California workers are likely very familiar with how much money they make from a particular job. Every couple of weeks, millions of employees in the Golden State receive their paychecks and inspect their earnings. Most are unaware of the rules and regulations that govern how much an employer should be paying the state based on his or her number of employees. The amounts that should be remitted to the state typically pay or benefits such as disability or unemployment are critical to an employee’s long term financial wellbeing in the event of unemployment or injury. Because of its critical importance, investigators do not take accusations and evidence of payroll tax fraud lightly. Additionally the taxing authorities will allow the employees of companies that short pay payroll taxes to claim the amount of withholdings that their employers represent to them were paid in on their W2’s even where no such funds were received by the FTB and the IRS.
According to news sources, Bhagwant Singh, 45, of Hesperia, was sentenced on August 4th after pleading no contest to a single count of payroll tax evasion, a felony under California law. According to prosecutors, Singh owned and operated A&J Shipping and Los Angeles Express Trucking. Both companies provided transportation services for goods and operated in Southern California. Several complaints by Singh’s employees were received by state and local officials concerning the underpayment of wages led to an investigation into Singh and his entities. The case was referred to the San Bernardino County District Attorney’s Office’s Workers’ Compensation Fraud Unit when investigators discovered that Singh did not have the required Workers Compensation Insurance for the individuals that he employed.
In addition to the failure to have Workers’ Compensation coverage, investigators found that Singh failed to remit payments to the Employment Development Department (EDD), as required by state law. These payroll-based payments establish an amount of money that disabled or unemployed workers could draw upon in the event that they were unable to physically endure or find work. Prosecutors said that employers that conduct business in this manner, by not making the correct payments to the EDD, put California taxpayers in a tough position, requiring them to pay even more to support disabled or unemployed workers.
Singh received a sentence of three years of formal probation and was ordered to pay nearly $180,000 to the EDD as restitution. Though, things could have gone much worse for Singh. If his payroll fraud would have been federal in nature, meaning that he failed to withhold federal income taxes (or failed to remit withheld amounts to the IRS), he would almost certainly be facing a potential subsequent lengthy stay in a federal prison.
The government does not take payroll tax fraud lightly. Whether the state or federal government is involved, the money that is being put in jeopardy was typically never a business owner’s to begin with and due to this fact, the sentences are typically very harsh. If you are a business owner, it is imperative to understand the requirements placed upon you by your state and by the IRS. And if an investigation should be opened against your business, having an experienced payroll tax attorney present could mean the difference between a misunderstanding and a felony criminal conviction. The IRS and state investigators are trained professionals that are taught to leave no stone unturned. They prey on taxpayers that opt to go into an audit or investigation alone. Don’t be one of those business owners.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing are experienced in representing taxpayers in varying business sizes and matters that range from straight civil payroll collection representation all the way through payroll tax audits and investigations. Don’t take a chance by gambling with your physical and financial freedom. Let an experienced team of tax attorneys and CPA’s zealously advocate for your best interests. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.