Serious Penalties for Businesses Falsifying Employee Status to Obtain Tax Benefits
The IRS takes business tax fraud very seriously. One of the most important aspects of this crime that the government prosecutes with extraordinary vigor is the falsifying of employee status in order to evade withholding taxes, social security and Medicare. Specifically, companies that improperly classify their employees as "independent contractors" not only fail to collect and pay over taxes to the IRS, but also may be defrauding workers compensation companies.
When prosecuting cases of this kind, the federal government will not only seek to collect from an employer the contribution it was supposed to make on behalf of the employee for Medicare and social security, but the contribution that the employee was supposed to make, as well as the taxes which should have been withheld. The government may also prosecute for the failure to collect and pay over taxes, social security and Medicare withholding, even when workers are properly classified as employees. Section 7202 of the tax code makes this type of tax fraud a felony, punishable by up to $10,000 in fines and five years in prison.
These are serious charges. Contact us for a consultation with one of our Florida tax fraud defense attorneys. Defrauding workers compensation insurance companies can also result in federal or state criminal prosecution
Orlando Business Fraud Defense Attorney ∙ Defense Against Fraud Charges
At the Law Offices of Mark L. Horwitz, P.A., we have more than 30 years of Florida criminal defense experience, including defense against corporate tax fraud. We can mount a defense against these charges. One of the most important aspects of Section 7202 is that the crime needs to be willful.
There are many factors that go into determining whether a worker is an employee or a contractor, including:
- The degree of control the company has over the individual's results and the means of obtaining these results
- The amount of training the individual requires for the job
- The length of the continuing relationship between the individual and the company
- The location from which the individual works
- Whether the individual has to supply the tools of the trade
There is a degree of latitude and an element of interpretation of the factors which determine whether the worker is an employee or an independent contractor. Our lawyers have experience working with these factors to establish that the misrepresentation was a matter of mistake rather than a willful violation of the legal requirements.
Florida Withholding Taxes Attorney ∙ 866-784-0023
Our phones are answered 24 hours a day, and we respond quickly to our clients' inquiries. To speak with an attorney about your case, contact us online or call our Florida office.
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