The Taxman Cometh

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There are a variety of reasons why an employer may not pay employment taxes. One may be that the company uses the government as a bank and borrows the money with the intention of paying it back. Another reason may be that the employer may be going through a bit of a rough financial time and elects to keep the taxes until the outlook improves. (Those are probably naïve opinions.) An article published by the Chillicothe Gazette tells about an employer who neglected to pay more than $340,000 in employment taxes to the Internal Revenue Service (IRS).

The story states that the employer owned and operated a consulting group. He was responsible for collecting, accounting for and paying employment taxes paid by his employees. (He did that, but he neglected to send the proceeds into the IRS.)

Over approximately three months, he neglected to follow proper payroll procedures and as a result collected $341,336.46 in employment taxes. He also neglected to provide the actual amount of wages paid to the employees to a hired accounting firm that was hired to process payroll. This caused the company to prepare an inaccurate IRS form.

The 40-year-old employer received an 18-month prison sentence for his negligence. He was also ordered to serve three years of supervised release and pay full restitution to the IRS for failing to account for and pay employment taxes to the government.

The article did not mention a reason as to why the employer withheld the taxes, but regardless of that fact, federal law requires that employers pay employment taxes. The bottom line is that the law is the law and the taxman always cometh.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Parish Gets 18 Months in Employment Tax Fraud Case,” published by the Chillicothe Gazette on September 18, 2015.

COLUMBUS — A Chillicothe man received 18 months in a federal prison Friday in connection with a failure to pay more than $341,000 in employment taxes.

Senior U.S. District Judge James L. Graham gave the sentence to Andrew J. Parish, 40, of Chillicothe, and also ordered Parish to serve three years of supervised release and pay $341,336.46 in restitution to the IRS for failing to account for and pay over employment taxes to the IRS.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.