On November 16th, the U.S. Department of Justice charged a Nevada woman for attempted tax evasion related to employment taxes. This recent indictment is just another sign that the Department of Justice is actively pursuing employment tax cases. See “Business Taxpayer Update – 3 Things Employers Should Know About Employment Taxes, April 20, 2016. According to a press release, the indictment alleges that the woman owned and operated a home health care business and “was responsible for collecting, accounting for, and paying over income, social security, and Medicare tax withheld from employees’ wages. The tax withheld is referred to as ‘trust fund tax’ because the employer holds those funds in trust until the amounts are paid over to the Internal Revenue Service (IRS) on behalf of the employee. If a responsible person willfully fails to pay over trust fund taxes, the IRS may impose a penalty equal to the amount of the trust fund taxes on the responsible person. The penalty is known as the trust fund recovery penalty.”
The U.S. Department of Justice alleges that the Nevada woman “willfully attempted to evade and defeat the payment of the trust fund recovery penalties assessed against her by concealing and attempting to conceal from the IRS her access to personal funds and assets” including buying a home in the name of a nominee. Moreover, she allegedly “engaged in currency transactions with financial institutions in amounts less than $10,000 to prevent the filing of currency transaction reports” and “provided false information to the IRS regarding her ability to pay the trust fund recovery penalties.”
She is presumed innocent of any criminal wrongdoing alleged in the indictment unless the U.S. Department of Justice can prove her guilt beyond a reasonable doubt. If convicted, she could face “a statutory maximum sentence of five years in prison, a period of supervised release, restitution, and monetary penalties”.
Employers facing trust fund tax compliance issues should immediately seek assistance from a qualified tax professional. Giovanni V. Alberotanza is a tax attorney who represents businesses and individuals throughout all stages of civil and criminal federal and state tax controversies. For a free consultation, please contact Giovanni at firstname.lastname@example.org or 410.649.4990.