We represent clients from all U.S. and International locations regarding Federal Tax and California Issues.
According to a Department of Justice press release, Sainte Deon Robinson was sentenced to serve 30 months in prison for intentionally failing to pay over federal income, Social Security, and Medicare taxes that were withheld from his employees’ paychecks. According to court documents, Robinson was the President of OneCare Inc., a North Carolina mental health service provider. Between 2010 and 2013, Robinson’s position at OneCare Inc. made him responsible for ensuring that taxes withheld from employees paychecks were accounted for and paid over to the IRS. This case should serve as a stark warning to similarly situated business owners and managers.
During trial, government prosecutors and the IRS estimated that Robinson failed to pay over approximately $1.7 million of withheld taxes. In addition to being sentenced to serve 30 months in a federal prison, Robinson will also be required to serve three years of supervised release after his physical incarceration. Lastly, Robinson will be required to pay restitution to the IRS in the amount of $1.7 million.
Employers and those working within the business who are charged with administering financial and tax matters have a legal obligation to withhold, account for, and remit, a variety of taxes from employees’ paychecks. In certain instances, business owners and managers who operate a business without appropriate safeguards to ensure appropriate tax withholding especially where they misappropriate the money that they were charged with withholding and fail to ever pay it over to the IRS can face criminal prosecution for employment tax fraud.
Although there is no particular set of circumstances that automatically leads to an IRS or state employment tax examination or investigation, there are various other tax issues that can lead tax revenue officers on a path to criminally investigate employment tax compliance. Some of those issues include:
– Misclassification of workers for tax purposes, (employee versus independent contractor)
– Excessive use of non-remitted employment tax to keep a failing business afloat, or
exponentially worse, to pay personal expenses,
– Certain structured business transactions, closing one Corp, opening another, followed by
– Failure to keep sufficient business records.
– Paying employees in cash or under the table
– Utilizing illegal aliens
The IRS and state taxing authorities treat employers’ responsibility to withhold and remit income, social security, Medicare, and employment-related taxes seriously. Not only does the IRS lose out on tax revenue from the employer, they also lose out on tax revenue from employees who claimed that they had a certain amount of tax withheld on their paychecks they never received. Needless to say, when employers and their officers that are responsible for such withholding often receive harsh sentences, especially when the failure to pay over withheld taxes was particularly malicious.
If you are a business owner or are responsible for the tax functions within a company and you have reason to believe that you or your business are not in compliance with federal or state employment tax requirements, it is in your best interest to contact an experienced business tax attorney to take on issues of non-compliance or non-payment head on before the IRS or state tax authority initiate a criminal investigation or aggressive civil enforcement action.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing taxpayers from a vast array of backgrounds. From business owners to individuals who are under audit or have received notice that their tax returns will be examined by the IRS or state tax authorities, our clients rely on our zealous advocates to develop an effective strategy to help mitigate the potentially negative effects of inquiries by taxing authorities. Do not let the threat of an IRS investigation or criminal tax prosecution keep you up at night. Contact the Tax Law Offices of David Klasing today for a reduced-rate consultation.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, and Sacramento.
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