According to a Department of Justice press release, a woman from North Carolina will serve over a year in a federal prison for charges relating to employment tax fraud. If you are a business owner or are responsible for the payroll tax function within your company and believe that you or your company have not complied with employment tax requirements, it is in your best interest to contact an experienced tax defense attorney as soon as possible.
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Court documents revealed that for a 24-year span beginning in 1992, Terra Ferguson, of New London, North Carolina, served as an office manager at a Randolph County, North Carolina pediatric doctor’s office. In her role, she was responsible for, and had complete control over, the practice’s finances. Additionally, her role included being responsible for payroll taxes.
Prosecutors alleged that between 2011 and 2016, Ferguson caused nearly $80,000 to be withheld from employee paychecks but willfully failed to pay the withheld taxes over to the IRS.
Under federal tax law, those who are responsible for the payroll tax function are required to withhold, account for, and timely pay over the withheld funds to the IRS. Additionally, Ferguson failed to pay the practice’s share of employment taxes. Investigators determined that Ferguson spent the monies on her own personal expenses, including her own business ventures.
It is extremely common for those involved in payroll or employment tax crimes to also be non-compliant on their individual income tax returns. In the present story, Ferguson prepared false tax returns for her employer, which included an exaggerated mortgage interest deduction and the underreporting of gross receipts. Prosecutors asserted that the approximate tax loss of Ferguson’s criminal activity is nearly $375,000.
In addition to serving 14 months in federal prison, Ferguson will serve three years of supervised release. She was also ordered to pay restitution to the IRS in the amount of $374,101.
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Payroll and employment taxes are of the utmost importance to the IRS. Without employers’ compliance, the IRS’ primary mechanism to collect taxes from employees falls apart. The IRS recognizes that fact and has prioritized the enforcement of those laws.
Because the IRS knows that there are businesses that are non-compliant with payroll tax laws, they have established certain taxpayer-friendly programs to come into compliance. If you feel that your business may have failed to comply with federal or state payroll or employment tax laws, it is in your best interest to contact an experienced tax attorney to discuss your options. Many taxpayers incorrectly believe that ignoring the problem will make it go away.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have worked with business owners of companies ranging in size from middle market to mom and pop. If you have received notice from the IRS or state taxing authorities that your payroll tax withholding, accounting, and remittance procedures are being scrutinized, our team of zealous advocates will help you develop a legal strategy aimed at preserving the integrity of you and your business. Do not let the threat of a criminal investigation or prosecution keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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