According to a Department of Justice press release, a south Florida man was recently sentenced to serve two years in federal prison for intentionally failing to properly account for and pay over employment taxes that were withheld from his employees’ paychecks. This story should serve as a reminder to business owners and those who are responsible for the payroll function at a business that the IRS places the utmost importance on employment tax withholding compliance. If your business has failed to properly withhold, account for, or pay over employment taxes, you should contact a payroll tax attorney as soon as possible to discuss options to come into compliance.
Court records indicate that Ricardo Betancourt, a Miami resident, served as the owner and operator of various package delivery services serving southern Florida. Betancourt operated his businesses between 2002 and 2017, generating healthy gross revenues of over $100 million during that period. Betancourt’s businesses had a workforce that included hundreds of employees.
Prosecutors alleged that between 2009 and 2016, Betancourt properly withheld taxes from the paychecks of his employees but failed to remit more than $10.6 million of the withheld taxes to the IRS. Instead, prosecutors alleged that Betancourt transferred the funds to an investment vehicle used to support an extravagant lifestyle that included luxury vehicles and even cosmetic surgery.
In addition to the 24-month federal prison sentence, Betancourt was ordered to serve three years of supervised release. Additionally, Betancourt was ordered to pay restitution to the IRS in the amount of $9,033,318, representing the tax loss that he caused through his illegal actions.
Although some taxpayers may believe that payroll-related taxes are just another form of tax, it is critical to understand the importance placed upon them. Withholdings from employees’ paychecks make up the majority of income tax collections from individuals on an annual basis. Additionally, when employers or their agents withhold from the paychecks of their employees but fail to remit the funds to the IRS, they are putting their employees at increased risk for negative compliance interactions.
Because of the importance that the IRS places on payroll tax compliance, they have established various avenues whereby business owners who have not been completely compliant may work toward coming back into full compliance. An experienced tax attorney can guide a business owner through the maze of compliance hurdles and toward getting right with the government. The journey has many traps for the unwary but experienced tax counsel will serve as a competent guide and advisor through the entire process.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle-market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.
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