According to a Department of Justice press release, a Massachusetts man has been charged with tax evasion via cash skimming and employment tax fraud involving paying employees in cash. Business owners should heed this story’s warning that the IRS will aggressively pursue those who fail to properly withhold, account for, and pay over payroll taxes. If you have failed to meet your payroll tax obligations, it is in your best interest to seek the assistance of an experienced payroll tax attorney.
Defendant Accused of Payroll Tax Evasion After Paying Employees in Cash
Court records indicate that Gennaro Angiulo owned and operated GJ Towing in the New England area. Between 2014 and 2017, prosecutors allege that Angiulo was responsible for paying wages to employees and paid much of their salaries in cash or “under the table”. Angiulo cashed checks from customers in amounts that were just shy of the $10,000 per day reporting limit imposed by federal law and used the proceeds to pay large portions of its employees’ salaries.
Paying his employees in cash kept their earnings out of their accounting and payroll system and thus, resulted in a massive underpayment of payroll tax. IRS investigators estimate that the total tax loss resulting from Angiulo’s allegedly illegal behavior was $3.3 million. Angiulo very easily could have been charged with a conspiracy between Angiulo and his employees to defraud the federal government and as aiding and abetting the income tax evasion of his employees.
If he is convicted, Angiulo could be sentenced to up to five years in prison for the tax evasion count and up to ten years in prison for the evasion of cash transaction reporting count. Additionally, he would likely be sentenced to serve a period of supervised release. Lastly, Angiulo would likely be required to repay the tax loss that he caused in the form of restitution.
Understanding Payroll Tax Requirements
Employers are required to withhold and pay over payroll taxes. Likewise, employers are not permitted to pay their employees in cash in order to reduce the amount of recorded salaries that are subject to payroll tax withholding. Because the IRS derives much of their tax revenue from payroll tax withholdings, they treat tax evasion relating to such withholding and remittance with an extreme seriousness.
If you have failed to withhold, account for, and pay over payroll taxes, or have failed to file a tax return for one or more years, it is in your best interest to contact an experienced tax defense attorney as soon as possible to determine the best avenue for you to come into payroll tax compliance. Working with your seasoned tax lawyer, you will always be represented and will never have to go up against the IRS alone.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including cash skimming and paying employees in cash) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore 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
