No Let Up by IRS on Payroll Tax Issues

IRS investigationPayroll taxes fund government programs and agencies. The Internal Revenue Service (IRS) shows no signs of slowing down when it comes to initiating and prosecuting employment tax disputes.


In late June, 2020, two owners of three fast food restaurants in Ohio were sentenced to two and three years of probation respectively. They will also pay more than $500,000 in restitution for failing to pay over employment taxes. For a two-year time period, the two neglected to pay $346,773 in employment taxes to the IRS. As we have discussed before, not only can holding on to payroll taxes have a negative impact on your personal liberty, it also creates a shortfall for employees who believe the money coming out of their paycheck is paying their tax own liabilities.


In this case, a Special Agent involved with the IRS criminal investigation noted, “Employers who chose to not play by the rules create an unfair competitive advantage over those that do, they are not only cheating the system and their employees; they are cheating future generations relying on those taxes to help build the future.”


Also in late June, a New Jersey business owner pled guilty to tax evasion and employment tax charges when engaged in a plethora of problematic financial behaviors including failure to file federal tax returns, cashing out business proceeds, and paying employees off the books. Ultimately the defendant failed to pay over $213,000 in payroll taxes.


The man admitted to using his business account and the excess proceeds to pay his mortgage, life insurance, credit card, and other personal expenses. He faces ten years in prison plus fines and probation when sentenced this coming December.


At just about the same time in Greensboro, North Carolina, a business owner was sentenced to 18 months in prison for embezzling payroll taxes from her staffing agency. The catch in this case is that the owner was the subject of a criminal tax investigation for failing to pay employment taxes in 2015. Upon conviction, she served prison time. When released, the woman restarted her business and her payroll tax scheme. Not surprisingly, she was again accused of criminal tax fraud to which she pled guilty. When she walks out a free woman from this stint, she will be on probation for three years and owe more than $2 million in restitution. Ouch to all.


Common thread? Payroll tax schemes oftentimes do not pay. Common mistake? Yielding to the siren song of easy cash and failing to contact good criminal tax defense when they had a chance to make a difference. If you get in too deep—do not wait for a Special Agent. Contact good legal help now.


Cleveland tax attorneys provide personalized legal service on civil and criminal tax matters

The legal team at Robert J. Fedor, Esq., LLC delivers experienced representation if you are the subject of tax litigation or face an allegation of tax crime. Serving clients internationally and domestically in Cleveland and Chicago. Contact us online or call us at 800-579-0997 today.


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