Payroll Tax Debt Not Pursued, As Micros Are
Aug 25th, 2008 | By Dawn Rivers Baker | Category: ResearchPossibly you will remember the plan hatched in Congress calling for merchant account banks to collect and verify the taxpayer identification numbers (TINs) of the vendors whose transactions they processed and report those amounts to the IRS. In addition, if they could not verify a TIN, they would be required to withhold 28% of that merchant’s revenues and remit those funds to the IRS. The idea is to use this method to combat rampant under-reporting among the self-employed and close the tax gap.
It seems the whole thing got slipped into the recently passed giant housing rescue legislation when nobody was looking. Meanwhile, the Government Accountability Office released a report last month that found there are 1.6 million businesses in the country with a cumulative $58 billion owing in unpaid payroll taxes. Yet, the IRS has done very little to collect that money. In fact, the IRS is so determined to be nice about the whole thing that they appear willing to let the statute of limitations expire, so that they can’t collect on these tax obligations, rather than get tough with the offenders. Congress hasn’t even asked about that portion of the tax gap. I’m sure there must be some very good reason for that.
