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According to a Department of Justice press release, a New Jersey man was recently indicted on several counts related to failing to properly withhold and pay over certain employment taxes on behalf of his employees. This story should be a reminder to business owners and those who are responsible for the finance and payroll functions of a company, that the IRS and Department of Justice do not take violations of employment tax laws lightly. If you or your company have failed to properly withhold, account for, and pay over employment taxes or other payroll-related taxes required by law, it is in your best interest to contact an experienced tax attorney to determine your best strategy to come into compliance with federal tax law.
Court documents revealed that Joseph Schwartz, an insurance broker and owner of several health care companies, engaged in a scheme to evade the proper payment of over $38 million of payroll and unemployment taxes. According to the indictment, Schwartz owned several companies, including over 95 healthcare & rehabilitation facilities operating in 11 states.
Through a newly-formed staffing company, Schwartz employed over 15,000 employees that worked throughout his various healthcare facilities. Between 2017 and 2018, the defendant allegedly caused his staffing company to not pay over $38,982,016 in taxes to the IRS. Additionally, Shwartz served as the trustee of his staffing company's 401K retirement plan. The indictment alleges that he did not file several required reports with the Department of Labor relating to those retirement plans.
If the defendant is convicted of the willful failure to collect, account for, and pay over employment taxes, he could be sentenced to up to five years in prison on each count. Additionally, the defendant could be sentenced to up to five years in prison for each count of tax evasion. Lastly, the defendant could be sentenced up to 10 years in prison for each count of failing to file a benefit plan report. The defendant may face a term of supervised release to commence upon the completion of his physical incarceration. Finally, Schwartz may be required to pay restitution to the IRS, representing the total tax loss he allegedly caused.
While the amount in controversy in this case may seem astronomical, frequent readers of our blog know that the IRS and Department of Justice pursue criminal investigations and criminal charges against those who have committed willful tax crimes involving much less. Employment taxes are a particularly sensitive subject and are taken seriously by federal authorities. Luckily, the IRS has established several programs that allow taxpayers that have fallen behind on employment or income taxes to come back into compliance while potentially mitigating some of the negative consequences of a criminal investigation or prosecution.
If you have failed to comply with federal employment tax laws or have failed to properly file an income tax return for one or more years, it is in your best interest to consult with an experienced tax defense attorney. Together, you will work to establish the pertinent facts of your case. Next, you will jointly decide on a path forward to come into tax compliance. While you are being represented by a seasoned tax attorney you won't have to go up against the IRS or Department of Justice alone.
Regardless of your particular 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.
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