According to a Department of Justice press release, a New Jersey law firm partner was sentenced to serve a year in prison for failing to pay over payroll taxes that were withheld from his employees for tax quarters ending on March 31, 2016 and June 30, 2016. This story is a stark reminder that the IRS treats payroll tax compliance with the utmost importance and taxpayers should seek assistance from an experienced payroll tax defense attorney as soon as possible if they believe they are at risk for examination, criminal investigation, or prosecution.
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Law Firm Partner Withheld but Failed to Pay Over Payroll Taxes to the IRS
Court documents reveal that last year, George Gilmore, of Toms River, New Jersey, was convicted by a federal jury on two counts of failing to pay over payroll taxes, as required by federal law. For the two quarterly periods identified above, Gilmore properly withheld payroll taxes from his law firm’s employees but failed to pay such amounts over to the IRS. Business owners and those in charge of payroll functions are required by federal law to withhold, properly account for, and pay over payroll taxes to the IRS.
In addition to the 365-day prison sentence, Gilmore was also sentenced to three years of supervised release, which will commence at the conclusion of his physical incarceration. Most individuals who are convicted of tax crimes, including payroll tax law violations are ordered to pay restitution to the IRS.
The Importance of Payroll Tax Compliance
As we have indicated many times before, payroll tax compliance is one of the most important areas of enforcement undertaken by the IRS. This is primarily because payroll tax provides the IRS with the vast majority of its tax revenue. Tax withholdings make up most of what a taxpayer pays each year in federal and state income taxes.
Although the idea of payroll tax and the fact that employers must comply with laws surrounding it is not complex, but there are situations where payroll tax compliance can become complex. For instance, employers with a workforce that they consider to be independent contractors may be at risk for a worker classification audit. In such an audit, the IRS determines whether they agree that a particular employee, or a group of employees, are actually independent contractors, or if instead, they are employees (requiring payroll taxes to be withheld and remitted).
Whether you are a business owner or an employee at a business who is responsible for the payroll tax withholding function, it is critical that you understand and appreciate the requirements placed upon you by federal law. If you have concerns about payroll tax noncompliance or are unsure about the tax treatment of your workforce, it is in your best interest to contact an experienced tax attorney as soon as possible. Your tax defense lawyer will work to understand your particular set of facts and offer a variety of solutions to mitigate any potential negative repercussions that payroll tax noncompliance can cause.
Contact an Experienced Tax Attorney Today
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.
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