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IRS Urged To Reach Out To Payroll Services Providers

by Mike Godfrey, Tax-News.com, Washington

20 September 2017


The IRS must take further action to reduce the risk of employment tax fraud for US businesses that use third-party payers, according to a new report from Treasury General for Tax Administration (TIGTA).

Businesses that use professional employer organizations (PEOs) that are not certified by the IRS remain at risk of tax fraud, warns the report. PEOs are referred to as third-party payers because they usually pay wages and file employee tax returns on behalf of the employer. Certified PEOs are required to notify the IRS of all employers that use their services.

However, the majority of PEOs choose not to participate in the voluntary certification program, making it difficult for the IRS to link specific employers to the third-party payers they use. As of March 31, 2017, only around 13 percent of PEOs had applied for certification (123 out of an estimated 780-980 service providers representing up to 180,000 employers).

TIGTA recommended that the IRS work with the Department of Treasury to put together a proposal requiring all non-certified POEs to register with the IRS.

The IRS is now in the process of taking corrective action.

TAGS: tax | business | United States | individual income tax | services | Tax

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