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What Businesses Need to Know About the New IRS Early Interaction Initiative

What Businesses Need to Know About the New IRS Early Interaction Initiative

Business owners are required to pay payroll/ employment taxes to the Internal Revenue Service. However, in recent years with the ups and downs of the economy, too many business owners have failed to do so. In response to this growing trend, the IRS launched the new Early Interaction Initiative to start 2016. The purpose of this initiative is to ensure that employers are compliant in paying their taxes and also to help them avoid interest and penalty charges. If you are a business owner, here are a few things you need to know about this new initiative.

This is Designed to Help the Business Owner

A common mistake that business owners who are in a financial bind make is thinking that not filing their payroll or employment taxes will only impact them. The unfortunate truth is that when they withhold their portion of employment taxes it actually makes it difficult for employees to keep their taxes current. There has been a spike in recent years of employees receiving notification that their employers have not paid into these payroll taxes and that the employee is obligated to fix it. If the issue is not taking care of it can land business owners in jail. The Early Interaction Initiative is specifically designed to step in before business owners reach the point where legal action is necessary.

Here’s How the Program Works

Employers should file tax forms every quarter. The goal of this program is to identify those small, medium, and large business owners who have a pattern of late payments, or missed payments, before they reach their quarterly filing time. The IRS will directly notify employers that they have fallen behind on tax payments and work with them to bring them current. It is important to remember that once the quarterly filing deadline occurs, businesses are subject to a variety of late fees and interest on their taxes which can make the amount even more difficult to pay.

What to Do if You Receive a Notification

If you are a business owner who received a notification regarding paying your taxes the first thing you should do is not panic. Even business owners who generally stay on top of their employment filings may receive this form as a gentle reminder that the time is coming. Any business who knows that they are consistent and filing their payroll taxes should not be concerned if they do receive this notification from the IRS. It’s also important to remember that the IRS wants to work with businesses to ensure that they are running smoothly and pay their dues to the government accordingly.

Any business owner that is concerned about receiving one of these forms should equal legal counsel with the tax relief firm. As the initiative is fairly new, it is likely that several businesses who have been behind on their taxes for long periods of time will likely receive a notification because of this trend. Any law firm that is seasoned in the ins and outs of business taxes will be able to assist you in understanding why you received this notification, what to do about it, and how to ensure that your employment taxes stay current.