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Michigan Business Owner Facing Criminal Payroll Tax Charges

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Michigan Business Owner Facing Criminal Payroll Tax Charges

According to a Department of Justice press release, a Michigan business owner was recently charged with tax fraud after he allegedly failed to properly remit payroll taxes and file personal tax returns. The IRS takes both payroll tax compliance and the proper filing of tax returns seriously. Whether you are a celebrity or a small fish in a large pond, the IRS will investigate, and the DOJ will prosecute conduct that they perceive rises to the level of a tax crime. If you have failed to file a tax return in the past or have taken a position on a tax return that is not supportable, it is in your best interest to contact an experienced tax attorney to discuss your options as to how to come into tax compliance.

Prosecutors allege that Dale Thrush, of Farwell, Michigan was the owner and operator of 402 N. Mission St. LLC. Thrush’s company provided payroll tax services to its clients, helping them properly withhold and remit the payment of payroll taxes to the IRS.

Defendant Ran a Payroll Tax Company but Allegedly Failed to Comply with Payroll Tax Laws

Thrush may have needed some assistance from his own company. Court documents reveal that IRS investigators and DOJ prosecutors believe that Thrush properly withheld payroll taxes from the paychecks of his employees but failed to remit the full amount of the withholdings to the IRS. Instead, the IRS and DOJ allege that he used the funds to fund his other businesses, including paying for the remodeling of his wife’s business.

In addition to allegedly failing to properly withhold, account for, and remit payroll taxes, Thrush is also accused of failing to file personal tax returns for the tax years between 2013 and 2016. The alleged failure to file his tax returns resulted in much of the income from Thrush’s businesses going unreported.

If convicted, Thrush faces up to five years in prison for each of the ten counts of failing to properly pay over payroll taxes and one year for each of the four counts of failing to file an individual tax return. Thrush also faces a sentence of supervised release upon the completion of a prison sentence. Finally, if convicted, Thrush will likely be ordered to pay restitution to the IRS.

Understanding the Importance of Payroll and Individual Tax Compliance

Because most Americans pay the lion’s share of their federal income tax liability through withholdings from their paycheck, payroll withholding laws are some of the most enforced tax laws at the federal level. Employers are required by law to properly withhold, account for, and remit amounts from employees’ paychecks. The failure to do so can land a company owner or the individual responsible for the payroll function within the company in big trouble, up to and including federal prison.

Likewise, failing to file a tax return is easy to do and many Americans fall behind on their tax return compliance. Though it is important to understand that failing to file a tax return, even if you are earning relatively low levels of income, is a crime. It is that fact that sometimes drives taxpayers to fear taking the steps to get back on track.

Whether you have failed to file a tax return in the past or have failed to properly adhere to the payroll tax withholding and remittance regime, it is critical to understand the potential implications and consequences if the IRS discovers your noncompliance. An experienced tax defense attorney can help you assess your exposure and determine the steps that are necessary for you to come into tax compliance.

A tax defense lawyer will work with you to understand the particular facts and circumstances surrounding your tax profile and will recommend a course of action to get right with the government. One major benefit of working with a tax attorney is that they will represent you in any interaction with the IRS. Going up against the IRS alone can quickly backfire and with the help of a seasoned tax practitioner, you won’t have to.

Does the IRS Share Voluntary Disclosure Information with State or Local Authorities?

In recent years, the IRS has greatly expanded its voluntary disclosure program, where taxpayers who have committed intentional or unintentional violations of the tax code can be brought back into compliance without facing criminal tax charges or the most severe civil penalties. Although the popular offshore voluntary disclosure program (OVDP) for foreign bank and financial accounts has ended, most of its components have been rolled over into the agency’s new, comprehensive disclosure program. While this program is an excellent option for many taxpayers who are out of compliance, it does not come without its downsides. The IRS, for example, can, in some circumstances, share information disclosed during this process with state and local authorities who can use it to assess further penalties against you. Our skilled Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing can evaluate your situation and disclose all risks to you before you decide to enter a voluntary disclosure program.

What is the Voluntary Disclosure Program?

The voluntary disclosure program allows taxpayers who have committed past tax crimes to be brought back into compliance in almost all cases without facing criminal tax charges. The key is that you must disclose your fraudulent behavior and correct the returns before the IRS opens an audit or a criminal tax investigation into your returns. At the Tax Law Offices of David W. Klasing, our skilled Tax Lawyers and CPAs have years of experience successfully guiding our clients through the voluntary disclosure program and bringing them back into compliance.  In fact, at times our voluntary disclosure work has accounted for 80% of our book of business.

Note:  As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) 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, Kovel CPAs 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.

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. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.

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.

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