According to a Department of Justice press release, a California businessman was recently indicted for various tax crimes after allegedly failing to properly withhold and pay over taxes from his employees’ paychecks. This story emphasizes the importance of complying with federal income tax laws, including those involving the payment of employment taxes. If you own a business or are responsible for the payroll tax function and have failed to comply with federal employment tax rules, it is in your best interest to contact an experienced tax defense attorney to determine the best strategy to come into compliance.
Court records reveal that Larry Kudsk, of Berkeley, was the owner and operator of two construction businesses. Between 2015 and 2016, federal prosecutors allege that the defendant failed to properly pay over federal income taxes that were withheld from his employees’ paychecks. The IRS and federal prosecutors estimate the defendant allegedly caused more than $250,000 of tax loss.
Employers in the United States are required to withhold federal income taxes from the paychecks of their employees. Additionally, amounts withheld are required to be accounted for on a quarterly basis and remitted to the IRS. These funds are used, in part, toward taxpayers' individual federal and state income tax liability.
The defendant is scheduled to make an initial court appearance later this month. If he is convicted, the defendant faces up to five years in federal prison for each of the seven failing to pay over employment tax counts he is charged with. In addition to being sentenced to federal prison, the defendant may also be ordered to serve a period of supervised release to commence upon the completion of any physical incarceration. Finally, the defendant may be ordered to pay restitution to the IRS, representing the tax loss that he caused.
The story emphasizes the importance of complying with federal employment tax laws. Although it may be tempting for some employers to use funds that were withheld from employees paychecks, the long-term repercussions for doing so far outweigh any short-term benefit. It should come as no surprise that the Department of Justice and IRS are particularly sensitive to violations of payroll tax laws. Withholding federal income taxes from the paychecks of employees is the single largest source of tax revenue by the federal government. Any attempt, whether intentional or simply negligent, to sidestep payroll tax laws, is typically met with strong resistance by tax authorities.
If you or your company have failed to comply with federal employment tax laws for one or more quarters, it is in your best interest to consult with an experienced tax defense attorney. Together, you will establish the pertinent facts of your case and determine the next steps required to come into tax compliance. While you are being represented by a seasoned tax attorney, you will not have to go up against the Department of Justice or IRS alone.
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
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.
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