DOJ: Employment Tax Enforcement Highest Priorities

DOJ: Employment Tax Enforcement Highest Priorities

Civil and criminal employment tax enforcement is among the Tax Division’s highest priorities. Employers have a legal responsibility to collect and pay over to the Internal Revenue Service (IRS) taxes withheld from their employees’ wages. These employment taxes include withheld federal income tax, as well as the employees’ share of social security and Medicare taxes (collectively known as FICA taxes). Employers also have an independent responsibility to pay the employer’s share of FICA taxes.

When employers willfully fail to collect, account for and deposit with the IRS employment tax due, they are stealing from their employees and ultimately, the United States Treasury. In addition, employers who willfully fail to comply with their obligations and unlawfully line their own pockets with amounts withheld are gaining an unfair advantage over their honest competitors.

The Tax Division pursues civil litigation to enjoin employers who fail to comply with their employment tax obligations and to collect outstanding amounts assessed against entities and responsible persons. The Tax Division also pursues criminal investigations and prosecutions against those individuals and entities who willfully fail to comply with their employment tax responsibilities, as well as those who aid and assist them in failing to meet those responsibilities. Examples of some of the more prevalent employment tax schemes can be found here.

Unpaid employment taxes are a substantial problem. Amounts withheld from employee wages represent nearly 70% of all revenue collected by the IRS and, as of June 30, 2016, more than $59.4 billion of tax reported on Employer’s Quarterly Federal Tax Returns (Forms 941) remained unpaid. When last measured, employment tax violations represented more than $91 billion of the gross Tax Gap and, after collection efforts, $79 billion of the net Tax Gap in this country.

The Tax Division works with its partners in the IRS and the Offices of U.S. Attorneys to seek money judgments, permanent injunctions, and criminal convictions that often carry substantial prison sentences, restitution and financial penalties. Examples of recent IRS employment tax fraud investigations are found here. These cases are sending the clear message that this conduct will not be tolerated, and the Tax Division remains committed to addressing this serious issue.

Civil Employment Tax Injunctions

Recent Criminal Employment Enforcement News

Published On DOJ

Charged with ensuring “that the laws be faithfully executed,” the 93 United States Attorneys work to enforce federal laws throughout the country. The President appoints a United States Attorney to each of the 94 federal districts (Guam and the Northern Mariana Islands are separate districts but share a United States Attorney). The United States Attorney is the chief federal law enforcement officer in their district and is also involved in civil litigation where the United States is a party.

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