The IRS has launched a new approach to help employers who fall behind in reporting and paying payroll taxes to the government (IR-2015-136). In the past, the IRS waited to contact employers until an employment tax return was filed. Under the new initiative, the IRS will monitor deposit patterns and identify employers who reduce their payments and make payments after they are due.

The IRS will contact employers by letter asking them to talk to the IRS about the situation. Alternatively, the IRS will make automated phone calls that provide information and assistance. In some cases, an IRS collection (revenue) officer will contact the employer at the place of business.

Deposit requirements

Federal tax deposits include income tax withholding, Social Security, Medicare, and unemployment taxes. Employers must remit payroll taxes through the Federal Tax Deposit system. The required frequency for deposits depends on the amount due and the frequency of the employer’s payroll. Normally, once an employer fails to remit payroll taxes due, the IRS sends a series of notices. The case then may be assigned to collection personnel.

The IRS noted that employers sometimes divert funds withheld from their payroll to pay for working capital or other business purposes. As a result, employment tax liabilities can grow rapidly, beyond the employer’s ability to pay. In other cases, an employer and its payroll processor may fail to address the deposit requirements because of miscommunication.