Federal Employment Tax Rules: Fudge the Numbers and Pay $25,000

Employers are required by the federal government to manage the taxes they pay on their employees’ wages. These taxes include federal income tax, the Federal Insurance Contributions Act tax and the Federal Unemployment Tax Act taxes. FICA taxes include Social Security taxes as well as Medicare taxes.

It’s no secret that paying taxes can be a confusing and complex experience. It’s all too easy to make one small error when calculating taxes for multiple employees. The Internal Revenue Service is skilled at spotting such errors and quick to issue penalties for them. It is very common for employers to be penalized for these errors, even if they did their best to file their taxes promptly and accurately.

Penalties for Violating Employment Tax Rules

The IRS likes to collect its taxes on time and many of the penalties for employment tax violations reflect this emphasis on punctuality.

For example, an employer who files his or her employment taxes one to five days past the deadline can expect a 2 percent tax penalty. Filing six to fifteen days late increases the penalty to 5 percent.

The IRS sends notification letters to employers that have failed to submit their taxes by the due date. Failing to respond to these notifications promptly can cause further penalties.

For instance, paying the tax balance within 10 days of an IRS notification results in a 10 percent tax penalty. Paying after that 10 day period increases the penalty to 15 percent.

The potential penalties for violating employment tax rules increase if the alleged offenses are more serious than a late payment. Employers who don’t withhold the required FICA or FUTA taxes from their employees’ wages are liable for 100 percent of all the tax that was supposed to be paid to the government.

Willfully neglecting to pay federal employment taxes is a felony offense and could bring a fine of $100,000 and a prison term of 5 years. Failure to file a return, keep required records or submit requested information to the IRS can incur a fine of $25,000 and a sentence of a year in jail.

Dealing with Tax Violation Penalties

As stated above, it’s all too easy to make a simple mistake when calculating taxes and end up facing an audit and possible charges from the IRS. While it’s a good idea to cooperate with the IRS, that doesn’t mean that charges must be taken without a fight.

Lawyers know that employers sometimes make mistakes and can help to prepare a legal defense. Possible defenses include:

  • Employer error or extenuating circumstances caused late payment
  • Employer’s accountant is responsible for mistaken payment amounts
  • IRS failed to adequately notify employer of late, missing or inaccurate payments

Get Professional Legal Defense

Tax violation accusations are very serious. Not only can they harm the reputation of you and your business, but you might be spending an entire year of your life in jail. To prevent this from happening, it is important to contact a professional criminal defense attorney who understands the IRS and knows how to fight the system.

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About the Author

Law Office of James Alston. serves people who need legal assistance in their Criminal Defense Cases in Texas.

Houston Criminal Lawyer James Alston represents clients in the Houston area, including Pasadena, Sugar Land, Missouri City, Channelview, Conroe, Galveston, Angleton, Richmond, Rosenberg, Beaumont, Galveston County, Ft. Bend County, Montgomery County, Brazoria County, Harris County and Jefferson County in Texas.