California business owners know that one of the most valuable assets of their organization are their employees. In most industries that are service-based, the workforce that performs day-in and day-out make the difference between success and failure. But what happens when a business owner denies the existence of employees? As you will read below, a California construction business owner will spend time in prison and be forced to pay a large sum to the State of California for doing just tat. The story below showcases the reasons why a taxpayer who is facing an audit or tax investigation should contact an experienced tax attorney as soon as possible.
William Alan Huffman, 47, from Sacramento, was arrested in January on tax evasion and workers compensation fraud charges. Huffman owned and operated a construction company in the Sacramento area. Before going to a full trial, Huffman and prosecutors from the Sacramento District Attorney’s Office came to an agreement that was presented to a judge in a Sacramento courtroom last week. According to prosecutors, Huffman had several full time employees that provided services for his construction business. But come the time to set money aside for workers compensation purposes and paying taxes, Huffman severely understated the amount of workers he had under his employ. The employees who were acknowledged by Huffman were reported to have worked substantially fewer hours than they actually had. Furthermore, when employees were paid, Huffman used cash instead of a payroll service in order to avoid withholding federal and state income tax and wages.
Prosecutors estimate that between 2012 and 2015, Huffman understated his payroll by over a million dollars. In addition to defrauding the state, Huffman defrauded his insurance companies as his construction company’s premiums were based on employee hours worked. Under the terms of the plea agreement, Huffman will spend at least a year in a California prison and will subsequently spend another year under supervised release. In addition to the prison sentence, he must pay just over $300,000 in restitution. Huffman is scheduled to be formally sentenced on March 24th.
It is important to mention that the charges, plea, and sentence in this case only pertain to charges brought by California prosecutors. It is possible that Huffman may also be in violation of federal law with regard to the failure to withhold and remit taxes from paychecks of employees and failure to pay employment taxes. Just because Huffman was charged and sentenced in this case does not mean that he will not be re-arrested and charged by federal authorities. We have previously stressed that once a government agency begins proceedings against you, it is only a matter of time until all of the others line up to get a bite at the apple.
Taxpayers who find themselves in an examination or a tax investigation, it is vital to contact a seasoned criminal tax attorney as soon as possible. Criminal tax defense attorneys have training with regard to Constitutional law, criminal defense, and criminal tax procedure that other tax professionals just don’t have. A tax attorney will meet with you, gather the facts of your case, and devise a strategy to be implemented. When you attend an in-person audit or investigation interview, your tax attorney will be there to ensure that revenue agents or law enforcement personnel do not get criminal admission out of you. Ensuring that you do not volunteer information that you are not legally required to is one of the most valuable functions of a tax defense attorney.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers from across all walks of life. Whether you are an individual or a business owner and are facing an audit or investigation, our team of zealous advocates are ready to fight for your rights and will put you in the best position to avoid or minimize the negative effects of our adverse tax situation. The extremely scary and potentially life-changing repercussions of a criminal tax conviction significantly outweigh any benefits of representing yourself. Sleep well at night knowing that you are in the hands of Southern California’s premiere criminal tax defense office. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation and be sure to check out our YouTube page for helpful tax content.