A former senior litigation counsel at the U.S. Department of Justice (DOJ) has stressed that since the IRS’ funding plan mentions more enforcement in areas that include employment taxes, businesses should start planning for audits “now.”
The Inflation Reduction Act was signed into law by President Joseph Biden on August 16, 2022, with a provision earmarking nearly $80 billion in funding for the IRS that Treasury Secretary Janet Yellen said on April 4, 2023 will help ensure fair enforcement of federal tax laws. On April 6, 2023, new IRS Commissioner Daniel Werfel and Deputy Treasury Secretary Wally Adeyemo held a conference to discuss the Service’s 10-year strategic operating plan for the massive financial support.
On page 74 of the 150-page plan, the IRS discusses developing enforcement approaches and compliance treatments for tax types including federal employment taxes by refining tools and processes for auditing key areas and using improved analytics to identify patterns of noncompliance. The plan notes that enforcement and compliance have been too low in employment tax, among other areas.
Employers are generally required to withhold federal income, Social Security, Medicare, and Additional Medicare taxes (commonly known as “employment” taxes) from their employees’ earnings and forward to the U.S. Treasury on the employees’ behalf. Additionally, employers are liable for...
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