Contractor License Practice Exam

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Prepare for the Contractor License Exam with comprehensive quizzes. Study with multiple choice questions, flashcards, and detailed explanations to ensure you're ready for success on exam day!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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Which entity is responsible for enforcing the collection of payroll taxes?

State Tax Agency
Internal Revenue Service (IRS)
Department of Labor
Federal Bureau of Investigation

The correct answer is: Internal Revenue Service (IRS)

The Internal Revenue Service (IRS) is the primary entity responsible for enforcing the collection of payroll taxes. Payroll taxes include federal income tax withholding, Social Security tax, and Medicare tax that employers must withhold from employees' wages. The IRS establishes regulations regarding how these taxes should be collected and reported, and it has the authority to enforce compliance through audits, penalties, and various collection methods. In relation to the other entities mentioned, the State Tax Agency typically focuses on state tax collection and enforcement rather than federal payroll tax compliance. The Department of Labor, while involved in protecting worker rights and enforcing labor standards, does not have the primary role in enforcing federal payroll tax laws; its responsibilities are more aligned with wage and hour laws. The Federal Bureau of Investigation (FBI) is primarily focused on investigating federal crimes and does not deal with tax enforcement directly. Therefore, the IRS is uniquely positioned in the federal system to handle the complexities of payroll tax collection and enforcement.