According to a Department of Justice press release, a Virginia man was recently convicted on criminal charges related to defrauding the IRS of more than 1.2 million dollars. This story should remind taxpayers who are business owners or those who are responsible for the payroll functions of a company, that the consequences of failing to comply with federal payroll tax laws can result in life changing civil and criminal repercussions. If you have failed to properly abide by federal payroll tax requirements for one or more years, it is in your best interest to contact an experienced payroll tax defense attorney.
Defendant Withheld Payroll Taxes but Did Not Remit Them, Failed to Report All of His Income
Court records reveal that Shane August, of Chesapeake, Virginia, employed approximately 60 individuals. Federal prosecutors alleged that August properly withheld taxes from the paychecks of his employees but failed to remit such amounts to the IRS as required by federal law. Instead, prosecutors argued that August used the funds to furnish a lavish lifestyle including building a new home and a luxury automobile lease. Between 2013 and 2017, August provided employees false documentation claiming that the money that he had withheld from their paychecks had been paid to the Social Security program.
Federal prosecutors alleged that August failed to include the $900,000 that he had withheld from his employees’ paychecks but failed to remit to the federal government on his federal individual income tax return. Additionally federal prosecutors argued that August failed to include $288,000 of additional personal income for those years.
Sentencing is scheduled for March of 2022. The defendant faces up to five years in prison. Additionally, August may be sentenced to serve a period of supervised release upon the completion of his physical incarceration. Lastly, August may be ordered to pay the IRS restitution, representing the tax loss that he caused.
Appreciating the Importance of Payroll Tax Compliance and What to Do If You’ve Fallen Behind
As we have indicated several times on our blog, the IRS and Department of Justice take violations of federal payroll tax laws extremely seriously. Withholding taxes from employees’ paychecks is the single largest source of tax revenue for the IRS. Thus, it is not surprising that the Department of Justice, upon referral by the IRS, will not hesitate to criminally prosecute those who willfully violate such laws. Employers are required to withhold taxes from employees’ paychecks but are also required to properly account for such withheld amounts and remit such amounts to the IRS.
If you have failed to comply with Federal payroll tax requirements, it is in your best interest to seek the assistance of an experienced payroll tax attorney. Together, you will work to determine the level of civil or criminal exposure present in your case. Next, you will jointly agree on a strategy to come into tax compliance. While you are being represented by a seasoned tax lawyer, you will not have to go up against the IRS or Department of Justice alone.
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.
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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
