Contact: Chris Chichester, 202-228-5843
SNOWE BILL SAFEGUARDS SMALL BUSINESSES VICTIMIZED BY PAYROLL FIRMS
Washington, D.C. – U.S. Senator Olympia J. Snowe (R-Maine), Chair of the Senate Committee on Small Business and Entrepreneurship, has introduced a bill (S. 3583.) that will help protect small business owners from unscrupulous payroll and accounting firms that have fraudulently collected payroll taxes, pocketed the proceeds, and diverted delinquency notices that the Internal Revenue Service (IRS) sends to their clients.
“The small business provisions adopted in this bill could potentially prevent millions of dollars in back taxes, penalties and fines for small businesses,” said Senator Snowe. “Complying with the tax code is a costly, time consuming and tedious process that Congress must reform. My legislation will better protect taxpayers and unsuspecting small businesses from bankruptcy and financial ruin.”
Senator Snowe noted the amendment was accepted as part of Chairman Charles Grassley’s modification to the Taxpayer Protection and Assistance Act," which was passed by the Senate Finance Committee today.
Senator Snowe’s bill will:
• Identify payroll agents in payroll/accounting firms as “responsible persons,” which will enable the IRS to assess 100 percent of penalties against those firms. By giving the IRS such authority against the payroll agents, the IRS would not automatically re-assess the taxes due against the small business taxpayer, which paid what they thought was their payroll tax obligation in good faith; and
• Impose a requirement that any payroll agent who withholds payroll taxes must register with the IRS. This new requirement would place the IRS on notice that payroll agents are responsible for turning over certain withheld payroll taxes. In addition to registering with the IRS, this amendment would require payroll agents to be bonded so that there is insurance for paying payroll taxes should these agents breach their fiduciary duty and fail to turn client’s tax payments over to the government. As an alternative to bonding, payroll agents may opt to submit an annual audit by an independent third party.
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