New York is one of 29 states that have signed memoranda of understanding with the IRS to share enforcement information on employment tax collection matters. The move is part of the IRS’ Questionable Employment Tax Practices (QETP) initiative, which attempts to identify and prosecute employment tax schemes and illegal practices.
The original QETP initiative was a collaborative effort of the IRS, the National Association of State Workforce Agencies, the U.S. Labor Department, the Federation of Tax Administrators and five state work force agencies. New York now joins this group in its attempt to better enforce state and federal employment tax laws.
Employers may reasonably expect that tax records provided to state agencies also will make their way to the IRS. Any discrepancies between state and federal filings may trigger audits by one or both entities.