IRS Report Exposes Tax Evasion by ‘Ghost Employers’

A recent report issued by the Treasury Inspector General for Tax Administration highlights the Internal Revenue Service’s efforts to combat tax evasion by “ghost employers” who fail to pay employment taxes. While the IRS has prosecuted over 30 cases since 2020 as part of its “Ghost Employer Project,” which aims to identify noncompliance with tax laws, the scale of the problem remains significant. The report reveals that IRS Criminal Investigation identified 354 ghost employer leads between June 2018 and May 2023, resulting in 33 successful prosecutions with an average restitution amount of $1.3 million. However, the report indicates a much larger issue, with over 162,000 potential ghost employers identified, representing an estimated liability of $1.7 billion.

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