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.
See our Employment Tax Law Q and A Library
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.
See our Non-Filer Q and A Library
See our Criminal Tax Law Q and A Library
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.
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.
Here is a link to our YouTube channel: click here!
See our Audit Representation Q and A Library
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, and Sacramento.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. 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. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here: