According to a Department of Justice press release, a Montana business owner recently pleaded guilty to evading federal employment tax laws. This story should remind business owners and those responsible for payroll functions that compliance with employment-related taxes is not optional. The IRS and Department of Justice will not hesitate to pursue criminal charges, when appropriate, when employers and responsible parties are not properly living up to their federal payroll tax obligations. If you have failed to pay over employment-related taxes for one or more quarters, you should seek the assistance of an experienced tax defense attorney to determine the best strategy for you to come into compliance.
Defendant Failed to Pay More Than $550,000 in Employment Taxes
Court records reveal that Thomas O’Connell owned and operated several heating and plumbing companies that served customers in the Great Falls area. Between 2005 and 2016, O’Connell admitted to intentionally failing to pay over employment taxes that were due. Instead, he directed the funds to pay for personal expenses and other debt.
Considering O’Connell’s illegal activity spanned over 10 years, the IRS and Department of Justice estimate that the tax loss that he caused exceeded $550,000. O’Connell will be sentenced in June and faces up to five years in a federal prison. Additionally, O’Connell may be sentenced to serve up to an additional three years of supervised release upon the completion of his physical prison incarceration. Finally, O’Connell will likely be required to pay restitution to the IRS, representing the tax loss that he caused.
The IRS and DOJ Place a Heightened Importance on Employment-Related Taxes
The IRS and Department of Justice take employment-related tax obligations seriously. Between withholdings from employees’ paychecks and portions of tax paid by the employer, such withholdings and remittances make up a significant portion of taxes paid in the U.S. every year. When the system begins to erode, the IRS is not able to collect the requisite funding to keep the government running. Because of the importance of such taxes, taxpayers who violate employment and payroll withholding and remittance rules face severe consequences, including the potential for federal prison.
If you have failed to withhold and remit amounts from employees’ paychecks or pay over employment taxes for one or more quarters, it is in your best interest to contact an experienced payroll and employment tax attorney as soon as possible to discuss your options to come into compliance. Working with a seasoned tax attorney, you will establish the pertinent facts of the case and mutually agree on the strategy that keeps you, your business, and your freedom top of mind. Best of all, while you are represented by an experienced tax lawyer, you will not have to go up against the IRS alone.
We Are Here for You
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
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Questions about delinquent payroll taxes and trust fund recovery penalty
- What happens if an employer continues to incur new payroll tax liabilities?
- California Employment Taxes Basics
- How Does the IRS Develop an Employment Tax Fraud Case from the First Indication of Fraud to a Criminal Indictment?
- Can more than one person be considered responsible by IRS
- How unpaid employment tax payments are allocated
- When a corporate officer is considered a responsible party
- Examples of trust fund recovery penalty determinations
- Failing to pay employment taxes after notice is given
- How to determine responsible person for trust fund recovery
- Assessing trust fund recovery penalty and option to appeal
- What is the trust fund recovery penalty?
- What are the penalties for failure to pay employment taxes
- When am I considered liable for company’s employment taxes
