According to a Department of Justice press release, a business owner Missouri was sentenced to serve 18 months in a federal prison for his efforts to obstruct the IRS’ efforts to collect taxes that he owed. This story evidences the fact that whether you have failed to properly withhold and pay over payroll taxes for your employees or whether you think you can outsmart the IRS once your tax debt has gone to collections, it is a losing battle trying to go up against the IRS alone. If you are in a dispute with the IRS, it is in your best interest to contact a tax defense attorney as soon as possible.
Court documents reveal that Barrett Prelogar, 48, of Kansas City, Missouri, is the former owner and one of the founding partners of Winntech digital Systems Inc. (Winntech). The company was in the business of producing electronic displays that were used as a part of in-store displays and at trade show exhibits.
Prosecutors alleged that in 2002 and 2003, Prelogar caused Winntech to withhold payroll taxes from his employees, as is required by federal law. When it came time to pay over the amounts that Winntech withheld, Prelogar used the funds to pay for a significant portion of a lake house in the Ozarks, a home in Kansas City, another home in Leawood, Kansas, several luxury vehicles, and even a boat.
See our Employment Tax Law Q and A Library
Prelogar filed a federal individual tax return in 2008 and reported that he had received more than $500,000 in gross income and admitted that he owned more than $100,000 in taxes but failed to pay any of the taxes that were due. Upon the commencement of collection actions by the IRS, Prelogar took steps to frustrate such efforts. From 2011 to 2016, Prelogar used funds from Winntech to pay his personal expenses. Additionally, Prelogar withdrew money from Winntech’s corporate bank account and structured them in a manner that avoided certain bank reporting requirements of large transactions. After serving federal prison sentence, Prelogar must serve one year of supervised release. Additionally, Prelogar was sentenced to pay nearly $264,000 in restitution to the IRS.
We have indicated in previous blog postings that the IRS takes the administration of payroll tax laws very seriously. This story also illustrates that taking steps to frustrate IRS collection efforts can often lead to issues far beyond the tax originally owed. Although it is understandable that a taxpayer may not want to, or may not be able to, pay the taxes that they owe, there are strategies that may be employed to either reduce the amount of taxes owed, or at the very least, structure a payment plan that works for the taxpayer and appeases the IRS.
An experienced tax defense attorney will be able to work with you to understand your particular set of facts to help establish a game plan to move forward with. Although many believe that they can take on the IRS or state taxing authority alone, the lion’s share of the stories that we write about convictions for tax evasion or other tax crimes involve taxpayers who thought that they could handle their issues by themselves.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have worked with business owners of companies ranging in size from large too small. If you have received notice from the IRS or state taxing authorities that your payroll tax withholding, accounting, and remittance procedures are being scrutinized, our team of zealous advocates will help you develop a legal strategy aimed at preserving the integrity of you and your business. Do not let the threat of a criminal investigation or prosecution keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
Here is a link to our YouTube channel: click here!
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, and Sacramento.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here