The Internal Revenue Service plans to conduct a three-year research study on employment tax compliance starting in February.

The IRS said it will randomly select 2,000 taxpayers each year for the next three years for comprehensive examinations to collect data on employment tax filers. The study will be the IRS’s first Employment Tax National Research Project in 25 years. The IRS believes that business practices regarding employment tax issues may have changed significantly since the last time the IRS conducted an employment tax study in the 1980s, prompting the IRS to do another study.

Examinations for the study will be conducted to collect data that will allow the IRS to understand the compliance characteristics of employment tax filers.

The results will allow the IRS to gauge more accurately the extent to which businesses properly comply with employment tax law and related reporting requirements. When completed, this information will help the IRS select and audit future employment tax returns with the greatest compliance risk.

There are two main goals for the research project: to secure statistically valid information for computing the employment tax gap, and to determine compliance characteristics so the IRS can focus on the most noncompliant employment tax areas.

Taxpayers will receive notices describing the process for the research project, which will be similar to those used in other recent IRS research studies on individuals and Form 1120S corporations.

Records pertaining to employment tax returns and issues will be subject to review during these examinations, the IRS noted, and employers should have all of their records available to expedite these examinations.

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