According to a Department of Justice press release, a Virginia woman was recently sentenced to serve more than a year in federal prison for failing to comply with federal employment tax laws. This story highlights the importance for business owners and those responsible for payroll functions to comply with federal and state payroll tax requirements. If you have failed to comply with employment tax laws for one or more quarters, it is in your best interest to contact an experienced employment tax defense attorney to determine the extent of your exposure and to help you decide on the next best steps in moving forward into compliance.
Defendant Withheld Payroll Taxes, But Failed to Remit to the IRS
Court records reveal that Gail Jones, a Virginia resident, was sentenced to 15 months in prison for not paying employment taxes to the IRS. As a co-owner and executive of S&G Property Management Inc., Jones withheld taxes from employees’ wages but did not remit them to the IRS from 2013 to 2018. Prosecutors asserted that she used fraudulent tactics to evade IRS collection efforts, causing a tax loss of approximately $950,000. Additionally, Jones fraudulently obtained $20,800 in Paycheck Protection Program loans.
In addition to her prison sentence, she was ordered to pay $950,100.18 in restitution, representing the tax loss that she caused to the government. Additionally, Jones was ordered to serve three years of supervised release upon the completion of her prison sentence.
Severe Penalties for Employment Tax Fraud
This case underscores the serious consequences of failing withhold, account for, and remit payroll taxes. Jones’s actions led to significant legal repercussions, including prison time, restitution, and supervised release. Because withholdings from employees’ paychecks is the single-largest source of tax revenue related to individual taxpayers, it should come as no surprise that the IRS and the Department of Justice take violations of the laws related to such tax collection very seriously.
Importance of Employment Tax Compliance and Seeking Legal Assistance
If you have failed to properly withhold, account for, or remit amounts withheld from the paychecks of your employees, you could be at risk for an IRS audit, criminal tax investigation or, in certain circumstances, criminal tax prosecution. Generally, it is better for a taxpayer who has fallen out of compliance to come forward and settle their tax noncompliance with the IRS rather than waiting for an examination or an investigation. Contacting an experienced tax attorney will help ensure that you are best positioned to come into tax compliance while minimizing the potential negative repercussions that could follow from falling behind.
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