Snowe Introduces Legislation to Safeguard Small Businesses from Payroll Tax Fraud

            WASHINGTON, D.C. – U.S. Senator Olympia J. Snowe (R-Maine), Ranking Member of the Small Business and Entrepreneurship Committee, today introduced legislation that will protect small businesses from payroll tax fraud and provide them with greater security when working with IRA registered payroll service providers.  The Small Business Payroll Protection Act of 2007 includes provisions to safeguard small business owners against fraud – including increasing IRS oversight of payroll service providers and creating a separate section of Internal Revenue code that will govern the payroll industry.

            “As Ranking Member of the Senate Committee on Small Business and Entrepreneurship, I understand how critical it is to defend our small business owners from tax fraud,” said Senator Snowe.  “Enacting these provisions will help protect small companies in Maine and across the country from the very few dangerous payroll providers that would steal their clients' payroll taxes.  At the same time, this bill recognizes that small payroll tax agents must be provided flexible and reasonable regulatory options that offer real protection to their clients.  This legislation contains both strong safeguards and small business flexibility.”

            The legislation would define the responsibilities of payroll tax deposit agents and require all agents to register with the IRS or be penalized.  The bill also penalizes payroll providers that collect – but fail to make – required tax payments by extending section 6672 penalties to all payroll tax agents.  Additionally, payroll clients will also be informed of their continued liability for all of their payroll taxes as well as their obligation to periodically verify that their payroll taxes are paid in full.

         This is the third time Senator Snowe has introduced legislation to safeguard small businesses from payroll tax fraud.  The bill’s language was included in the 109^th Congress in the “Telephone Excise Tax Repeal Act of 2005” bill marked up by the Senate Finance Committee.

# # #