Tax-evading firms LWC Target

Rena Picou Trevathan
July 12, 2011
Jeanne R. Lefort
July 14, 2011

The Louisiana Workforce Commission has put employers on notice, pay unemployment insurance taxes on workers or face litigation that could add interest and penalties to the amount already owed for any given tax year.

This action came after the LWC collected nearly $1.2 million this year alone from five unnamed Louisiana companies that had avoided paying unemployment taxes. One case alone totaled more than $400,000 in overdue taxes, penalties and interest.

An employee of the LWC said employers that have violated tax laws by avoiding payment are being targeted with the assistance of new business data analysis software in addition to other investigative methods used to enforce the State Unemployment Tax Act.

“Having the technology to do the data-mining and analysis previously done manually has greatly enhanced our capability to go after those who are shortchanging the state,” LWC Executive Director Curt Eysink said in an official statement. “Identifying potential SUTA dumping cases and investigating them use to take about two weeks per case. Now it only takes about two hours.”

In addition to other workforce-related matters, the LWC administers Louisiana’s unemployment program including tax assessment and collections, and determination of benefit eligibility and payment.

With its new Cary, N.C.-based SAS, formerly called Statistical Analysis System, Fraud Framework for Government software package, the LWC can detect collusive patterns in financial activity and track suspected fraud.

This detection system can identify high payroll and expense transfers being transferred to corporate shells that can give a business the image of being in a lower tax bracket. It also flags improper payments based on registered payroll levels and can identify sudden changes in revenue and employment patterns.

Louisiana law authorizes civil and criminal penalties for unemployment tax violation and for advising others on how they might skip required payments. Fines for violations can reach $10,000 and possible imprisonment for up to six months for every individual case involved. Violations could also result in employers being placed in a higher tax bracket for the year violated and three subsequent years.