According to a Department of Justice press release, a North Carolina physician and his wife were recently indicted on employment tax evasion charges, as well as failing to file tax returns as required by law. This story should remind business owners that federal law requires employers to withhold and remit employment taxes. Failure to do so can result in severe repercussions up to and including federal prison time. If you have failed to properly withhold, account for, and remit employment taxes or have failed to file employment tax returns, it is in your best interest to contact an experienced tax defense attorney to determine the necessary steps to come into tax compliance.
Defendants Withheld Employment Taxes, Failed to Remit Funds to the Government
Court documents reveal that James Rice, an orthopedic surgeon, and his wife owned and operated Sandhills Orthopedic in North Carolina. Prosecutors allege that between 2007 and 2014, Rice and his wife, who was responsible for payroll functions of the business, withheld over $580,000 of employment taxes from the paychecks of Sandhills’ employees, but never paid the withheld funds over to the IRS.
Prosecutors also allege that the couple failed to file tax returns for the business, as required by law, for tax years 2014 through 2017. Additionally, James Rice and his wife are accused of having not filed individual federal income tax returns for tax years 2014 through 2016, despite their requirement to do so.
If convicted, the couple faces five years in federal prison for each count of conspiracy and employment tax evasion and one year in federal prison for each count of failure to file a tax return. The couple also faces supervised release at the completion of any prison sentence. Finally, if convicted, the couple will likely be ordered to pay a monetary penalty in the form of restitution to the IRS.
Business Owners’ Legal Obligation to Withhold, Account For, and Remit Employment Taxes
Business owners are generally concerned about their business operations and other obligations, such as tax laws and regulations are sometimes an afterthought. When federal and state tax obligations fall through the cracks, it is critical to correct the slip up as soon as possible. As with most tax liabilities, the problem only becomes exacerbated over time.
If you have failed to properly comply with federal or state employment tax withholding requirements, have failed to file a tax return for one or more years, or have taken a position on a tax return that could not be supported upon an examination, you should strongly consider the assistance of an experienced tax attorney. Together, you will determine the pertinent facts of your case and determine the best route to come into compliance. The most valuable part of tax attorney representation is never having to go up against the IRS alone.
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.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
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Questions about delinquent payroll taxes and trust fund recovery penalty
- What happens if an employer continues to incur new payroll tax liabilities?
- California Employment Taxes Basics
- How Does the IRS Develop an Employment Tax Fraud Case from the First Indication of Fraud to a Criminal Indictment?
- Can more than one person be considered responsible by IRS
- How unpaid employment tax payments are allocated
- When a corporate officer is considered a responsible party
- Examples of trust fund recovery penalty determinations
- Failing to pay employment taxes after notice is given
- How to determine responsible person for trust fund recovery
- Assessing trust fund recovery penalty and option to appeal
- What is the trust fund recovery penalty?
- What are the penalties for failure to pay employment taxes
- When am I considered liable for company’s employment taxes
Questions and Answers on Unfiled Back Taxes
- What are the common issues that non-filers face?
- Risk of audit after filing delinquent prior year returns
- Can substitute return deficiency be discharge in bankruptcy
- Substitute return modified by subsequent delinquent return?
- Do I file every delinquent return for each missing year?
- How does the IRS identify non-filers?
- How important is it to the government that I didn’t file?
- Delinquent tax return criminal prosecution likelihood
- Will I get a refund on a delinquent tax year?
- What happens after enforcement action has begun?
- Should I use an attorney, EA or a CPA to represent me when I re-enter the tax system?
- Why do people drop out of the tax system?
- What happens after the IRS identifies me as a non-filer?
- IRS has not previously filed substitute returns
- Tax attorney representation when re-entering tax system
- How will the government force me to file returns?
- What penalties can IRS impose on delinquent tax filings?
- What should I do to re-enter the tax system?
- Can Law Office of David W. Klasing help me re-enter system?
- Will tax collection taken by authorities affect my credit
- I concealed bank accounts from the government
- Forgetting or failing to file tax return
