According to a Department of Justice press release, a Virginia Doctor pleaded guilty to employment tax evasion after failing to pay over in excess of $2 million of employment related taxes. This story should serve as a warning to business owners that the IRS and Department of Justice will not hesitate to drop the legal enforcement hammer on those who fail to properly abide by the nation’s employment tax withholding laws. If you have failed to properly withhold, account for, and pay over employment-related taxes for one or more periods, it is in your best interest to contact an experienced tax defense attorney to determine the best strategy to bring you back into tax compliance.
Defendant Used Withheld Taxes to Start a New Business
Court records indicate that Arshad Pervez Cheema was the owner and operator of Walk-In Medical Center PC, a medical practice with offices in Falls Church and Herndon, Virginia. Prosecutors alleged that Cheema was responsible for collecting and paying over payroll taxes to the IRS and from 2012 to 2016, he failed too properly do so. Prosecutors were prepared to present evidence that during that time, Cheema withheld but failed to pay over more than $500,000 of payroll taxes. The funds were instead used to pay other expenses, including starting a new restaurant business venture.
In addition to the failure to pay over payroll taxes described above, Cheema admitted to not paying corporate tax for Walk-In Medical Center PC. Finally, he admitted to having not paid employment taxes for another medical office that he owned and operated. In total, federal prosecutors allege that Cheema’s wrongdoing caused more than $2 million in tax loss.
Cheema’s sentencing hearing has been scheduled for June. He faces up to five years in federal prison for his willful failure to pay employment taxes. Additionally, Cheema will likely be ordered to serve a period of supervised release after his physical incarceration is complete. Finally, Cheema will likely be ordered to pay restitution to the IRS, representing the tax loss that he caused.
The Importance of Employment Tax Compliance
Payroll-related taxes are the government’s primary mechanism in the collection of tax revenue. Employers around the nation are required to properly withhold, account for, and pay over amounts that are withheld from the paychecks of their employees. Additionally, employers are required to pay their share of certain employment-related taxes. Together, these taxes are vitally important to U.S.’s ability to raise revenue. Thus, when a taxpayer violates their obligation to comply with such laws, the penalties can be severe.
If you are an employer and have failed to properly withhold, account for, or pay over employment-related taxes, you should seriously consider strategizing with an experienced tax defense attorney to determine the best method to get right with the government. Your seasoned tax defense lawyer will work to understand the facts of your case and represent you throughout the process of resolving your employment or corporate tax issue(s).
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.
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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
