29 states have agreed to work with the IRS to share the results of employment tax examinations.
"Combining resources will help IRS and the states reduce fraudulent filings, uncover employment tax avoidance schemes and ensure proper worker classification,” according to an IRS spokesman.
What this means is that employers who pay employees 'under the table' will be far more likely to suffer adverse consequences, since it now will be easier for the IRS & states to coordinate their efforts.
Many businesses have used a variety of methods in an effort to avoid federal and state employment payroll and unemployment taxes. They include:
- Paying employees cash;
- Classifying employees as 'independent contractors' or '1099's'
Here's the press release from the Internal Revenue Service. The states involved in the program are: Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.