IRS Tax Penalties on the Rise, Particularly Employment Tax Penalties

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IRS Tax Penalties on the Rise, Particularly Employment Tax Penalties

The IRS recently issued its annual Data Book, providing a glimpse into the world of tax administration during the past fiscal year.  The recent release provides a number of interesting takeaways, but here are a few of the highlights:

  • The IRS assessed $27.3 billion in civil penalties during FY 2016.
  • The IRS assessed close to $12.5 billion in additional taxes for returns not filed timely and collected almost $2.3 billion with delinquent returns.

It’s always interesting to see how the civil penalties break down.  Based on the data, approximately $12 billion in penalties were assessed against individuals and estate and trust income returns during FY 2016.  There were close to $2.2 billion in civil income tax penalties assessed against businesses and over $6 billion for employment taxes.  Other penalties related to excise taxes and estate and gift taxes.

So how does this compare to prior years?  Well, it marks an increase in the total amount of civil penalties assessed overall.  Most notably, it marks a nearly 40-percent increase in the amount of employment taxes assessed.  That statistic is consistent with recent anecdotal information and the government’s reprioritization of employment tax enforcement.  For other posts related to the uptick in employment tax enforcement, which is largely confirmed by the recently-released data, see Employment Tax Enforcement is on the RiseThe Crime of Willfully Failing to Collect or Pay Over Tax, and Another Trust Fund-Related Tax Indictment.