Presentation Outline

Transcription

1 Guest Workers: : Outreach- education/ enforcement FTA Annual Meeting Little Rock, Arkansas June 4-7, 2006 Presentation Outline o Barriers to Compliance o Tax Compliance Issues Processing Audit o ITIN Statistics/Resource Information o Guest Worker Advisory Committee o Outreach/Education/Translation o Operational Enhancement o Guest Worker Compliance Initiative o Statistics o Mini Warehouse 1

2 Barriers to Compliance o Low levels of English proficiency o Lack of familiarity with U.S. tax system o Lack of understanding of filing requirements o Erroneous information about withholding and filing requirements o Fear of dealing with the Government/Immigration issues o Limited bilingual staff to communicate with Hispanic population o Limited number of instructions and tax forms in Spanish Tax Compliance Issues o A large segment of N.C. s non-compliant guest workers originate from: Guatemala Nicaragua Honduras Earn an average per annum salary of $32,000 o Are employed in: Food processing plants Furniture and textile manufacturing facilities Construction industry o Have been employed for several years o Have an income tax liability o Corrected filing status is Single 2

3 Tax Compliance Issues o False name and Social Security Numbers o Minimum or no withholding on wages o Non-filers o 1099 income recipients o Counterfeit documents obtained (birth certificates, Social Security cards; other forms of identification) o Dependents o Filing status Document and Payment Processing Issues o Original return filed with ITIN applied for o Return filed with ITIN and correct name; W-2 with SSN and false name attached o Filing Status o Dependents o ELF Fraudulent Preparer Cases 3

4 o Returned mail Audit Issues o Guest Worker changes name and SSN o Employer re-hire policies o Audit completed under SSN Tax return filed under ITIN o Amended return filed after audit with ITIN applied for Incorrect allowances Incorrect filing status o Debt set-off program ITIN Statistics o As of million ITIN s have been issued o As of States ranked by largest ITIN issuance California (2,112,586) Texas (776,932) New York (394,000) North Carolina (334,000) o 1.5 million ITIN s issued in 2005 o IRS maintains ITIN database 4

5 NCDOR - Actions o Guest Worker Advisory Council o Outreach/Media Advertisements o Education o Translation o Operational Enhancement o Compliance Guest Worker Advisory Committee Provide guidance on operational strategies o TACC Taxpayer Service/Proposed Assessments o Taxpayer Assistance Outreach/Education/Proposed Assessment o Hispanic Liaison Advertising/Media Events o Collection Final Assessments o Examination Compliance Initiatives o All Divisions Recruitment $500,000 recurring budget 5

6 Community Outreach NCDOR - Outreach o Education Assistance: presentations and distribution of Spanish language brochures at: Church events Hispanic Festivals State Fair Hispanic Job Fairs Mexican and Central American Consulate events Campaign $140,000 budget Advertising Message individual income tax filing requirements o Theater Advertising One Movie Theater 14 screens 8 weeks Slide appeared 6 times before every movie in every Theater section o Television Univision - Spanish Language Television o Radio Spanish language radio stations 6

7 Tax Education - Current NCDOR - Education o Tax Seminars held at various venues o Radio Talk Shows (call-in questions) o North Carolina Public Television (OPEN/net) Tax Education Future o Production of Spanish language tax education videos o Distribute Spanish language posters on tax issues o Prepare inserts in Spanish for employee paycheck envelopes NCDOR - Translation Translation Current Letter/Brochures o NC-4/Withholding tax brochure o Corporate Income and Franchise Tax brochure o Privilege License tax brochure o Sales and Use tax brochure o Various Examination Division form letters o Various Collection Division form letters Translation Current Forms o Various USUB forms o NC-4 7

8 Web-site NCDOR - Translation o General Tax Information Individual Income Tax Sales/Use Tax Withholding o Tax Preparation TACC/Service Centers VITA sites (link to VITA web-site) o FAQ s Outreach/Education/Enforcement Operational enhancement o Recruitment of bilingual staff in: Examination Division Collection Division Taxpayer Assistance Division Call Center o Bilingual Hispanic Liaison Public Information Office Press releases Outreach events scheduling Media campaigns 8

9 Outreach/Education/Enforcement Operational enhancement o Taxpayer Assistance Call Center (TACC) IVR - Translated messages Increased bilingual agents Enforcement Guest Worker Compliance Initiative Identify non-compliant guest workers Assess tax based on name and SSN provided Notify employer of correct NC-4 withholding 9

10 Enforcement Guest Worker Compliance Initiative Business owners Hispanic owned businesses not in compliance Audit for all tax schedules Field Examinations unreported/underreported sales and use tax unreported/underreported individual income tax unreported/underreported corporate income/franchise tax Enforcement Guest Worker Compliance Initiative 1099 Recipients Identify guest worker 1099 recipients Non-filers Underreported income Overstatement of deductions Employer/Employee relationship 10

11 Enforcement 1099 Misc Issues Records examined for which the 1099 is $10,000 or greater ,197 records for a 1099 being issued to a payee using an ITIN resulting in over $140 million in untaxed income ,829 records for a 1099 being issued to a payee using an ITIN resulting in over $208 million in untaxed income One NC payee received $1.4 million in 1099 income using ITIN. 90 payees were found to be in the $600,000 to $215,000 income range Enforcement Guest Worker Compliance Team Experienced bilingual Field Auditor - Leader Auditors and Tax Technicians in various regions Bilingual and non-bilingual Dedicated database 11

12 Enforcement Identification of Withholding Compliance Issues NC-3 media submitted by employers Secure NC-3 information electronically during field audit NC-4 submitted by employer (>9 allowances or exempt) o NC requires employers to submit NC-4 Assignments Enforcement Guest Workers Individual Income Tax Guest worker compliance team Business Owners Sales & Use; Income Tax Field Auditors 1099 Recipients Tax Auditor/Tax Technician Desk Audits 12

13 Enforcement - Statistics Tax Non-compliant Assessment Employer Schedule guest workers Totals Furniture Industry Individual 380 $ 525,415 Brick Manufacturer Individual ,417 Processing Plant Individual 420 1,153,844 Processing Plant Individual ,552,760 Various (32 employers) Individual ,744,862 Total guest worker employer 5938 $ 15,153,298 Guest Worker Business owners Period 7/1/05 4/30/06 Convenient Stores/Restaurants Sales/Use 51 1,479,712 Total completed audits 5989 $ 16,633,010 In progress 7 employers Future Assignments Guest Workers 656 non-compliant guest workers Future Assignments 25 employers Identified 34 additional employers with large number of guest workers 13

14 Future Assignments Business Owners Assigned cases o 230 Field Audit cases assigned Convenience Stores Restaurants Mexican Grocery Stores (La Tiendas) Future Assignments 1099 Recipients 1099 s secured through Field Examination o Tax Auditor/Tax Technician inventory o Prioritize by dollar value IRS Extract Tape o Query database o Filter results o Assign cases 14

15 Mini-Warehouse o Appropriation of funds through Guest Worker Initiative o SAS technology o Integrate disparate data sources o Identify non-filers and underreporting o Provide operational staff with a powerful research tool o A step that is consistent with the Vision 2010 strategic plan Architectural Overview ITAS 1099 MISC NC-3 Data Warehouse Tier SAS ETL Server Warehouse Or Marts Data Warehouse BI Tier 3 rd party M E T A D A T A 15

16 Project Approach Clear goals and limited scope for the project Executive support and leadership for the project Partnership with SAS to get effective business intelligence tools Create a core team of internal resources of business and IT personnel to implement the plan Effectively utilize subject matter experts to ensure the project meets key business needs Access Web Portal 16

17 Access Ad Hoc Reports Access Ad Hoc Reports 17

18 Schedule 80 business days from project start to completion Phase 1 Requirement gathering Phase 2 Design and analysis Phase 3 Development, test, and integrate Phase 4 Production release All phases will be complete by the end of June 2006 Thank You! Alan P. Felton, Assistant Secretary of Revenue, Tax Compliance NC Department of Revenue alan.felton@dornc.com 18