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White Collar Criminal Investigations Slowing Down? Think Again…The Increase in Employment Tax Prosecutions

By Caroline D. Ciraolo
The White Collar Crime Committee Newsletter, ABA Criminal Justice Section’s White Collar Crime Committee
Winter/Spring 2021

The Internal Revenue Service (“IRS”) is responsible for nearly 96% of the gross revenue received on behalf of the United States. Employment taxes, including federal income tax actually withheld and paid over to the IRS, constitute over 70% of all revenue collected by the IRS. Despite our strong system of voluntary compliance, the IRS estimates the annual gross tax gap – “the amount of true tax liability that is not paid voluntarily and timely” – to be $441 billion. Of this amount, $81 billion is attributable to employment tax.

Therefore, it comes as no surprise that civil and criminal employment tax enforcement is among the highest priorities of the IRS and the Tax Division of the U.S. Department of Justice (“DOJ”). The IRS and the DOJ have increased civil and criminal employment tax enforcement since 2015 in an effort to educate, modify the behavior of, and hold accountable those employers who intentionally fail to comply with their employment tax obligations.


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