The Internal Revenue Service said it would begin sharing the results of employment tax examinations with 29 different state labor agencies to cut down on avoidance schemes and fraudulent employment tax filings.
The agreements are part of the IRS's Questionable Employment Tax Practice initiative to encourage businesses to comply with federal and state employment tax requirements.
"These agreements present a united front for the IRS and its state partners to improve compliance in the employment tax arena," said Kathy Petronchak, commissioner of the IRS Small Business/Self-Employed Division, in a statement.
Michigan is the first state to sign the agreement with the IRS and has already used some of the information to strengthen employer compliance with its unemployment insurance tax law. California, Michigan, New Jersey, New York and North Carolina helped develop the strategy.
The states that have signed partnership agreements with the IRS so far are: Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.
