According to a Department of Justice press release, a Las Vegas dentist was recently indicted on both employment and income tax charges. Although the COVID-19 pandemic has slowed the pace of federal tax examinations and investigations, they have not come to a halt. Furthermore, as federal employees return to their workplaces, practitioners expect an exponential uptick in IRS criminal investigations and Department of Justice prosecutions. This means one thing for taxpayers: if you have failed to file a tax return or have been dishonest about any element of your previously filed tax returns, you have a small window of time to work with an experienced tax defense attorney to get right with the government and come into tax compliance.
According to an indictment returned by a federal grand jury sitting in Las Vegas, Timothy Wilson was the owner and operator of Starsmiles Children’s Dentistry LLC. Starsmiles provided pediatric dentistry services in the Las Vegas area. Prosecutors allege that although Wilson withheld payroll taxes from the paychecks of his employees, he failed to remit the payments to the IRS. Additionally, federal prosecutors allege that Wilson failed to file a tax return in 2014 and intentionally failed to pay over taxes that he owed for tax years 2013 through 2018.
IRS investigators and Department of Justice officials estimate that Wilson kept over $85,000 of withheld payroll tax for his own use and failed to pay more than $100,000 in income tax. If convicted, Wilson could face up to five years in prison for failure to pay over payroll taxes and up to one year for each count of failing to file a tax return or pay taxes owed. If convicted, Wilson will also likely be sentenced to serve a period of supervised release and be ordered to pay restitution.
As we have indicated in previous blog postings, withholding, accounting, and paying over payroll taxes is critical to the U.S. tax system. Most wage-earning employees in the U.S. pay their lion’s share of taxes through paycheck withholding. As a result, the IRS takes situations where employers withhold tax but fail to pay it over to the government extremely seriously.
Much like failing to file a tax return or pay income tax due, it is easy to get into a pattern of failing to pay over payroll tax. Many taxpayers in such a situation feel trapped and reach a point where they are buried in tax debt and feel like there is nothing that they can do to alleviate the pressure and the burden. Those taxpayers generally ignore the problem until the government opens an investigation, potentially leading to criminal charges.
But that situation does not need to be the reality for every taxpayer. Business owners who are behind on their income tax, payroll tax, or both have an opportunity to work with an experienced tax defense attorney to come into compliance with the tax laws. As mentioned earlier, the COVID-19 pandemic has caused a decrease in the amount of new IRS investigations and criminal prosecutions. Although practitioners believe this period to be over in relatively short order, there is still a golden opportunity for taxpayers to come forward and take the first step toward relieving the burden of being out of tax compliance.
Your tax defense attorney will work with you to understand the particular facts of your case. Once the entire story is on the table, your tax lawyer will present you with options as to how to best resolve the noncompliance. Lastly, your tax defense attorney will represent you with any interaction with the IRS or state taxing authority.
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Regardless of your particular business or individual tax 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.
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