10 THE QUEENS COURIER • JULY 20, 2017 FOR BREAKING NEWS VISIT WWW.QNS.COM
Employment Tax Enforcement
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BY JOHN SAVIGNANO, CPA
Employment tax enforcement
is a critical element of the IRS’s
overall tax enforcement effort.
Recent government reports
indicate a growth in ‘egregious
employment tax noncompliance”
and focus on the need to combat
this trend through increased use
of civil and criminal enforcement
mechanisms.
Recent factors and trends signal
that a greater focus on employment
tax enforcement is underway
and likely to continue.
The trust fund recovery penalty
under Sec. 6672 is a basic
procedural weapon that allows
the IRS to assess a civil penalty
against any “responsible person”
who willfully fails to pay over
a business’s withheld employment
taxes. In addition, Sec.
7202 makes it a crime to willfully
fail to collect or pay over these
taxes. There is a significant overlap
between the two provisions,
and civil trust fund recovery penalty
investigations are often a
ripe source for criminal referrals.
Practitioners advising or representing
taxpayers with civil trust
fund penalty exposure should,
therefore, always remain cognizant
of potential criminal implications.
The line between a civil and
criminal violation is often quite
thin. Almost by definition, then,
taxpayers facing a trust fund
recovery penalty assessment often
exhibit many characteristics that
could support a criminal referral.
That, of course, can increase the
stakes when employment tax violations
are at issue.
Moving forward, employment
tax enforcement is likely
to increase, despite drops in
overall tax enforcement in recent
years due to budget and personnel
constraints. Both the IRS and
the Department of Justice have
openly signaled that addressing
employment tax noncompliance
is a high priority. In this environment,
practitioners should pay
particular attention to their clients’
employment tax compliance
issues and advise them accordingly.
John Savignano is a partner
with Savignano Accountants &
Advisors located at 47-46 Vernon
Blvd., Second Floor, in Long
Island City. If you have any questions
or require additional information,
please call John at 718-
707-0955.
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