CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Concerned Raised Over IRS's Payroll Tax Oversight

Concerned Raised Over IRS's Payroll Tax Oversight

by Mike Godfrey,, Washington

14 July 2017

The Ways and Means Social Security and Oversight Subcommittees have said that the Internal Revenue Service (IRS) needs to take action to reduce errors in collecting Social Security payroll taxes from state and local government employees.

The subcommittees heard evidence on Social Security compliance for state and local governments. The subcommittees were concerned regarding reports that errors in the administration of payroll taxes were going undetected for years, with US taxpayers ultimately not receiving the correct Social Security benefits as a result.

Social Security provides retirement, disability, and survivors' benefits, and is primarily funded through payroll taxes. The program is administered by the Social Security Administration (SSA) with taxes being collected by the IRS.

"Social Security still does not have the ability to verify that state and local governments are properly reporting wages for covered workers," said Chairman of the Social Security Subcommittee Sam Johnson (R - TX). "And the IRS still doesn't know whether the employer reported and paid the correct amount of payroll taxes without doing an audit."

Witnesses from the SSA, IRS, and state Social Security administrators indicated that complex coverage rules for state and local governments, and a lack of understanding of these rules, contributed to this problem. However, a representative from the IRS said that out of the 90,000 state and local government employers only a few hundred received audits each year.

Members of the subcommittee suggested that the IRS needed to take more action regarding payroll tax compliance. They highlighted that payroll taxes, such as those for Social Security, made up a large proportion of collections made by the IRS. "Even though payroll taxes are the biggest tax most people pay, efforts to improve compliance generally focus on other taxes," said Johnson.

"Social Security, the IRS, and states must accept responsibility for the roles they play in making this process work the way it should."

TAGS: compliance | tax | tax compliance | employees | retirement | audit | payroll | Internal Revenue Service (IRS) | United States

To see today's news, click here.

Leave a comment

Read our Posting Guidelines



Password Reminder

Please enter your email address to receive a password reminder.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Tax-News+ Updates

Receive FREE daily updates from, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...


Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »