IRS updates procedures on employment tax responsibilities
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Thursday, January 24, 2019

IRS updates procedures on employment tax responsibilities

By Payroll and Entitlements Editorial Staff

The IRS has updated its procedures on employment tax responsibilities and coordination with other functions. The procedures focus on the coordinated programs both internally and externally of the employment tax organization. The IRS administers the employment taxes imposed by Chapters 21 through 25 of the Internal Revenue Code and the self-employment taxes imposed by Chapter 2. An important phase of administration of employment taxes, including the self-employment tax, is interpreting the sections of the Code applicable to these taxes. The Employment Tax Program is governed by Policy Statements and other internal guidance that apply to all Service personnel regardless of operating division. The Policy Statements found in IRM 1.2.1, Servicewide Policies and Authorities, Policies of the Internal Revenue Service, apply to all employment tax issues and examinations.

Review policy statements. Examiners should review these Policy Statements to properly perform their examination duties. By providing one source of authority for all operating divisions, the Service greatly reduces philosophical and procedural inconsistencies. The director of the examination - Specialty Policy is responsible for employment tax policy and procedures. Every function in the IRS has a role in proper employment tax administration. It is essential that each function conducts operations with an emphasis on promoting voluntary compliance. Appropriate reviews should be conducted to ensure consistency with the employment tax policy statements and philosophies. Attention should be given to the coordination of employment tax programs between operating divisions to ensure approaches are consistent. Information should be continuously reviewed to suggest changes in employment tax compliance and examination programs, training courses, educational programs and employment tax administration. Managers will work together in a cross-functional, cooperative manner to ensure that cases referred from one division to another are evaluated and assigned in a manner consistent with improving taxpayer compliance while making the best use of available resources. If an agreement cannot be reached regarding the acceptance of a referral, the next-level managers will work together to resolve the dispute.

Examination support. Further, if SB/SE employment tax determines it will provide examination support beyond consultation services, the employment tax returns will be controlled by the SB/SE employment tax group.  Identification of the returns and periods to be examined will be jointly determined by the SB/SE employment tax manager and referring SB/SE examining function. Coordination is necessary to effectively and efficiently administer the employment tax law. Through the Enterprise Wide Employment Tax Program (EWETP) team, the IRS will continue to develop and strengthen the EXETP by working across Business Operating Division (BOD) lines. The EWETP will apply a corporate approach utilizing current enforcement techniques, prospective approaches, enhanced automation, improved systems and process changes, as well as appropriate legislative recommendations. SB/SE has the primary compliance responsibility for the employment tax returns filed by SB/SE and Large Business & International (Large Business & International) taxpayers.

Current information. The SB/SE employment tax website has current information regarding group locations and geographic areas of responsibility. The Specialist Referral System should be used by nonemployment tax employees to request examination resources and/or consultation services from employment tax specialists. Further, Centralized Case Processing (CCP) in Florence, KY, will be responsible for processing all closed case files submitted from field employment tax groups located within SB/SE Examination, Specialty, Employment Tax (Area 212). Employment tax cases closed by groups outside of Examination - Specialty, Employment Tax (Area 212) will be closed to their respective CCP area for closure. The SB/SE employment tax coordinates with Large Business & International when SB/SE employment tax independently selects a taxpayer identified as part of a controlled Large Business & International case, and the SB/SE employment tax manager will confer with the appropriate Large Business & International manager to determine the degree of coordination necessary.

Coordination. Coordination takes place also if an Large Business & International manager determines that SB/SE employment tax support is needed for an Large Business & International examination, and a request will be made to the appropriate SB/SE employment tax manager via the Specialist Referral System to determine the type and level of support that can be provided. SB/SE and Tax Exempt/Government Entities (TE/GE) have been assigned the similar task of developing their own employment tax programs. To ensure consistency both in the approach and in the interpretation and application of law, ongoing communication between the operating divisions is essential. The operating divisions may develop their own systems to accomplish this coordination. TE/GE has primary compliance responsibility for the employment tax returns filed by TE/GE taxpayers. Each business unit should establish mutually satisfactory procedures for resolving disagreements arising from subsequent review of Appeals determinations. Finally, the IRS makes available any information returns to the Social Security Administration for use in administering the benefit provisions of the Social Security Act. (Internal Revenue Manual, IRM 4.23.2, November 19, 2018.).

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