Further Actions Are Needed to Reduce the Risk of Employment Tax Fraud to Businesses That Use the Services of Professional Employer Organizations

The Commissioner, Small Business/Self-Employed Division, should work with the Department of the Treasury, Office of Tax Policy, to consider a legislative proposal to require noncertified PEOs to register with the IRS, similar to requiring tax return preparers to obtain a Preparer Tax Identification Number, and require the noncertified PEOs to file a Schedule R with their Form 941.

The Commissioner, Small Business/Self-Employed Division, should establish timeliness standards for reviewing applications.

The Commissioner, Wage and Investment Division, should establish processes and procedures to reduce unnecessary resources expended notifying employers of an address change when programming incorrectly identifies an address change resulting from minor formatting revisions.

The Commissioner, Wage and Investment Division, should ensure that programming is updated to include Form 940 in the criteria to generate CP 148 notices when an address is changed.

The Commissioner, Wage and Investment Division, should develop processes and procedures to track employer contacts with the IRS alerting them of an unauthorized address change and refer these unauthorized address changes to the appropriate IRS function to determine why the change occurred and if the employer's account should be marked to proactively protect the business against possible identity theft.