An Iowa man was recently sentenced to two years in prison for evading the payment of employment taxes owed by his company. This case emphasizes the importance of properly accounting for and paying employment taxes, as well as the severe consequences that can arise from noncompliance. Business owners and individuals who find themselves in tax-related trouble or think they may be out of compliance should seek the guidance of an experienced tax defense attorney.
Landscaping Company Owner Failed to Pay Over Employment Taxes
According to a Department of Justice press release, Kevin Alexander of Sioux City owned K&L Construction, Inc. (K&L), a landscaping and construction company. Between 2014 and 2017, K&L paid approximately $3.8 million in wages to its employees, of which approximately $1 million in income and Social Security and Medicare taxes were withheld. Alexander, who was responsible for filing quarterly employment tax returns and collecting and paying to the IRS taxes withheld from employees’ wages, failed to pay those withholdings over to the IRS.
In an attempt to evade the IRS’s efforts to collect K&L’s unpaid employment taxes, Alexander submitted a form to the IRS concealing the full amount of K&L’s available assets. This deliberate act of deception led to Alexander facing criminal tax charges for his noncompliance.
In addition to the two-year prison term, U.S. District Chief Judge Leonard T. Strand ordered Alexander to serve two years of supervised release and to pay approximately $1.7 million in restitution to the United States. This case serves as a cautionary tale for business owners and individuals who may be tempted to evade their tax obligations or deceive the IRS in an attempt to avoid penalties.
Seeking Assistance from a Tax Attorney
If you find yourself in a situation where you are not in tax compliance due to failure to properly account for or pay employment taxes, have failed to file a tax return for one or more years, or because of a position taken on a tax return that would not withstand IRS scrutiny, it is crucial to consult with an experienced tax attorney. A knowledgeable and seasoned tax attorney can help you navigate the complexities of the employment tax system, work towards resolving your tax issues, and ultimately help you avoid the severe penalties that may arise from noncompliance with employment tax laws.
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.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
We Are Here for You
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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Questions About Delinquent Payroll Taxes and Trust Fund Recovery Penalty
- What happens if an employer continues to incur new payroll tax liabilities?
- California Employment Taxes Basics
- How Does the IRS Develop an Employment Tax Fraud Case from the First Indication of Fraud to a Criminal Indictment?
- Can more than one person be considered responsible by IRS
- How unpaid employment tax payments are allocated
- When a corporate officer is considered a responsible party
- Examples of trust fund recovery penalty determinations
- Failing to pay employment taxes after notice is given
- How to determine responsible person for trust fund recovery
- Assessing trust fund recovery penalty and option to appeal
- What is the trust fund recovery penalty?
- What are the penalties for failure to pay employment taxes
- When am I considered liable for company’s employment taxes
