Report and payment of employment taxes are a fundamental responsibility of business owners who employ workers in the United States. An Internal Revenue Service (IRS) criminal tax investigation recently exposed another business that collected employment taxes but failed to pay them over to the IRS.
According to the Department of Justice (DOJ), Eric Moesle of Pickerington, Ohio, worked as the office manager for Elemental Dental, a dental practice located in Pataskala, Ohio. From the internet, it appears Elemental Dental may have been a family business.
Evasion of employment taxes is an important focus for the IRS. Not only do employment taxes fund government initiatives, but they establish a record of payment for workers to take part in social programs like Medicare and Social Security. Employment tax fraud steals from the government and the workers whose payroll taxes are not deposited.
Payroll taxes are generally reported on a quarterly basis along with the employer’s end-of-the-year annual filing of wages and compensation paid to each employee. The importance of paying employment taxes correctly and on time is emphasized by the Trust Fund Recovery penalty (TFRP) which can be assessed for non-compliance.
As we discussed earlier, the TFRP is a serious penalty that lands on the owner of the business, regardless of whether they assigned the task to an office manager, accountant, or third-party vendor. The amount of the TFRP is the amount of money not paid over for employees and the taxes due by the employer—plus the same amount as a penalty.
Mr. Moesle was the individual responsible for preparing tax returns, payroll, and bookkeeping for the dental practice. From 2014 through 2020, he correctly withheld payroll and income taxes, which employees could see on their paystubs and their annual W2 forms. Yet, he failed to file quarterly tax returns and failed to pay over the worker’s payroll taxes and the business share of employment taxes.
When questioned in an IRS criminal investigation, Mr. Moesle unwittingly claimed that he did not know the reports and monies had not been paid over. He also said the failure to pay over the employment taxes was unintentional. Mr. Moesle pled guilty in August of this year to not paying over $750,000 and faces up to five years in prison, plus what is bound to be a hefty fine and restitution.
It is unclear when Mr. Moesle sought legal help. Given the high profile of employment tax fraud with the IRS, it is usually only a matter of time before businesses are identified by the IRS for failing to report or pay over payroll taxes. As a legal group working with business owners and individuals facing IRS criminal investigations, here are a couple of tips—get good legal advice if you are engaged in a tax crime, and be sure to speak with your legal counsel before the IRS speaks with you. And when you do talk to the IRS? Do not lie—it will not help your case.
Talk to our legal group for experienced, discreet guidance and representation
With offices in Cleveland and Chicago, the legal group at Robert J. Fedor, Esq., LLC delivers skilled representation on IRS audits, employment tax fraud, and other tax controversies. Call 440-250-9709 or contact us online today.
