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Understanding Trust Fund Penalty Liability

In Trust Fund Penalty by Jason FreemanLeave a Comment

Federal tax law mandates that employers withhold payroll taxes from employees’ wages for the government’s account.[1]If your company is required to withhold, account for, and pay taxes— including non-resident alien withholding and employment taxes—but willfully fails to do so, you may be held personally liable for a penalty equal to the full amount of the unpaid trust fund tax.[2] Withheld taxes—typically …

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Government Report Recommends More Criminal Referrals for Employment Tax Violations

In Criminal, Employment Tax, Trust Fund Penalty by Jason FreemanLeave a Comment

A recent government report recommended that the IRS beef up its use of the Trust Fund Recovery Penalty and more liberally refer employment tax cases for criminal investigation.  The report, issued by the Treasury Inspector General for Tax Administration (“TIGTA”), A More Focused Strategy Is Needed to Effectively Address Egregious Employment Tax Crimes, was somewhat critical of the IRS’s failure …

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IRS Tax Penalties on the Rise, Particularly Employment Tax Penalties

In Audit, Employment Tax, Penalties, Trust Fund Penalty by Jason Freeman1 Comment

The IRS recently issued its annual Data Book, providing a glimpse into the world of tax administration during the past fiscal year.  The recent release provides a number of interesting takeaways, but here are a few of the highlights: The IRS assessed $27.3 billion in civil penalties during FY 2016. The IRS assessed close to $12.5 billion in additional taxes …

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IRS Hits Business Owner with $4.3 Million Trust Fund Penalty for Business’s Unpaid Payroll Taxes—Federal Court Upholds Assessment

In Employment Tax, Penalties, Trust Fund Penalty by Jason FreemanLeave a Comment

A recent ruling by a federal Texas district court serves as yet another reminder of the exposure that business owners face when it comes to personal liability for the unmet payroll taxes of their businesses.  In McClendon v. United States, the district court recently held a doctor-taxpayer/business owner personally responsible for $4.3 million of the business’s outstanding payroll taxes, upholding …

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Court Issues Permanent Injunction Against Failing to Pay Employment Taxes

In Employment Tax, Trust Fund Penalty by Jason FreemanLeave a Comment

A federal district court in U.S. v. Agape Health Services  recently issued an order permanently enjoining a taxpayer and his business, Agape Health Services, LLC, from failing to make employment tax withholdings and payments.  The order, which extends to the business’s “representatives, agents, servants, employees, attorneys, successors in interest and assigns, and anyone in active concert or participation with them,” …

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Shareholder Fraud Meets Employment Tax Fraud

In Criminal, Employment Tax, Trust Fund Penalty, White Collar by Jason FreemanLeave a Comment

The Department of Justice Tax Division announced a recent guilty plea by the CEO of VitalSpring Technologies, Inc., a Virginia-based health care technology company.  The case shows how large-scale shareholder frauds often involve interrelated tax violations (such as failing to pay employment taxes) and other regulatory infractions.  The CEO faces a potential sentence of 10 years in prison for the …

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Another Trust Fund-Related Tax Indictment

In Trust Fund Penalty by Jason FreemanLeave a Comment

The Department of Justice recently announced another indictment of a taxpayer charged with evading the payment of “trust fund” taxes—taxes withheld from employees’ wages to be paid over to the government.  The DOJ press release provides a succinct summary of the allegations and the relevant facts: Maria Larkin aka Maria Bella-Larkin, owned and operated Five Star Home Health Care Inc. …

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Employment Tax Enforcement is on the Rise

In Employment Tax, Trust Fund Penalty by Jason FreemanLeave a Comment

For the past year, the IRS and the Tax Division of the Department of Justice (“Tax Division”) have touted a renewed and increased emphasis on employment tax enforcement—both civil and criminal. Indeed, employment tax enforcement is currently among the IRS’s and Tax Division’s highest priorities. Earlier this year, the Tax Division publicly warned that it has “sharpened its focus on …