Successful business owners know more than just their trade, they also know how to navigate the details of business ownership. From administrative tasks to those involving human resources issues, knowing how to manage these details can make or break a business. One important detail: payroll tax obligations.
The Internal Revenue Service (IRS) expects business owners to remit payroll taxes. These include income taxes as well as those to cover social security, Medicare, and the Federal Unemployment tax. The IRS generally expects these payments on a quarterly basis though it is important to note state taxing authorities may have additional requirements.
What happens if a business owner fails to make the quarterly payment to the IRS?
It is likely that the IRS will contact the employer through mailed correspondence. The agency will remind the employer of their obligation and charge a penalty fee for their failure to make a timely payment. If the employer fails to respond or take appropriate action, the IRS may move forward with further action. This could include a lien on the employer’s property or criminal charges.
Will the IRS really pursue criminal charges?
They can pursue criminal charges in these situations — and have had success doing so. In a recent example, the IRS went after a business owner who failed to remit payroll taxes. The agency pushed for criminal charges in addition to full payment of taxes owed and additional financial penalties. The IRS was able to gather enough evidence to support their allegation that the business owner intentionally avoided their tax obligations. As a result, the court ruled in the agency’s favor. The court required the business owner not only pay restitution and an additional $150,000 fine, but also gave him a 28 month prison sentence.
As if that was not bad enough, the business owner also held a professional license. Those with a professional license, such as a medical, nursing, dental, or law license, can face additional professional consequences if they are convicted for a crime of this nature. The individual in this case also faced the loss of his professional license as a direct result of the conviction.
What should a business owner do if they face similar charges?
The first step is to carefully review the allegations. Check for any due dates or other requirements and make sure you follow the guidelines. A failure to do so can limit your options.
Next, gather and organize paperwork to defend your case. These matters are not easy to navigate, but you do not need to go through this alone. The attorneys at Goldburd McCone are experienced with these types of cases and can help business owners fight back — not just for their own freedom but also to preserve their business interests.