As we have mentioned in previous blog postings, the government has classified several tax offenses that it believes to be particularly egregious. One of those taxes involves the failure to withhold and account for payroll deductions from employees’ paychecks. Under federal and most state laws, employers are required to withhold, truthfully account for, and remit payroll taxes from the paychecks of employees. Those employers who fail to do so often face stiff penalties and often serve time in federal prison.
Owner of Glass Company Fails to Pay Over Payroll Taxes, Will Likely Go To Prison
According to a Department of Justice press release, Gail Cooper, 64, from Greenville, Ohio, recently pleaded guilty to one count of failing to account for and pay over employment taxes. According to court documents, Cooper was the owner and operator of Greenville Architectural Glass LLC between 2007 and 2015. The company served clients by installing glass in commercial and residential buildings in the Ohio area. Between 2013 and 2015, the company paid wages to employees. As Cooper was responsible for the operation of the entire company, she was responsible for payroll and payroll tax functions.
A person who is responsible for payroll taxes is responsible for withholding federal income taxes, Social Security and Medicare taxes from employees’ wages, account for such withholdings, and pay them over to the IRS. Additionally, Cooper was responsible for filing quarterly employment tax returns. Although Cooper withheld taxes from employees’ wages, none of the money withheld was paid over to the IRS for the first quarter of 2013 through the second quarter of 2015. Additionally, Cooper failed to pay over unemployment taxes to the IRS.
According to the IRS, as part of her plea agreement, Cooper also admitted that she filed false individual income tax returns for the years 2008 – 2010 on which she understated GAG’s gross receipts and overstated its expenses. Cooper also admitted in plea documents that she willfully failed to file income tax returns for the years 2011 through 2014, which would have reported her income from GAG and other sources. Cooper paid a professional tax return preparer to complete returns for those years, but Cooper never filed them.
Cooper faces up to five years in federal prison and will likely also be sentenced to serve a period of supervised release upon her term in prison. Additionally, Cooper will likely be required to pay restitution to the IRS for the amount of tax dollars that were lost.
Contacting an Experienced Tax Attorney
If you are a business owner that has been less than compliant with the payroll or income tax compliance rules, it is in your best interest to contact an experienced tax defense attorney. The IRS treats all tax offenses seriously but is particularly harsh when it comes to criminal income and payroll tax law violations. Bringing a seasoned tax defense attorney on board will help ensure that you have adequate representation from the beginning of the process through resolution.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers from varying backgrounds with diverse tax issues. Whether you are facing a payroll tax dispute or are under audit for an unrelated tax matter, our team of skilled advocates are standing by to help you craft a strategy that keeps your interests at the top of mind. Do not let the IRS or state taxing authorities keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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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
