November 7, 2007 - The state of Michigan's Unemployment Insurance Agency and the Internal Revenue Service have entered into an agreement to share results from employment tax examinations in an effort to increase employer compliance with federal and state employment tax laws.

Keith W. Cooley, director of Michigan's Department of Labor & Economic Growth, attended an official signing ceremony in Washington, D.C. yesterday, where the IRS and 29 states, including Michigan, formally entered into information sharing agreements. The agreements are part of a joint federal-state Questionable Employment Tax Practice (QETP) initiative.

"We were the first state to sign the memorandum of understanding (MOU) with the IRS," Cooley said. "Our Unemployment Insurance Agency (UIA) has already begun to forge a much closer working relationship with the IRS, and as a result has significantly increased the sharing of tax and audit information between the IRS and UIA."

The QETP agreement provides, for the first time, a centralized and uniform mechanism for exchanging employment tax data between IRS and state workforce agencies, such as Michigan's UIA.

Cooley noted that the agreement will help improve compliance with state and federal regulations governing employment and unemployment tax activities and reduce fraudulent filings and plans and the misclassification of workers.

"The UIA-IRS data exchange is helping to strengthen employer compliance with our UI tax law," Cooley explained. "Our objective is an unemployment tax system that is fair for all employers and where everyone pays their proper share of taxes."

"The agreement will also help increase the collection of state and federal unemployment/employment tax debts," he said.

The IRS - state agreement also encourages coordinated outreach and education activities, allowing all of the participating parties to present a consistent message and to encourage businesses to voluntarily meet their employment/unemployment tax responsibilities.

Also playing a role in crafting the agreement between the IRS and the states were the U.S. Department of Labor, the National Association of State Workforce Agencies and the Federation of Tax Administrators.

Finally, the agreement empowers a multi-agency QETP oversight group to establish uniform processes through collaborative agreements and legislative proposals.

Keith W. Cooley (left), Director of Michigan's Department of Labor & Economic Growth, attended the official QETP signing ceremony in Washington D.C. on November 6, 2007. The agreement allows for the exchange of tax examination information between the IRS and state unemployment insurance programs. Representing the IRS at the signing were Kathy Petronchak, Small Business/Self Employed Commissioner, and Bill Conlon, director, Specialty Taxes. Michigan was the first state to sign the agreement.

Read more Michigan Department of Labor & Economic Growth press releases.