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IRS Accelerates Tax Help for Employers

Monday, January 4, 2016

Quick Facts

  • The new Early Interaction Initiative allows the IRS to more quickly identify and interact with employers that fall behind on payroll and employment tax obligations.

  • Early interaction efforts may include IRS letters, phone calls and personal visits to noncompliant employers.

The Internal Revenue Service (IRS) has launched a new program to help employers avoid interest and penalty charges related to their payroll and employment tax obligations.

Under the new program, called the Early Interaction Initiative, the IRS will more closely monitor employers’ federal tax deposits (FTDs) and provide accelerated alerts to employers that fall behind on their required payments. These alerts may include letters, automated phone messages and personal phone calls or visits from the IRS.

The initiative, which began in December 2015, is designed to provide employers with tax compliance information and assistance at an earlier time than the IRS would have offered it in the past. Before the initiative, the IRS would usually contact a noncompliant employer after the employer filed an employment tax return. By that time, the employer may have already incurred unpaid tax obligations.

“With early interaction, we will be able to offer help weeks or even months sooner, when it can often do the most good,” said IRS Commissioner John Koskinen.

Federal law requires employers to withhold federal income, Social Security and Medicare taxes from employees’ wages. Employers must then deposit the withheld amounts (and any employer-matching contributions) with the federal government shortly after employees are paid.

These FTDs are made electronically through the Electronic Federal Tax Payment System.

Employers usually report their FTDs to the IRS later, on a quarterly return. In the interim, an employer may not have realized that it missed payments or failed to comply with other FTD obligations.

The Early Interaction Initiative allows the IRS to identify and communicate with a noncompliant employer well before its quarterly return is filed. The program aims to minimize delinquencies by helping employers stay current with their responsibilities and correct any violations before they result in additional charges.   

For more information, visit the IRS website and type “employment taxes” in the search box.  

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

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