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Protect yourself from costly payroll fraud

By
Industry Observer with Green Krist CPA PLLC 34463

When you own and operate a business, you must exercise vigilant oversight, including watching over your payroll taxes. Here’s an example of why.

Rodney Taylor entrusted his corporation’s accounting and bookkeeping to Robert Gard, CPA. Over several years, Mr. Gard embezzled between $1 million and $2 million, including payroll taxes.

Despite Mr. Gard’s wrongdoing, the ultimate responsibility to settle the payroll taxes with the IRS fell on Mr. Taylor as the business owner and “a responsible party” under tax law.

The Taylor case highlights a crucial lesson: while delegation of duties is a part of business, you cannot transfer your responsibility for compliance with the tax laws. Here are two proactive steps to protect your business:

  • Direct oversight. Ensure payroll reports are delivered directly to you, allowing you, a responsible party, the first review.
  • Regular verification. Periodically check the IRS electronic federal tax payment system (EFTPS) to confirm that the IRS received payment for the payroll taxes.

By implementing these two simple measures, you significantly mitigate the risk of embezzlement and maintain compliance with tax obligations while safeguarding your financial interests and those of your company.

Green Krist, CPA  specializes in assisting taxpayers with IRS and North Carolina Department of Revenue issues in the greater Raleigh, North Carolina area.

Sham Reddy CRS
Howard Hanna RE Services, Dayton, OH - Dayton, OH
CRS

Thanks for sharing Kelly!!! Great information!!!

This case highlights a crucial lesson: while delegation of duties is a part of business, you cannot transfer your responsibility for compliance with the tax laws. Here are two proactive steps to protect your business: Direct oversight and Regular verification.

May 26, 2024 09:56 AM
Roy Kelley
Retired - Gaithersburg, MD

Thank you very much for sharing your experience and advice.

Have an outstanding week.

May 26, 2024 10:11 AM