According to a Department of Justice press release, Earenest J. Grayson Jr., of Tulsa, Oklahoma, was recently indicted on 10 counts of failing to comply with payroll tax laws. If you are a business owner, this story demonstrates the government’s extreme seriousness towards complying with payroll tax obligations.
Company Owner Failed to Pay Over Payroll Taxes, Indicted
Court documents reveal that Grayson, the owner of Zealcon, a computer software company in Oklahoma, failed to account for, and pay over payroll taxes for tax years 2013, 2014, and 2015. Additionally, Grayson failed to file his own personal tax returns for tax years 2013, 2014, and 2015.
The indictment alleges that Grayson was the individual responsible for reporting and paying over payroll taxes withheld from the wages paid to Zealcon employees, but failed to do so. Federal investigators estimate that Grayson knew of his payroll tax obligations and intentionally failed to account and pay over to the IRS more than $300,000 in withheld taxes.
If he is convicted, Grayson faces decades in prison, as each count of failure to account for and pay over payroll taxes can carry up to five years in prison. In addition to being sentenced to serve time in a federal penitentiary, Grayson could also face a period of supervised release and may be ordered to pay restitution to the IRS.
The Seriousness of Payroll Tax Compliance
The IRS and state taxing authorities would likely take the position that all taxes are important to them. But there are few specific types of taxes that are more important to a state or federal government than payroll-related taxes. Not only do payroll taxes help fund the government, but they are also withheld from employees’ paychecks and remitted to the government, a system that can be easily abused.
It is critical to understand that employers have the responsibility to collect, account for, and pay over withheld federal and state income taxes from their employees. It is extremely easy for the government to identify employers that are not living up to this requirement. When employees file their individual tax returns, they will indicate that they have paid a certain amount of federal and state income tax through withholding. This amount will also be evidenced by the employees Form W-2, which is also required to be sent to the government by the employer. If the amounts withheld from employees’ paychecks do not match the amount remitted to the government, red flags will go up at the IRS and state taxing authorities.
If you are a business owner that has received notice of a payroll tax auditor are under investigation for a payroll tax-related issue, it is in your best interest to contact a tax defense attorney who has experience in payroll tax defense. A seasoned payroll tax lawyer will be present at any critical interactions with taxing authorities and ensure that you are not providing any more information than necessary that may be used against you at a later time.
Contact an Experienced Tax Attorney Today
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have devoted their careers to assisting taxpayer from all walks of life to achieve resolutions to their variety of tax situations. Whether you are a business owner facing a payroll tax auditor have received a notice that your individual tax returns have been selected for examination, our team of zealous advocates is standing by to help craft a strategy aimed at maintaining your physical and financial freedom. Do not let the threat of an IRS or state tax audit 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
