IRS Scrutinizes Payroll Practices, Challenges for Companies

This article was originally published in Financial Executive, May 2010

About 6,000 companies nationwide are being selected at random for a Payroll Tax.

Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. audit. The audits will focus on whether companies are paying all of their required employment taxes that fund Social Security and Medicare. The Internal Revenue Service wants to know how many companies are misclassifying employees as independent contractors and failing to pay taxes on fringe benefits. The initiative is expected to last for three years.