Dear Friend,
At a recent gathering of leading tax professionals, a senior Department of Justice official delivered a message that should catch the attention of business owners across the country: the DOJ is intensifying investigations where employment taxes are an issue. While these investigations may stem from concerns at the intersection of labor and immigration policy, the risk extends far beyond that.
You Might Not Employ Undocumented Immigrants But You Could Still Be at Risk
A recent announcement by the Department of Justice confirms a marked increase in enforcement actions around employment tax compliance. These efforts focus on businesses that have misclassified employees as independent contractors, failed to file or withhold appropriate taxes, or participated in off-the-books payroll practices, which are sometimes criminally prosecuted.
The scope of these investigations is broad. Companies that rely on contract labor, staffing agencies, or seasonal work may be especially exposed—even if their workforce is fully authorized. High-risk sectors include construction, hospitality, food service, and manufacturing, but the implications are relevant across all industries.
This push coincides with a shift in IRS policy: tax authorities are now sharing employment data more widely with other agencies, creating new exposure for employers whose classification practices may not stand up to scrutiny.
If your business may be exposed, Moskowitz LLP wants to help you resolve issues now—before the government takes action.
The IRS’s Voluntary Classification Settlement Program (VCSP) offers a proactive option for eligible employers to reclassify workers as employees for future tax periods, while immensely limiting liability for past noncompliance. Participation in this may significantly reduce the probabilities of imposition of penalties and audits.
Moskowitz LLP has helped many businesses correct past wrongdoing and resolve tax issues through the Voluntary Disclosure Program and strategic compliance planning.
Contact, visit or call us at 415-394-7200 for a confidential consultation.
Mid-Summer Reflection: How a War and a President Invented Income Tax
While fireworks and summer BBQs still echo from Independence Day, July also marks another turning point in our nation’s tax history. On July 1, 1862, in the midst of the Civil War, President Abraham Lincoln signed the Revenue Act of 1862 into law—introducing the first federal income tax.
At the time, the Union needed new revenue to fund the war effort. The law imposed a 3% tax on incomes above $600 (roughly $18,000 today). It also created the office of Commissioner of Internal Revenue and laid the groundwork for the IRS. (Note: It was later found to be unconstitutional.)
Though temporary at first—the act was repealed in 1872—the idea took root. Later versions came and went until the modern income tax was codified by constitutional amendment in 1913.
So if you’re reflecting this July, remember: the price of liberty has always included a tax bill.
If you’re facing one of your own, we’re here to help.
