According to a press release, the agreements, part of
the Questionable Employment Tax Practice (QETP) initiative,
provide a centralized, uniform means for the IRS and state
employment officials to exchange data, thereby leveraging
resources and encouraging businesses to comply with federal
and state employment tax requirements. Questionable
employment tax practices (QETP) are employment tax schemes
or practices that have no objective other than to avoid
federal and/or state employment taxes.
In addition to coordinating compliance activities, the agreements call for collaborative outreach and education activities designed to help businesses understand their employment and unemployment tax responsibilities.
The state agencies, the U.S. Department of Labor, the National Association of State Workforce Agencies, the Federation of Tax Administrators and the IRS worked together on various facets of the exchange agreements.
California, Michigan, New Jersey, New York and North Carolina all are part of the team that developed the strategy, and they were instrumental in helping make sure the agreements meet the needs of the participating states as well as the needs of the IRS, according to the announcement.
Thus far, 29 states have entered into individual information-sharing agreements with the IRS:
Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.
You can read more about the initiative HERE