Today TaxMama® has an announcement from the IRS that I want to share with you. The IRS IS coming to visit your small business – if you fall behind on your payroll tax deposits. Beware!
Dear Family,
This is the IRS’ latest announcement – you’re going to love this!
This is a pet project of Darren Guillot, Deputy Commissioner for Collection and Operations Support in the Small Business/Self-Employed Division (SB/SE). He refined the process in his last post as Director of Field Collection Operations.
All sarcasm aside, his heart IS in the right place. His intention, believe it or not, is to help small businesses that start to get behind on payroll tax deposits – before they get so far behind that it’s too late to save the business. The fact is, one of the most common reason that small businesses fail (other than ineptitude, bad planning and lack of funds) is that the owner thinks it’s OK to use the money withheld from employees’ paychecks to pay their own bills, as a short-term loan. It might work once. But payroll after payroll, the boss starts getting more behind. The funds don’t get paid back. The payroll taxes don’t ever get deposited. This affects the employees, trying to get their refunds. This often causes businesses to go under.
The other part of issue is the one affecting the IRS. The majority of the money that the IRS collects is from payroll taxes – not your income tax returns. They rely on all employers to get this deposited correctly. Which is why the late deposit penalties can be as high as 15%, depending on the delay. (That doesn’t really help, because they don’t have the money to pay the underlying taxes, anyway.) The IRS still has to give the employee credit for the withholding reported on the W-2s, even if the IRS hasn’t received the money.
You and I, as taxpayers, pay for this shortfall when employers steal this money from their employees and the IRS. And YES! The IRS does consider this “theft” because the employers are stealing money that legally belongs to their employees – not the employer.
Please read this note from the IRS and share it.
- Tax Professionals – Please advise your clients to call you when they get this visit
- Business owners, please call your tax pro when you get the visit.
As part of a nationwide effort by the IRS to ensure fairness in the tax system, teams of IRS Revenue Officers will be conducting special efforts in Los Angeles for individual and business taxpayers who need education and compliance assistance beginning January 27, 2020.
IRS revenue officers work cases that involve an amount owed by a taxpayer or a delinquent tax return. Their role involves education, investigation, and when necessary, appropriate enforcement. The IRS routinely conducts face-to-face visits with taxpayers who have a previously known tax issue that wasn’t resolved through mail contact.
IRS revenue officers are in about 250 locations throughout the country, and they regularly provide scheduled and unscheduled visits with tax payers who are having difficulty becoming compliant. This initiative will help close geographical gaps between those locations and provide additional revenue officers in areas that need extra help with cases.
So, while they are starting in Los Angeles, they will be spreading around the country.
For more information about these efforts can be found on IRS.gov:
- IRS Fact Sheet 2019-15 Special IRS efforts to focus on tax compliance, education begin https://www.irs.gov/newsroom/special-irs-efforts-to-focus-on-tax-compliance-education-begin
- IRS Tax Tip 2017-67 https://www.irs.gov/newsroom/how-to-know-if-the-knock-on-your-door-is-actually-someone-from-the-irs
And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com.
Incidentally, I don’t know if you know – TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves.
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