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West Virginia Employee Pleads Guilty to Payroll Tax Fraud

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West Virginia Employee Pleads Guilty to Payroll Tax Fraud


According to a Department of Justice press release, a West Virginia woman recently pleaded guilty to charges relating to payroll tax fraud after failing to remit nearly two million dollars of payroll taxes that had been withheld from the paychecks of employees. This should serve as a reminder to any business owner or individual with bookkeeping responsibilities that the Department of Justice and the IRS do not take violations of payroll tax laws lightly. If you have failed to comply with payroll tax laws or have failed to file a federal income tax return for one or more years, it is in your best interest to seek the assistance of an experienced criminal tax defense attorney to determine the best strategy to come into tax compliance.

Defendant Caused Just Under $2m of Tax Loss

Court records reveal that Diann Clark was an employee of Alpha Associates, an architectural business in Morgantown, West Virginia. Part of Clark's responsibilities included managing the payroll tax function. Federal prosecutors allege that between 2014 and 2018, Clark was responsible for withholding payroll taxes from the paychecks of employees. Although federal law required that she remit be withheld funds, she did not. Federal prosecutors estimate that Clark's illegal action caused a tax loss of nearly two million dollars.

Clark's sentencing date has not yet been set. She faces up to five years in federal prison. Additionally, she may be sentenced to serve a period of supervised release to commence upon the completion of her physical incarceration. Lastly, Clark will likely be required to pay restitution to the IRS, representing the amount of tax loss that she caused.

Re-Emphasizing the Need to Comply with Payroll Tax Laws

Multiple stories featured on our blog have emphasized repeatedly the need for taxpayers to comply with federal payroll tax requirements. Because withholding tax from employees’ paychecks is the single-largest source of federal income tax revenue, the intentional disregard for laws governing the process is often met with aggressive investigation and criminal prosecution by the Department of Justice. Recognizing that some employers simply fall behind on their requirement to follow payroll tax laws, the IRS has established several programs that allow taxpayers to come back into payroll tax compliance. An experienced payroll tax defense attorney will help determine the appropriate program and strategy to get right with the government.

If you have failed to comply with federal payroll tax laws or have failed to comply with federal income tax requirements, it is in your best interest to contact an experienced tax defense attorney. Together you will work to determine your level of civil and criminal exposure. Then, you will jointly decide on a path forward to come into tax compliance. While you are being represented by tax counsel, you won’t have to worry about going up against the IRS or Department of Justice alone.

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