According to a Department of Justice press release, a Maryland business owner was recently sentenced to serve nearly two years in federal prison after failing to properly pay over employment and sales taxes. This story is yet another example of a business owner headed off to prison due to their intentional skirting of federal employment tax requirements. If you have failed to properly withhold, account for, and pay over taxes from your employees’ paychecks or have failed to file a tax return for one or more years, it is in your best interest to contact an experienced tax defense attorney today to get right with the government.
Defendant Failed to Pay Over Withheld Taxes
Court documents reveal that Steve Choi was the owner and operator of nine businesses based in Maryland that provided food services to government buildings in the nation’s capital. Buildings serviced by Choi’s companies included the Department of Agriculture, the Library of Congress, and ironically, the Department of Justice.
Choi was required by law to withhold employment taxes from his employees, account for such withholdings, and pay them over to the IRS. Although Choi did withhold over $4.4 million in payroll taxes between 2011 and 2015, he never paid those amounts over to the IRS. Instead, prosecutors alleged that Choi used the funds to pay himself a salary greater than $1 million and to make other business expenditures. Choi pleaded guilty to employment tax fraud earlier this year.
At his recent sentencing hearing, Choi was sentenced to serve 21 months in federal prison. Additionally, Choi was ordered to serve three years of supervised release upon the completion of his physical incarceration. Lastly, Choi was ordered to pay restitution to the IRS in the amount of $4.7 million.
The Importance of Employment Tax Compliance
Throughout the history of our blog, we have made it a point to highlight the importance of payroll and employment tax compliance. The IRS collects the bulk of its revenue through paycheck withholding. Thus, it is critical for the IRS to ensure that the withholding mechanism operates as intended. One of the ways that the IRS works toward that goal is by enlisting the assistance of the Department of Justice to bring down the hammer on taxpayers who have taken steps to intentionally skirt their employment tax obligations.
If you are a taxpayer who has failed to comply with payroll tax laws or have failed to file a tax return for one or more years, there is good news. The IRS recognized the need to create avenues for taxpayers to come back into compliance and have developed and implemented programs to achieve that. With the assistance of your experienced tax defense attorney, you will establish the particular facts of your case and determine the proper strategic steps that are right for you.
We Are Here for You
Regardless of your 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.
Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client.
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
