Starting in 2017, the IRS will begin enforcing strict regulations on late tax payments. Out with the old system of email reminders and automated phone calls, in January 2017 new software will be in place to analyze EFTPS (The Electronic Federal Tax Payment System) transactions diligently. Within 72 hours of a missed employment tax deposit this new software will issue an alert and an employee of the IRS will be sent to inquire about the delay in payment. Plainly put, if you are late on your tax payment, an IRS employee could be knocking on your door!
According to The General Ledger, this “pre-enforcement” visit will take anywhere from 45 minutes to an hour. The employee will explain to you the missed or late tax payment, clarify the consequences of missing a payment, and offer their assistance. Even more, if the payment is not made timely after the in-person visit, the IRS will be enforcing stricter and timelier policies. The next steps include a court order which forces the employer to make timely tax deposits going forward. Once this injunction is in place, the IRS can have the court find the business/employer in contempt, forcing them to post bonds, or obtain approval from the IRS before making ANY expenditures. Worst yet, if the payment is still not made after all of these attempts, a receiver could be appointed over the business.
Why is the IRS so obstinate about getting paid on time? Employment taxes make up 60-65% of annual tax revenue (The General Ledger). Without timely employment deposits, they are out a large chunk of change (pun intended). Employment taxes include withheld employee FIT and employer payroll taxes. So even if the tax is a small percentage to an employee, to the IRS, those payments add up quickly. Those funds are essential to the federal government and they are determined to get them in a timely fashion.