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Provision Business Services LLC

A Professional Bookkeeping Firm

Located in Albuquerque, Serving all of New Mexico

505-269-3783

In the July 2015 issue of The General Ledger, a newsletter published by the American Institute of Professional Bookkeepers, they warn that the IRS is now pursuing criminal charges against businesses that fail to pay payroll taxes.  This is a new, harder approach than what the IRS had taken in the past.

This is referring to federal withholding tax, social security, medicare, and federal unemployment taxes.  Many businesses will try to delay paying these federal payroll taxes to improve cash flow.  In the past, the IRS had a more lenient approach to this in which they only sought to collect payment and penalties.  This has changed.  To quote the AIPB article, “Criminal charges will be sought when unpaid taxes are used to help a business keep going.”  Jail time is being sought in certain cases.  The IRS considers this an especially egregious offense if the business was generous to employees or others and a substantial amount of money is involved.  A case was cited where an employer didn’t pay payroll taxes but gave employees free Starbucks coffee and 100% 401k matching contributions.  The IRS won criminal charges against this employer.