Most attorneys and other financial professionals take meticulous care to ensure compliance of not only their client’s affairs, but their own. That being said, there will always be those who attempt to game any system, regardless of profession. Recently, a tax attorney from Pittsburgh found himself in hot water for violating the very tax laws that he was entrusted to advise his clients on. This article exemplifies the seriousness of IRS or state taxing authority investigation and demonstrates that no one is above enforcement of tax law.
According to a press release by the Department of Justice, Steven Lynch, a tax attorney, was recently found guilty of failing to collect and remit employment taxes. Evidence produced at trial indicated that Lynch was a co-owner and operator of the Iceoplex at Southpointe, a sports facility with an ice rink, soccer field, and gym. Between 2004 and 2015, Lynch was responsible for the financial matters of the Iceoplex, including the withholding and the remittance of employees’ withheld taxes. Prosecutors alleged and a federal jury agreed that Lynch intentionally and criminally failed to remit over $790,000 of employment taxes during tax years 2012 and 2015.
Lynch was charged with, and convicted of, 16 counts of willfully failing to collect, account for and pay over employment tax. Each count carries a statutory maximum sentence of five years in federal prison. In addition to time behind bars, Lynch will almost certainly be sentenced to an additional period of supervised release. Finally, Lynch will likely be ordered to pay restitution to the IRS. Sentencing is scheduled for early next year.
Employers are required by federal law to withhold federal taxes from the paychecks of employees. The amounts withheld must then be remitted to the IRS. Although many (if not most) businesses hire a third-party payroll processing company to perform these services, there are an appreciable amount of small businesses that perform these duties manually. In those situations, it is easy to see how a taxpayer can fall into noncompliance. Employment tax withholding and remittance is not the easiest process, and thus, it is possible that a business may fail to correctly comply with their obligations inadvertently. On the other hand, there are some employers who simply refuse to collect employment tax, or worse, collect employment tax and intentionally divert the funds for their personal enjoyment instead of remitting them per federal law.
Through prosecutions like the one against Mr. Lynch, the IRS and Department of Justice have made it clear that they are cracking down on employers who violate employment tax withholding laws. Taxpayers who employ individuals in their business must take care to ensure that they are in compliance with all tax laws. Business owners who do not have a complete appreciation for their obligations under federal or state tax laws should contact an experienced tax attorney.
Whether you have questions with regard to ongoing tax compliance and planning or if you are being audited or investigated by a taxing authority, it is in your best interest to consult with an experienced tax lawyer as soon as possible. Unlike tax preparers, the only tax professionals that many businesses interact with, a tax attorney has been trained in criminal and civil procedure, Constitutional law, and criminal tax law. Bringing a seasoned tax attorney on board will help ensure that the negative implications of an IRS or state tax audit or investigation are minimized or completely avoided.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers from all walks of life. From individuals so business owners, our zealous advocates are ready to develop and execute an effective strategy that is tailored to the specific facts of your case. Don’t lose sleep at night over tax troubles. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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