According to a Department of Justice press release, a Brooklyn businessman pleaded guilty to failing to pay over employment taxes to the IRS. If you are a frequent reader of our blog, you have likely noticed that we have highlighted many cases related to employment tax evasion. The reason for this is clear: the IRS and state taxing authorities take employment-related taxes seriously and are willing to drop the hammer on taxpayers who intentionally or recklessly fail to comply with withholding, accounting, and remittance requirements.
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According to prosecutors, Michael Jaramillo, acted as the President, owner, and operator of MT Electric Corp., based in Brooklyn, New York. Between 2011 and 2014, Jaramillo used local check cashing businesses to cash checks from clients. He used the funds from the checks to pay more than $3 million of wages to his employees “under the table”.
When it came time to file his employment tax returns, Jaramillo falsified the documents by failing to report the wages that he paid his employees in cash. As a result, the employment tax returns indicated an inaccurate amount of employment taxes due. The government estimated, and Jaramillo admitted, that his actions resulted in a tax loss of over $450,000.
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Sentencing is scheduled for this fall. Jaramillo faces up to five years in prison on the single count of failing to comply with employment tax laws. Additionally, Jaramillo will likely be sentenced to serve a period of supervised release after his physical incarceration. Lastly, he will likely be ordered to pay restitution to the IRS.
If you are a business owner that may be out of employment tax compliance, it is in your best interest to contact an experienced business tax defense attorney. If the IRS or state tax authorities open an inquiry with regard to employment tax, it is critical that you have legal representation by your side to ensure that your rights are secured and that you have the best chances of making it out of the examination or investigation unscathed. If the IRS or state taxing authorities have not yet contacted you, an experienced tax attorney will help you get ahead of the problem.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have worked with business owners of companies ranging in size from mom and pop to middle market. If you have received notice from the IRS or state taxing authorities that your payroll tax withholding, accounting, and remittance procedures are being scrutinized, our team of zealous advocates will help you develop a legal strategy aimed at preserving the integrity of you and you business. Do not let the threat of a criminal investigation or prosecution keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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