As a business owner, you are aware of ways you can skim here and there to take advantage of your position without quite reporting it all to the IRS. Let’s look at just three today:
Payroll record manipulation: Tax evasion has been around as long as taxes. Cooking the books was easier before so much of the evidence went electronic. Keeping two sets of books allows a business owner to recount two business narratives but raises the stakes of discovery during an IRS audit. A critical risk of separate records is the clear display of willfulness required to keep two sets of books. If you are notified of an audit and your business records are not in order, it is crucial to seek experienced legal counsel before contacting the IRS.
The problem with payroll taxes: Collecting, reporting, and paying over employee wage withholding is a straightforward and necessary aspect of business ownership. That said, the accessibility of withheld funds can be a siren song to some and lead to payroll taxes that are withheld but not paid over to the IRS. Funneled into side accounts or spent to keep a sinking ship afloat, the proceeds are not paid over on behalf of workers, nor reported on tax returns. The problems compound and can lead to expensive, troubling allegations by the IRS. Tax attorneys with extensive criminal tax defense experience can provide the necessary guidance for business owners facing these circumstances.
Worker schemes: While some business owners purposefully misclassify workers to avoid payroll taxes and other employer obligations, others “lease” employees from third-party vendors with sketchy accounting practices. Paying cash under the table is a tried-and-true tactic for avoiding payroll taxes and employee benefits until you are caught.
Employment fraud can begin with what seems like a short-term decision, but it often becomes much harder to undo once the IRS gets involved. Find out exactly what tax fraud is and how the IRS defines it by reading our free resource guide, Understanding Tax Fraud.
When you need a tax law firm with years of significant, successful experience defending clients against IRS allegations of criminal tax fraud, contact our tax attorneys at 440-250-9709. We deliver strong, strategic defense if you are charged with tax crime or are the subject of an IRS tax investigation. We assist clients across the U.S. and abroad from offices in Cleveland and Chicago.