How to Report an Employer for Not Paying Payroll Taxes: A Comprehensive Guide

If you suspect that your employer is failing to pay payroll taxes, it's important to take the necessary steps to report this issue. In this guide, we will explore the appropriate channels and documents to use, along with the process to initiate an investigation.

Understanding Payroll Taxes and Reporting Requirements

Payroll taxes are levied on the income earned by employees, both those paid by the employer and the employer's business profits. Failure to pay these taxes can lead to penalties and legal consequences for both the employer and the employees. IRS Form 211 is one of the forms used to report such non-compliance, offering a potential reward for helping the IRS recover the past due taxes.

Steps to Take When Reporting an Employer

Contact the Internal Revenue Service (IRS)

If you have a personal stake in the matter and direct evidence of payroll tax evasion, you can contact the IRS to request your tax records.:

Provide your Social Security number or Individual Taxpayer ID number to the IRS. No reason for the request is required to be stated. The information you receive will indicate whether the employer has accurately processed tax payments to the IRS for your account records. For an error in your tax records, you can request a correction if your employer transposed your Social Security Number, or if funds were withheld but not credited to your account.

State Income Tax Office

Another entity to consider is the state income tax office. Different states may have various names for this department, but they are equally interested in payroll tax non-compliance:

States can swiftly shut down businesses that are found to be withholding state taxes and not submitting them.

Best Practices to Follow

Before taking any action, it's wise to ensure that the employer has not already submitted the payroll taxes. Consider the following steps:

Call the employer's office to confirm if the taxes have been sent. Verify that you receive pay stubs, which must be provided as per legal requirements. If not, report the issue to your state’s wage and hourly bureau: The bureaus typically respond more quickly. State laws are often more restrictive than federal employment laws, so acting through the state may be more effective. The bureaus also report their findings to the IRS, which can then take further action.

Seeking Legislative Help

For more direct action, consider the following:

Send a letter to the IRS and follow up if there is no response within 30 days. Contact your local US Representative or US Senator's office, or include a copy of your letter to the IRS in your correspondence with them. Include all relevant details, such as your full name, address, the company's name and address, and any supporting documentation.

Conclusion

Reporting an employer for not paying payroll taxes can be a complex process, but it's crucial to take the proper steps to ensure justice is served. By understanding the right channels and procedures, you can play a role in ensuring compliance and protecting the rights of all workers.