Employer refuses to withhold employment taxes
The Department of Justice has filed a lawsuit in federal court in Sacramento, California to collect more than $500,000 in unpaid employment taxes, penalties and interest from a Redding, California employer who has openly refused to withhold federal taxes from his employees' wages.

The complaint alleges that Walter Allen "Al" Thompson does business as Cencal Aviation Products, which makes jackets, flight bags, and other accessories for private pilots. Thompson has been described by the New York Times as an "advocate of the notion that American companies and their workers do not have to pay income taxes." Thompson appeared on the television program "60 Minutes II," where he asserted that wages are not taxable and that employers therefore need not withhold federal taxes from their employees' wages.

The government's complaint seeks a ruling that Thompson personally owes more than $500,000 in employment taxes, penalties, and interest. The complaint also seeks a ruling that Thompson and his spouse owe $27,721 in federal income taxes, penalties, and interest that they have refused to pay, and requests that the court order the foreclosure of the Thompsons' residence, with the net proceeds of the sale being used to help pay their tax debts.

The contention that employers do not have to withhold federal income tax or other employment taxes from wages paid to employees is on the IRS's list of the Dirty Dozen tax frauds for 2004.

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...back to 5 August 2004


Further information:
www.usdoj.gov/opa/pr/2004/July/04_tax_520.htm
www.irs.gov/newsroom/article/0,,id=120803,00.html

IRS Offers Penalty Refund for EFTPS Enrollment
The IRS has announced an incentive to encourage enrollment in and use of the Electronic Federal Tax Payment System (EFTPS). Approximately one million employers could qualify for a refund of a previously paid federal tax deposit (FTD) penalty. Penalties for late filing are from 2% up to 15% of the amount due, depending on how later the payment in made.

The EFTPS-FTD penalty refund offer allows business taxpayers an opportunity to receive an automatic one-time penalty refund if they have been assessed a deposit penalty on a Form 941 Employer's Quarterly Federal Tax Return. The offer is available to employers who are not mandated to use EFTPS. To qualify for the offer, the employer must:

• use EFTPS for one year (four consecutive quarters),
• make all Form 941 payments on time and,
• have previously fully paid the penalty.

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...back to 27 May 2004


Further information:
www.irs.gov/newsroom/article/0,,id=123430,00.html
www.eftps.gov

Paying tax electronically
There are three ways of paying tax electronically

• by authorizing withdrawals from savings or checking accounts
• through the Electronic Federal Tax Payment System (EFTPS)
• by charging it to certain charge cards.

The IRS describes these three methods in a recent press release and, in addition, explains the way in which an installment payment can be set up. The IRS offers a streamlined approval process if the amount due is not more than $25,000 and the taxpayer will pay it within a five-year period.

Taxpayers may ask for an installment plan while filing by attaching Form 9465 Installment Agreement Request to the front of the tax return, listing the proposed monthly payment amount and date. They may also choose to pay from a bank account each month through an electronic funds withdrawal program.

There is a $43 fee for setting up the installment agreement. Taxpayers will also pay interest - currently figured at five percent per year, compounded daily - plus a late payment penalty. This penalty, usually 0.5 percent of the balance due per month, drops to 0.25 percent when the IRS approves the agreement for an individual taxpayer who filed the return on time and did not receive a levy notice.

Further information:
www.irs.gov/newsroom/article/0,,id=122609,00.html
...back to 15 April 2004

Electronic payment of taxes
To promote greater use of the Electronic Federal Tax Payment System (EFTPS), the IRS has launched an express enrollment process for new business taxpayers.

EFTPS Express Enrollment for New Businesses will affect all businesses receiving a new Employer Identification Number (EIN). Business taxpayers with a federal tax obligation will be automatically pre-enrolled in EFTPS to make all their Federal Tax Deposits.

In addition to receiving their EIN, taxpayers will also receive a separate mailing containing an EFTPS Personal Identification Number (PIN) and instructions for activating their enrollment. New business taxpayers will activate their enrollment by calling an 800-number, entering their banking information and completing an authorization for EFTPS to transfer funds from their account to Treasury's account for tax payments per their instructions.

More than 4.4 million taxpayers have enrolled in the system to make their federal tax payments electronically. Around 250,000 new EINs are issued every year. Further information:
www.irs.gov/newsroom/article/0,,id=119561,00.html
...back to 22 January 2004

Electronic Federal Tax Payment System
Beginning in January 2004, businesses applying for an Employer Identification Number (EIN) (on Form SS-4, by TeleTIN, or Online Application) that are expected to have a Federal tax obligation will be automatically pre-enrolled in Electronic Federal Tax Payment System (EFTPS) in order to make Federal tax deposits. Details of EFTPS are available on the EFTPS website.

EFTPS was introduced in 1996 and since that time more than 4 million taxpayers have enrolled in the system to make their federal tax payments electronically. Around $1.5 trillion dollars are collected through EFTPS each year. Over ninety-five percent of the employment tax dollars are collected through EFTPS each year.

Further information:
www.irs.gov/formspubs/article/0,,id=109879,00.html#EIN
www.irs.gov/businesses/small/article/0,,id=98350,00.html
www.eftps.gov
...back to 6 November 2003