According to a Department of Justice press release, an Oregon man was recently sentenced to serve a year in federal prison for failing to pay over withheld employment taxes to the IRS. Business owners and those who are responsible for the payroll function of businesses who have failed to properly withhold, account for, and remit employment taxes have severe risk of civil and criminal penalties. If you are out of compliance with federal or state employment tax withholding requirements, it is in your best interest to contact an experienced tax defense attorney to develop a strategy to come into compliance.
Employer Failed to Remit Withheld Employment Taxes
Court documents reveal that Jeffrey Fitch from Beaverton, Oregon, owned and operated SFA Engineering LLC and SFA Design Group LLC. Between 2013 and 2016, Fitch withheld over $450,000 of employment taxes from the paychecks of his employees. But instead of paying those amounts over to the IRS as required by federal law, he used the funds to pay for personal expenses, benefiting him and his family.
In addition to failing to pay over the employment taxes referenced above, Fitch also failed to file employment tax returns. Lastly, Fitch’s business failed to pay the employer-portion of his employees’ employment taxes. In addition to his federal prison sentence, Fitch was ordered to pay $453,879 in restitution to the IRS.
Coming into Employment Tax Compliance
Employment tax withholding is a particularly important area of tax compliance for the IRS. Because employment taxes are withheld from employees’ paychecks, employers are tasked with being the fiduciary of those funds until they are remitted to the IRS. In the above case and in many cases around the United States, employers may withhold the funds, as required by law, but fail to remit the funds. Instead, many business owners will use the funds for their own benefit.
Understandably so, the IRS and Department of Justice tend to bring the hammer down on business owners who fail to properly remit withheld employment taxes. Thus, if you have an outstanding employment tax liability or have failed to comply with employment tax withholding and remittance requirements, it is in your best interest to contact an experienced tax defense attorney to determine the best strategy to bring you into tax compliance.
We Are Here for You
Regardless of your particular 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. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
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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
