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Michigan Software Business Owner Indicted on Payroll Tax Law Violations, Faces Prison

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Michigan Software Business Owner Indicted on Payroll Tax Law Violations, Faces Prison


According to a Department of Justice press release, a Michigan software developer was recently indicted for violations of employment tax violations after failing to pay over withheld payroll taxes. As you will read in the details of this story below, serious consequences can result from failing to properly pay over withheld taxes from the paychecks of employees. If you have failed to properly comply with federal payroll tax withholding laws or have failed to file a tax return for one or more years, it is in your best interest to contact an experienced tax defense attorney to determine the best strategy to bring you into tax compliance.

Defendant Allegedly Withheld Taxes from Employees’ Paychecks, But Failed to Pay Funds Over to the IRS

Court documents reveal that Rigal Ziv, of West Bloomfield, Michigan, was the owner and operator of Multinational Technologies Inc, a software development firm. Government investigators allege that Ziv was responsible for the payroll function at Multinational Technologies, including the withholding, accounting for, and paying over of payroll taxes from the wages of employees. Prosecutors allege that between 2014 and 2018, Ziv properly collected approximately $691,000 in employment taxes from the wages of his employees but failed to file any employment tax returns reflecting that withholding and further failed to pay those funds over to the IRS, as required by law.

Investigators allegedly discovered that after learning of the IRS investigating the payroll tax noncompliance described above, Ziv failed to file additional employment tax returns and failed to pay over an additional $199,000 of payroll taxes withheld from the wages of his employees. Prosecutors allege that the hundreds of thousands of dollars withheld but not paid over were used to fund Ziv’s lavish lifestyle, including mortgage payments, luxury auto leases, and department store purchases.

If Ziv is convicted, he faces up to five years in prison for each of the 22 counts of willful failure to comply with employment tax laws. He also faces a term of supervised release, to commence upon the completion of any physical incarceration. Lastly, if convicted, Ziv would likely be ordered to pay restitution which represents the amount of tax loss that he caused.

Appreciating the Seriousness of Payroll Tax Compliance

The U.S. tax system relies on payroll tax withholding to collect the majority of the nation’s tax revenue. Thus, it should not be a surprise when the IRS and Department of Justice take alleged violations of payroll tax laws seriously. As is allegedly the case in the case profiled above, the government is particularly sensitive when an employer withholds from the paycheck of an employee but keeps the funds for themselves.

If you have fallen behind on your business’s payroll tax compliance or have otherwise failed to file a tax return for one or more years, you should contact a seasoned tax attorney to discuss the next steps to bring you into tax compliance. Together, you will work to establish the important facts of your case. Next, you will mutually agree on a path to bring you into tax compliance while attempting to mitigate civil and criminal risks.

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.

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