According to a Department of Justice press release, a North Carolina doctor and his wife were sentenced to five years in federal prison after being convicted of several tax counts including willfully failing to pay over employment taxes. This story should remind taxpayers that regardless of your status or position within society, the IRS and Department of Justice will not hesitate to pursue a criminal tax investigation or charges against those who willfully violate federal income tax laws. If you have failed to file a tax return for one or more years, or have filed a tax return that contains knowingly false information, it is in your best interest to contact an experienced tax defense attorney to determine the best strategy to come into compliance.
Defendants Allegedly Failed to Pay Over Withheld Taxes, Used Funds for Personal Expenses
Court records revealed that James Rice and his wife, Susan Rice, both from North Carolina, owned and operated several businesses including Sandhills Orthopedic, a medical practice run by James Rice. Susan Rice was responsible for the practice’s administrative functions. Prosecutors allege that the defendants transferred more than $1 million from the orthopedic practice’s bank accounts into personal bank accounts, as well as other controlled business bank accounts. Additionally, authorities assert that the defendants used the orthopedic practice’s funds to pay for personal expenses such as a country club membership and expenses related to their pet.
In addition to the extraction of funds from the orthopedic practice, the defendants were convicted of withholding nearly $580,000 in income taxes from the paychecks of their employees but failing to pay over such a mount to the IRS. Instead, the defendants used the withholding tax proceeds for their own personal gain. Additionally, the defendants failed to file a federal income tax return for years 2014 through 2016. Lastly, James Rice failed to file a corporate income tax return for another business that he owned.
In addition to the five-year prison sentences, the defendants were each ordered to serve three years of supervised release to commence upon the completion of their physical incarceration. The defendants were also ordered to pay nearly $2.4 million in restitution to the United States, representing the amount of tax loss that they caused.
Tax Evasion Isn’t Worth the Repercussions of Being Caught
The above story illustrates the potential repercussions that can result from a criminal tax investigation, prosecution, and conviction. Although many taxpayers likely only see the upsides of skirting federal tax laws, it is critical to appreciate the extremely detrimental effects of being caught. Fortunately, the assistance of a seasoned tax attorney could help you mitigate some of the potentially life-changing repercussions of tax non-compliance.
If you have failed to properly report your business or individual income, or have failed to properly comply with federal employment tax laws, it is in your best interest to consult with an experienced tax defense attorney. Together, you will work to determine the pertinent facts of your case. Next, you will mutually agree on the best path forward to bring you into tax compliance. While you are being represented by a tax defense attorney, you won’t have to interact with the IRS or Department of Justice alone.
We Are Here for You
If you 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 IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
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.
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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
