04/17/2024
Criminal Investigation Had Success With Ghost Employers, While Civil Enforcement Efforts Can Be Improved
Why did we do this audit?
This audit reviews the IRS’s efforts to identify employers that issue Forms W-2 to their employees but do not submit them to the Social Security Administration, don't file employment tax forms, and don't make any Federal tax deposits. The IRS refers to these types of employers as “Ghost Employers.”
In June 2020, the IRS established the Ghost Employer Project to see if it could systemically identify this type of noncompliance with the tax laws.
What did we find?
From June 2018 to May 2023, IRS's Criminal Investigation function identified 354 Ghost Employer leads. As of May 2023, 33 cases led to a successful prosecution with an average restitution amount of $1.3 million.
Separately, the IRS research function identified more than 162,000 potential Ghost Employers with an estimated liability of $1.7 billion. The IRS then randomly selected 280 to be reviewed by compliance functions. However, we found that the results of these cases weren't fully tracked by the Ghost Employment Project team.
Treasury Inspector General for Tax Administration Treasury Inspector General for Tax Administration
