According to a Department of Justice press release, two individuals from North Carolina pleaded guilty to violating employment tax laws. The IRS and the Department of Justice view employment tax law violations as one of the most egregious types of tax crimes. Accordingly, the examinations, investigations, and prosecutions for payroll and employment tax noncompliance are particularly intense. Taxpayers with questions as to their potential civil and criminal liability for payroll tax compliance should contact an experienced tax defense attorney as soon as possible.
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Court documents reveal that Elizabeth Wood, 40, and her mother, Rebecca Adams, both of Greensboro, were the owners and operators of a staffing business that connected workforce with employers that needed short- and long-term temporary work. As a part of operating their staffing business, both Wood and Adams were responsible for withholding, accounting for, and paying over payroll taxes from the paychecks of their employees.
IRS investigators and Department of Justice prosecutors alleged that Wood and Adams withheld payroll tax from their employees’ paychecks, as required by federal law, but failed to pay those amounts over to the IRS.
A History of Payroll Tax Violations
This is not the first time that Elizabeth Wood has been convicted of violating payroll tax laws. In 2015, Wood was convicted of embezzling state tax withholdings. While Wood was in prison, Adams ensured that their employees’ paychecks were withheld from, but also ensured that the IRS did not receive the withheld funds.
According to documents and information provided to the court, Rebecca Adams, 57, and her daughter Elizabeth Wood, 40, operated a temporary staffing business in Greensboro that changed names twice, even though it did not otherwise change its actual business operations. Adams and Wood withheld taxes from employees’ paychecks but did not pay those taxes over to the IRS. When Wood was released from prison, she continued working with her mother to withhold payroll taxes but failed to file the required quarterly payroll tax returns or remit the funds withheld.
Wood and Adams will be sentenced in May and each faces up to five years in federal prison. Additionally, the duo may be ordered to serve a sentence of supervised release at the conclusion of their physical incarceration and pay restitution.
Payroll Taxes: Critically Important to the IRS
Payroll taxes are vitally important to the tax collection efforts of the IRS and state tax authorities. Most Americans’ taxes are paid through the payroll tax withholding mechanism. When employers withhold payroll taxes but fail to pay such amount over, the employer is creating a mismatch between the tax dollars received by the government and the taxes that an employee believes that they paid.
If you are an employer or are otherwise responsible for payroll tax compliance, and you believe that your business may be out of compliance with the laws relating to employment and payroll tax withholding, accounting, and remittance, it is in your best interest to contact an experienced payroll tax attorney as soon as possible.
Your payroll tax defense attorney will work with you to understand the particular facts of your case and will make recommendations to help rectify the situation and mitigate the potential negative impacts of payroll tax noncompliance. The IRS and state taxing authorities have developed certain programs to allow taxpayers to come back into compliance after a period of failing to live up to their tax withholding and remittance requirements. A seasoned tax attorney will help you understand such programs and assist in the determination as to which is right for you.
Note: As long as a taxpayer that has willfully committed tax crimes self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax prosecution, the taxpayer can be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously receive a break on the civil penalties that would otherwise apply. It is imperative that you hire an experienced and reputable tax defense attorney to take you through the voluntary disclosure process. As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results. See our Testimonials to see what our clients have to say about us!
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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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