Many Chicago business owners have faced difficult cash flow problems; problems that come with temptations. The possibility of using withheld payroll tax monies that were deducted from employee paychecks to keep the business's doors open can be tantalizing.
Giving in to the temptation can bring a whole new set of problems, however, not the least of which will be aggressive actions by the Internal Revenue Service to collect those payroll taxes and levy penalties on the employer.
We read recently of a businessman who was accused of giving in to the temptation of withholding federal taxes from employee pay, but then neglecting to give the funds to the IRS.
Late last year, he entered into a plea agreement with federal prosecutors. After a couple of delays in sentencing, he finally got the word from the judge: 1 month in prison, followed by 7 months of house arrest and 3 years of probation. In addition, the Oklahoma sign-company owner will be required to pay $282,000 in restitution.
Prosecutors had asked for harsher sanctions, but the judge had a response many observers will find grounded in reason and common sense: if the man served a long prison sentence, his business would die and the IRS would not get its money.
Instead, the man will serve time, then have his freedom significantly curtailed by house arrest and then have to live under the watchful eye of a probation officer. But his business can continue to repay the federal tax agency.
For many business owners who have given in to payroll tax temptations, it makes sense to allow them to remain productive members of society as they pay for their transgressions. In that way, their families and employees don't suffer, and the IRS gets the money it is owed.
It's the kind of resolution a skilled tax attorney can help bring about. You can discuss the details of your situation in a confidential conversation with a Chicago tax attorney.