Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Department of Justice Considers Personal Benefit an Important Factor in Prosecuting Employment Tax Cases
Author: Scarinci Hollenbeck, LLC
Date: September 24, 2013
Key Contacts
Back
Since 2008, the U.S. economy has struggled and employers faced with the dilemma of either paying employees and vendors, or paying employment tax often chose the former. The belief is that they can always catch up. Unfortunately, I have seen many employers incur substantial tax liability for employment taxes, interest and penalties, and have found themselves personally liable.
The Department of Justice will now consider whether an individual personally benefited from employment taxes that were not properly withheld or paid as a key factor in considering whether it will criminally prosecute a case.
“Using the money to keep a business afloat is not a defense against criminal liability for an employer, but the DOJ is less likely to prosecute in that case than when the employer is using the funds to purchase homes, cars, and other luxury items,” said Margaret Leigh Kessler, Assistant Chief (Western Criminal Enforcement Section), DOJ Tax Division.
Speaking during the “Civil and Criminal Tax Penalties” session of the American Bar Association Section of Taxation meeting in San Francisco, Kessler pointed out that no one factor is dispositive as to whether a case will become criminal. She said there are many different factors that may cause the IRS to refer a case to the DOJ for criminal prosecution, including engaging in a course of illegal conduct over a long period; taking aggressive measures to actively hide assets once the Service has determined noncompliance; and lying to the IRS agents reviewing the case.
“The size of the business is not a driving factor,” Kessler said. “While a case involving large amounts of money may be more attractive to the DOJ, officials wouldn’t be eager to prosecute it criminally if they didn’t have evidence that the money was being used for personal benefit.”
Those employers who use employment taxes for cars, vacation homes and the like now face not only personal liability but criminal prosecution.
- Practices: Tax and Trusts & Estates, Sophisticated Estate Planning & Wealth Preservation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Author: George McGowan
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Author: George McGowan
How to Effectively Use Contracts to Manage Risk
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Author: George McGowan
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
How Can Trusts Be Used in Business Succession?
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.