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With the recent uptick in enforcement by the IRS comes a new trend in criminal tax prosecutions of payroll tax cases. Whether your business is located in Hartford, Connecticut or elsewhere, the failure to collect and pay-over the payroll taxes may create more than just financial problems for you.
We frequently represent taxpayers having a difficult time paying their payroll tax obligations to the IRS. In general these matters remain civil issues with the IRS and we help our clients resolve these matters either through installment agreements or by filing an offer in compromise. However, there has been a significant increase in the number of these cases being referred over to the Criminal Investigation Division of the IRS.
Internal Revenue Code Section 7202 makes it a felony for an employer to willfully fail to collect, account and pay over the payroll taxes. The violation of any one of these requirements is sufficient to violate the statute. Punishment includes incarceration, fines and the payment of the government’s costs to prosecute the taxpayer.
The government will prosecute the trust fund portion of the taxes (meaning the taxes withheld from the employee’s pay) under IRC Section 7202. However, the government will often also charge the taxpayer/employer with tax evasion for the unpaid portion of the payroll taxes for the employer’s match of the FICA taxes under IRC Section 7201.
Taxpayers should also be aware that payment of the liability after indictment will not stop the government’s prosecution of the case.
If your business is having payroll tax problems please contact us immediately, as the sooner you deal with the issue the better result we can help you obtain, and you can avoid the potential of a criminal tax referral. If the case is referred over to the criminal investigation division we stand a better chance of stopping the case before the investigation picks up steam the earlier we get involved.
If you have any question about payroll tax issues in Hartford, Connecticut or other civil or criminal tax issue please feel free to contact me at (860) 657-9040 or egreen@convicerpercy.com.
Eric L. Green, LL.M.
Convicer, Percy & Green, LLP
41 Hebron Avenue
Glastonbury, CT 06033
Ph. (860) 657-9040
Fax (860) 657-9039
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