According to Robert Horwitz , the U.S. Department of Justice, in conjunction with the IRS Criminal Investigation Division, is going to ramp up the rate of criminal prosecutions for willful failure to collect and pay over federal employment taxes under 26 U.S.C. 7202 . Apparently, this area is being stressed by the new Acting Assistant Attorney General for the DOJ Tax Division, our friend Caroline D. Ciraolo. Caroline is one of our favorite people and an incredibly intelligent and able attorney. She was formerly with Rosenberg, Martin, Greenburg, in Baltimore, but tasked earlier this year to head up the DOJ Tax Division. The failure of businesses to pay over the withheld taxes from its employees is a double-whammy to the public fisc. First, the government never collects the withheld taxes from the employer, and second, the IRS usually pays the employees’ refunds based on credit for withholding never collected. If your business is significantly behind on its federal payroll taxes and has been for quite some time, your liability may not be limited to a tax bill. There could be handcuffs and substantial fines in your future. You can read more about Mr. Horwitz on his site (he is a former DOJ Tax Division trial attorney and noted practitioner on the west coast).
U.S. Department of Justice to Ramp Up Criminal Prosecutions for Willful Failure to Collect and Pay Over Federal Employment Taxes