According to a Department of Justice press release, a New York business owner was recently sentenced to serve more than a year in federal prison after evading the payment of employment taxes. This story should serve as a reminder to those who own their own business or work in a payroll function that an employer’s obligation to abide by federal employment tax laws is taken seriously by the IRS and the Department of Justice. If you have failed to properly comply with federal employment-related tax laws for one or more years, it is crucial to discuss your potential exposures with an experienced employment tax defense attorney.
Defendant Attempted to Evade Tax After Assessment
This story is a follow-up to a posting that we brought you over two years ago. Edward Hansen of Northport, New York, previously pleaded guilty to a single count of willfully failing to collect, account for, and pay over payroll taxes to the IRS. Business owners are required by law to withhold payroll taxes from employees’ paychecks. Additionally, they are required to account for the amounts that are withheld on a quarterly basis and pay such amounts over to the IRS.
Prosecutors asserted that Hansen was the owner and operator of a steel construction business in Suffolk County, New York. In the four-year period between 2008 and 2011, the IRS assessed nearly $500,000 in penalties against Hansen relating to his failure to pay over employment taxes. In an effort to evade the payment of those penalties, Hansen changed the name of his business to BR-Teck Enterprises Inc. and transferred the ownership to another individual. Hansen admitted that the transfer of control was all for show as he continued to operate the business and continued to fail to pay over employment taxes withheld from his employees. By June 2017, Hansen had failed to pay nearly $1 million in withheld payroll taxes to the IRS.
Hansen was sentenced to serve a year and a day in federal prison. Additionally, Hansen was ordered to serve two years of supervised release, commencing upon the completion of his physical incarceration. Lastly, Hansen was ordered to pay a $5,000 fine.
Coming Into Employment Tax Compliance After Falling Behind
As indicated above, employers are required to withhold certain amounts from employees’ paychecks. Those amounts must be accounted for and paid over in a timely fashion to the IRS. Additionally, employers must pay their share of certain employment taxes. These federal requirements represent a major source of the nation’s tax revenue. Thus, it is no surprise that when an employer fails to properly comply with them, the IRS and even the Department of Justice will not hesitate to intervene.
If you own a business or are responsible for the payroll tax function at a company, you can be held civilly and criminally responsible for the willful failure to abide by federal employment tax laws. If you suspect that your company has come out of compliance with such rules, you should contact an experienced Employment Tax Defense Attorney to discuss your options to come into compliance. A seasoned Employment Tax Lawyer will work with you to determine your level of exposure and ensure that you are on the right track to mitigating some of the potentially life-altering consequences of tax noncompliance.
We Are Here for You
Regardless of your 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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