On April 15, 2019, the Internal Revenue Service (“IRS”) announced that it had just completed a two-week educational campaign focusing on employment tax issues. According to the IRS’s release, it dispatched Criminal Investigation (“CI”) agents to nearly 100 businesses that were showing signs of potential serious noncompliance. During these visits, business owners were informed about ways to catch up with back payroll taxes. During these meetings, the CI agents discussed how to stay current and the potential for civil and criminal penalties. The IRS also announced that, over those two weeks, it had taken several dozen legal actions against potential employment tax violators, including indicting twelve individuals and executing four search warrants. The IRS said that federal courts imposed criminal sentences in six cases in which defendants were convicted of crimes involving payroll tax violations. This includes one Pittsburgh case where the defendant received a sentence of 24 months for failing to remit more than $2,200,000 in payroll taxes over a three-year period, as well as a 15-month sentence for a defendant who pled guilty to operating a New Jersey business that committed visa and tax fraud. According to the IRS’s announcement, withheld payroll taxes account for nearly 72 percent of all revenue collected, so noncompliance is of significant concern to the IRS.
This campaign underscores the IRS’s renewed interest in pursuing companies and individuals who fail to make timely payroll tax payments. Businesses that are not current on their payroll deposits or who are failing to accurately report their payroll tax liabilities may wish to come into compliance. Given the complexities of payroll tax cases, businesses with potential payroll tax issues should contact counsel.
We have previously written about the unique challenges defending individuals who face potential civil and criminal violations in employment tax cases. A copy of that article can be found here.
A copy of the IRS’s announcement yesterday can be found here.
A copy of the press release relating to the sentencing in Pittsburgh can be found here.
A copy of the press release relating to the sentencing in New Jersey can be found here.