According to a Department of Justice press release, a Maryland restaurant owner has pleaded guilty to willful failure to account for and pay over employment taxes, and to filing a false personal tax return. This story highlights the potential severe criminal ramifications that can result from engaging in tax noncompliance. If you have failed to file a tax return for one or more years, have filed a false tax return, or have failed to comply with employment tax laws, you should consider contacting an experienced tax defense attorney to determine the best way to get you right with the government.
Restaurant Owner Failed to Report and Pay Employment Taxes
Court documents reveal that John Worthington of Owings Mills, Maryland, owned and operated The Grill at Harryman House restaurant. As part of his restaurant ownership duties, Worthington issued Forms W-2 to his employees and withheld federal income, as well as Social Security and Medicare (FICA) taxes from their wages. However, from 2010 through 2021, Worthington failed to file the required Employer’s Quarterly Federal Tax Returns (Forms 941) with the IRS reporting the withheld employment taxes and did not remit the withholdings to the IRS. In total, Worthington neglected to report and pay approximately $2,813,348 in employment taxes to the IRS.
Instead of paying over the employment taxes, Worthington utilized funds from his business to settle debts with other creditors and fund various personal expenses, including golf club memberships, season tickets to the Baltimore Orioles baseball team, international vacations, and salaries for himself and his wife.
Furthermore, Worthington filed a joint 2016 personal tax return that falsely claimed $24,207 in federal income tax withholdings from his own wages from the restaurant, which he knew had not been paid to the IRS. This act resulted in a $9,096 refund to which he was not entitled. Worthington also failed to timely file his personal income taxes for 2017 through 2021, despite receiving a salary from the restaurant. His corporate tax returns for 2016 through 2021 were also not filed on time, despite the corporation’s active status and gross receipts or sales of over $15 million during that period.
Understanding the Need for an Experienced Tax Attorney
The guilty plea and potential penalties faced by Worthington underscore the importance of consulting with an experienced tax attorney when faced with an audit, aggressive tax collection action or criminal tax investigation. The U.S. government relies heavily on tax revenue collected through employer withholdings, and the IRS and Department of Justice take a particularly stern view of employment tax law noncompliance.
If you are noncompliant with employment tax laws or have unfiled corporate or personal tax returns, you should strongly consider consulting with an experienced tax attorney before the IRS initiates an audit or a criminal tax investigation. Working in conjunction with your tax counsel, you will gather the relevant facts of your case and develop a plan to help rectify your tax situation.
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.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento.
Our office technology allows clients to meet virtually via GoToMeeting. 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.
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
