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by | Apr 18, 2024 | Audits, IRS, Tax Crimes |

Ghost Employers are those nefarious employers who withhold payroll taxes from their employees’ paychecks but fail to submit the withheld payroll taxes to the IRS as required. These employers are dubbed Ghost Employers and use the funds instead for their company or for personal gain.

From June 2018 through May 2023, the IRS’ Criminal Investigation Division (CID) identified 354 potential Ghost Employers, of which more than 200 are still being investigated, or have since been adjudicated.  The 33 cases that have led to successful prosecution resulted in restitution of approximately $43 million.

As part of a separate effort, sophisticated software was used to help identify numerous potential Ghost Employers by matching W-2 Forms to tax returns. Using these tax returns, the software could see whether the payroll taxes had been paid by the employer as required. Subsequently, the software identified over 162,000 companies that potentially meet the Ghost Employer criterion.

TIGTA made four recommendations to the IRS which the IRS agreed to implement, including refining the identification process of Ghost Employers, and improving tracking of enforcement actions to ensure cases suitable for criminal investigation are properly identified.

To read the full report, click here.


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