Field Collection Operations

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Presentation transcript:

Field Collection Operations James P. Smith Supervisory Revenue Officer, Field Collection June 22, 2016 CPA Continuing Education Society of PA

FY 2016 Field Collection Operations 38% Decline

Employment Tax Compliance Efforts

FY 2016 Field Collection Operations 59

FY 2016 Field Collection Operations $59 Billion Delinquent amounts due from Forms 941, as of September 2015. Source: IRS CFO

Why Emphasize Early Interaction 68.6% of 2015 revenue from withheld income & FICA tax 68.3% in 2013 70% in 2012 Big part of Field Collection inventory

Why Emphasize Early Interaction Over Two-Thirds Withheld by Employers

Business Survival Curve Operating a business is challenging, those not paying taxes withheld in trust gain an unfair advantage over compliant businesses.

FTD Alert Historical Perspective Federal Tax Deposit Alert (FTD) Program Started in 1972 Focuses on payroll tax deposits Identifies changes in deposit history Assigns an “Alert” to Field Collection

Early Interaction Initiatives Federal Tax Deposit Alert System FTD Alert X Coded Pilot Tests whether accelerating the timing of alerts increases impact and identifies which taxpayers benefit most from alerts Implemented: April, 2015 EFTPS Early Alerts Modifies the FTD payment platform to create a near real-time system to identify variances in FTDs that will enable/expand treatment streams Initial Implementation: 2016 Fully Operational: 2017

Early Interaction Initiatives Benefits Expand early interaction program, educate taxpayers and modify taxpayer behavior to enhance compliance Improve collection case selection and assignment Enable data-driven decisions regarding taxpayer contacts

Outsourcing Payroll Many employers outsource some or all of their payroll and related tax duties to third-party payroll service providers. Third-party payer services include: Withholding Social Security, Medicare and income tax from wages Timely submitting federal tax deposits Preparation and timely filing of payroll tax returns Preparation and timely filing of information returns

Risks of Using Third-Party Payers In rare instances use of a third-party payer can expose a business to risk of: Payroll tax fraud Late or unfiled tax returns Underreported tax liabilities Late or undeposited tax payments Limited notification if a problem arises

Initiatives to Mitigate Risks of Using Third-Party Payers Dual Notice Initiative – Risks associated with address changes Electronic Federal Tax Payment System enhancements Inquiry PINs Email confirmation of scheduled payments

Initiatives to Mitigate Risks of Using Third-Party Payers Creation of Form 14157, Return Preparer Complaint Used by taxpayers to report suspected fraudulent activity and abusive tax schemes Federal Tax Deposit Alerts Early Interaction initiatives Trust Fund Recovery Penalty - IRC § 6672 Assessing the Third-Party Payer

Enforcement for Non-Compliant Employers Levy of bank accounts, receivables Seizure of property Disqualified Employment Tax Levy (DETL) Trust Fund Recovery Penalty (IRC 6672) Suits for Injunctive Relief Criminal Referrals

Final Thoughts - Compliance Case Resolution Prerequisites Compliance today Compliance tomorrow Compliance in the future No current/future compliance = No easy resolution Future compliance is the key to resolving past non-compliance.

Field Collection Operations Questions?