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Can You Go to Jail for Payroll Tax Liabilities?

Posted by Juda Gabaie | Jul 12, 2022 | 0 Comments

As of 2022, the IRS is cracking down on employers and payroll taxes. If you are a business owner who has failed to send the IRS your employees' Medicare and Social Security contributions, the IRS will very likely come knocking at your door—and they won't go easy on you.

Penalties for failing to file and pay payroll taxes can be steep. Willful failure to pay can even lead to jail time. What happens if you don't pay your business taxes on time, and how likely is it you could get a prison sentence if you don't pay?

Business Tax Penalties

The IRS has several penalties it can impose on you or your business if you have unpaid payroll taxes, including:

If the IRS considers your case to be tax fraud, you could face criminal charges. Criminal charges can come with high fines or jail time.

Criminal Penalties for Unpaid Payroll Taxes

When you owe payroll taxes, the IRS generally assigns a revenue officer (RO) to your case. The RO may impose a civil penalty, but they could also refer it to the criminal investigation (CI) division. Historically, the IRS has reserved criminal charges for employers with huge sums of unpaid business taxes. Since the IRS is cracking down on payroll tax liabilities in 2022, more business owners may find themselves with criminal charges and prison time for their unpaid taxes. The length of the sentence varies depending on how much an employer owes.

Why Small Businesses Could Be at Risk

If you're a small business owner in Rockville, Annapolis, Columbia, Frederick or Baltimore with few employees, you probably don't think you're a target for the IRS. However, small businesses tend to be more vulnerable because they lack the resources or personnel to ensure taxes are filed and paid on time. They also tend not to have large teams of attorneys to assist if something goes wrong. If you own and operate a small business and don't feel you have a handle on your payroll tax situation, you should know that the IRS might be looking at you.

How a Tax Attorney Can Help

If you have been contacted by an IRS RO and feel worried about your business's payroll taxes, you should consider consulting with a tax attorney. These situations can move quickly, and you don't want to deal with a tax liability problem while trying to run a business. Tax attorney Juda Gabaie specializes in helping employers with their business tax liabilities. He can review your situation and devise a strategy to take the IRS's target off your back. Call Gabaie & Associates, LLC today at (410) 358-1300 to schedule a free consultation and see how we can help your business.

About the Author

Juda Gabaie

Juda Gabaie Esq. has dedicated his career in defending clients nationwide to resolve tax disputes before the Internal Revenue Service and the state taxing agencies. Juda has represented clients before the US Tax Court, Maryland Tax Court, and Comptroller of MD hearing compliance. As an adjunct prof...


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