Insights: Article

New IRS Payroll Deposit "Help" Initiative

December 11, 2015

On Dec. 8, 2015, the Internal Revenue Service launched what they say is "a new initiative designed to more quickly identify employers who are falling behind on their payroll or employment taxes and then help them get caught up on their payment and reporting responsibilities. The effort is called the Early Interaction Initiative (EII)," according to the news release (IR-2015-136).

The release states that "two-thirds of federal taxes are collected through the payroll tax system." That means timely collection of payroll taxes is better for the IRS. But before this new initiative, it could take many weeks or even months before the IRS noticed a payment delay and contacted the employer about any undeposited payroll taxes. However, under the new EII, the IRS Commissioner John Koskinen says "we will be able to offer help [to employers]...sooner, when it can often do the most good."

What the Help Entails
Noting that funds required to be withheld from an employee's paycheck no longer belong to the employer, and that the employer has a fiduciary responsibility to handle these trust funds according to prescribed IRS guidelines, the IRS is particularly interested about withholding tax dollars being inappropriately diverted for the employer's use, no matter how well-intentioned that purpose may be.

To head off the possibility of withholding tax dollars being misused by an employer, the IRS will do one or more of the following under the new EII:

  • Monitor employer withholding deposit patterns to identify those employers whose payments decline or are late.
  • Send a letter to any identified employer reminding them of their responsibility to make timely and complete payroll filings and deposits.
  • Make automated phone calls providing information related to payroll withholding and payment requirements and offering assistance.
  • When deemed appropriate, dispatch an IRS revenue officer to the employer's place of business.


Clear Message

The message from the IRS for employers is clear-if an employer is having cash flow problems and is thinking about using employee's tax withholding dollars for a short-term loan to solve those cash flow issues, the IRS has just shortened the timeline before that action becomes an even bigger problem than cash flow.

Contact your Eide Bailly professional with questions or for assistance preventing payroll deposit issues from becoming a bigger problem.

Latest Insights

September 21, 2018
Article
In the wake of hurricanes, devastating results have been experienced by communities and businesses throughout the Texas Gulf Coast, Caribbean, Florida and southeastern United States. As a result of these catastrophes, businesses will turn to…
September 20, 2018
Firm News
Eide Bailly LLP announced the winners of its 2018 Nonprofit Resourcefullness Awards, recognizing creative and sustainable revenue ideas from nonprofits in Arizona, Colorado, Minnesota, North Dakota and Utah.
September 19, 2018
Article
The IRS has started sending out Letter 5699 asking businesses to verify if they should have filed Forms 1094/1095-C. These forms are required for all ALEs.
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in Pennsylvania? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into Pennsylvania tax filings.
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in Nevada? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into North Dakota tax filings. This webinar will cover registration,…
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in North Dakota? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into North Dakota tax filings. This webinar will cover registration,…
September 18, 2018
Article
As the largest tax reform legislation in the past 30 years becomes reality, it is important to stay up-to-date on planning opportunities and how reform may impact you and your business. Our Tax Reform: Practical Insights examples aim to break down…
September 18, 2018
Tool
Get ahead of tax season with the Eide Bailly Tax Planning Guide. A supplemental strategy guide to help guide year-end and make the tax laws work for you.
September 18, 2018
Article
The SCOTUS Wayfair decision has prompted a new focus on state and local tax compliance. The decision to register, report, and comply is important.