Man from Detroit Area Admits to Committing Payroll and Individual Tax Crimes
According to a Department of Justice press release, a Michigan man recently pleaded guilty to charges relating to the failure to file an individual income tax return and the willful failure to account for and pay over employment taxes. This story evidences the importance of payroll and individual income tax compliance. The IRS and state taxing authorities take both areas of taxation incredibly seriously.
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According to court documents and filings related to his plea agreement, Johni Semma was the owner of The Coliseum and Bayside Sports Bar & Grill, an adult entertainment establishment and restaurant, respectively. As the owner of his businesses, Semma was responsible for the collection, accounting for, and remittance of employment taxes for both The Coliseum and Bayside.
Prosecutors alleged and Semma pleaded guilty to willfully failing to properly account for and pay over payroll taxes from 2008 through 2015. Semma withheld payroll taxes from his employees’ paychecks but failed to file 27 of 29 Forms 941 and intentionally failed to remit over $1.3 million of those employment taxes. When Semma sold The Coliseum, he received more than $6 million in sales proceeds. Nonetheless, he did not clear up the payroll taxes that he had previously failed to pay.
Lastly, Semma appears to have carried his failure to comply with tax laws on to his own tax returns. As a part of his guilty plea, Semma admitted to failing to file an individual income tax return in 2012. The failure to file was estimated to have resulted in a loss of tax revenue to the IRS of over $460,000.
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Selma’s sentencing is scheduled for early next year. He faces up to fix years in prison and a term of supervised release after his physical incarceration. As a part of his plea agreement, Semma agreed that he would pay $1.8 million in restitution to the IRS.
The above story highlights the importance of staying compliant with federal and state payroll tax laws. As we have stressed in many of our prior blog postings, the IRS places the utmost importance upon payroll tax compliance because it is a critical component of how the IRS receives taxpayers’ tax payments throughout the year through withholdings.
If you are a business owner or an individual who is responsible for payroll tax withholding and are not in strict compliance with the laws set out by the IRS or state tax authorities, it is in your best interest to contact an experienced payroll tax attorney. When meeting with your attorney, you will discuss the particular facts and circumstances present in your situation and develop a strategy to come into compliance and minimize the potential negative consequences associated with payroll tax noncompliance.
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The tax and accounting professionals at the Tax Law Offices of David W. Klasing have worked with business owners of companies ranging in size from middle market to mom and pop. If you have received notice from the IRS or state taxing authorities that your payroll tax withholding, accounting, and remittance procedures are being scrutinized, our team of zealous advocates will help you develop a legal strategy aimed at preserving the integrity of you and your business. Do not let the threat of a criminal tax investigation or prosecution keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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