Californians know that taxes can be complicated. If you own a business, then you may find the process of withholding and paying taxes confusing and daunting. However, if you make a mistake with regards to your taxes, you could wind up facing serious criminal allegations. Then, if you do not put forth a strong criminal defense, serious penalties, including prison time, could befall you. Therefore, it is important to know what types of tax activities are considered illegal and how you can defend against any allegations of criminal wrong-doing.
One type of tax fraud aggressively pursued by federal authorities is employment tax fraud. There are several ways employment tax can be evaded, but they are illegal and harshly punished. First, an employer may be accused of pyramiding. Pyramiding occurs when an employer withholds employees' taxes but then intentionally fails to hand them over to the Internal Revenue Service.
A second form of employment tax evasion is employment leasing. Under this fraud, a business hires another company to handle administrative duties, including payroll. Then, the business, even though it has collected employment taxes, fails to remit it to the IRS. In some instances, the business's owners then use those withheld taxes for their own personal desires.
A third and very common way of evading employment tax is paying workers with cash. When this happens, it is difficult for the government to track employment taxes and to verify whether they have been paid. However, paying employees in this fashion is illegal, and can result in significant penalties.
If you are under investigation by the IRS or another federal agency for alleged tax fraud, then you should consider speaking with a California attorney experienced at handling white collar crimes. With a strong legal ally on your side, you stand a chance at beating the charges, putting the event behind you, and getting back to your normal life.
Source: IRS, "Employment Tax Evasion Schemes," accessed on Nov. 1, 2014