Am I in Trouble Over These Payroll Taxes?
When the IRS hired thousands of new agents, officers, and support staff, the government had a specific plan in mind.
What Businesses Are Included?
One type of targeted situation is any business that is habitually late in reporting or paying its payroll taxes. It could be the business owner that writes net paychecks for the business’s employees but does not file its quarterly tax return to report the amounts that were withheld from those employees’ paychecks.
Or, it could be that business owner who, once those funds are withheld from the employees’ paychecks, doesn’t pay the withholdings over to the government. Instead, the business owner may use the funds for more immediate necessities like rent, business telephone, or maybe to meet next week’s payroll.
Unfortunately, these things happen. But if the business owners know about their responsibilities, but fail to meet those responsibilities, that is what you call willful failure. This kind of problem could result in big trouble, including possible prison time.
Worst Case Scenario (But a Common One)
For example, Timothy J. Lundquist of Minnesota pleaded guilty to willfully failing to account for and pay over employment taxes for his automobile transmission business. Lundquist was responsible for filing quarterly Form 941 tax returns, as well as paying over the taxes withheld from his employees’ wages. For over 4 years, Lundquist didn’t pay the withholdings to the IRS, or even file the required Form 941 tax returns. In total, he cost the IRS more than $1.2 million. Lundquist faces a statutory maximum of 5 years in prison, plus more years of supervised release, restitution and fines.
Even if he was not going to prison, he would be slapped with a penalty for his personal responsibility.
Another Note – There is a Way Out
A lot of people fail to realize that this sort of problem can be “fixed”, sort of. Yes, that’s what tax lawyers do. Criminal charges can actually be avoided.
If you find yourself in this situation, it is important to get professional help. A tax attorney can help you end up with the best possible result by:
- Getting a short-term deferment
- Negotiating an installment payment agreement
- Submitting an Offer-in-Compromise to reduce the amount owed
- Determining the statute of limitation for your debt
- Filing claims to reduce penalties and interest.
If you have any questions or need guidance on your existing situation, contact Tax Law Offices. We can help!