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Montana Business Owner Pleads Guilty to Employment Tax Evasion, Faces Prison Time

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Montana Business Owner Pleads Guilty to Employment Tax Evasion, Faces Prison Time


According to a Department of Justice press release, a Montana business owner recently pleaded guilty to evading federal employment tax laws. This story should remind business owners and those responsible for payroll functions that compliance with employment-related taxes is not optional. The IRS and Department of Justice will not hesitate to pursue criminal charges, when appropriate, when employers and responsible parties are not properly living up to their federal payroll tax obligations. If you have failed to pay over employment-related taxes for one or more quarters, you should seek the assistance of an experienced tax defense attorney to determine the best strategy for you to come into compliance.

Defendant Failed to Pay More Than $550,000 in Employment Taxes

Court records reveal that Thomas O’Connell owned and operated several heating and plumbing companies that served customers in the Great Falls area. Between 2005 and 2016, O’Connell admitted to intentionally failing to pay over employment taxes that were due. Instead, he directed the funds to pay for personal expenses and other debt.

Considering O’Connell’s illegal activity spanned over 10 years, the IRS and Department of Justice estimate that the tax loss that he caused exceeded $550,000. O’Connell will be sentenced in June and faces up to five years in a federal prison. Additionally, O’Connell may be sentenced to serve up to an additional three years of supervised release upon the completion of his physical prison incarceration. Finally, O’Connell will likely be required to pay restitution to the IRS, representing the tax loss that he caused.

The IRS and DOJ Place a Heightened Importance on Employment-Related Taxes

The IRS and Department of Justice take employment-related tax obligations seriously. Between withholdings from employees’ paychecks and portions of tax paid by the employer, such withholdings and remittances make up a significant portion of taxes paid in the U.S. every year. When the system begins to erode, the IRS is not able to collect the requisite funding to keep the government running. Because of the importance of such taxes, taxpayers who violate employment and payroll withholding and remittance rules face severe consequences, including the potential for federal prison.

If you have failed to withhold and remit amounts from employees’ paychecks or pay over employment taxes for one or more quarters, it is in your best interest to contact an experienced payroll and employment tax attorney as soon as possible to discuss your options to come into compliance. Working with a seasoned tax attorney, you will establish the pertinent facts of the case and mutually agree on the strategy that keeps you, your business, and your freedom top of mind. Best of all, while you are represented by an experienced tax lawyer, you will not have to go up against the IRS alone.

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