It is a very common story for small businesses to get behind on paying employment taxes. Federal employment taxes are largely made up of FICA and withholding taxes. The IRS is especially keen on businesses who fail to pay these taxes. Not only is the government out the money it should be receiving, but it also has to pay out refunds and provide benefits. In many ways it is a double loss.
The Department of Justice issued a press release regarding the wireless technology company Distributive Networks LLC. Its owner, Kevin Bertram, pleaded guilty in federal court to willfully failing to pay more than $900,000 in employment taxes.
According to the press release, Bertram neither accounted for nor paid employment taxes due and owed to the IRS. Over a two year period Bertram failed to file IRS Forms 941 and failed to pay $927,922 in employment taxes that he had withheld from his employees’ wages.
He is now looking at spending up to 5 years in “Club Fed” and a fine of up to $250,000. He will still likely be on the hook for paying back the tax bill as well.
Failing to take care of employment taxes is probably the worst decision a small business owner can make. It is very enticing to take a “short term” loan on the back of the Federal Government – but this will lead to personal liability and potential criminal problems.
There are remedies for this problem, but quick action is needed.