Hawai'i and Internal Revenue Service officials will be sharing information in the hopes of catching companies and individuals evading or inappropriately reducing employment taxes they owe.

The IRS said an agreement signed with the state is part of an initiative to uncover questionable employment tax practices by exchanging data with states. The IRS hopes to identify fraudulent filings and unemployment tax avoidance schemes, and encourage businesses to comply with federal and state employment tax requirements.

Hawai'i is one of 29 states that have signed exchange agreements that were announced yesterday by the IRS.

Under the agreements, state and the IRS may exchange employment tax information for civil lawsuits and conduct coordinated enforcement efforts, including sharing results of examinations. The result is intended to be higher compliance with filing of Form 1099s and W-2s, and that both state and federal tax collectors will be able to collect more employment and unemployment tax debts.

The IRS said the program may also help level the playing field for businesses in that it may ensure everyone pays their share of employment taxes.

The federal tax agency also said it may work with states on educating businesses on employment and unemployment tax responsibilities.