes, the vast majority find themselves in non-compliance due to organizational issues, uncertainty about how to file or cash flow difficulties. Payroll taxes are complex, but compliance is vital, and failure to comply can lead to extensive consequences, as detailed above.

Wise Consulting Wants to Help Support Your Payroll Processes

When in doubt, always consult a payroll tax expert to avoid hefty fines or even jail time for what could be a simple mistake. At Wise Consulting, we have been working with businesses to file payroll taxes for a long time. At this point, we have seen it all, and we are confident that no matter the problem, we can help. We even have a Specialized Workforce Assistance Team—a SWAT team, if you will—that is ready and available to help any time with any payroll compliance issue. Taxes are an inevitable part of running a business, and we want to help tax season run smoother and more effectively than ever. Contact one of the specialists at Wise Consulting today to learn more.