11 Call For Action has issued a critical warning on potential tax fraud breaches.
It is a criminal act that might be committed by anyone. It may happen to you.
Katie Pelton, a consumer reporter for 11 News, sat down with Amanda Prestegard, an assistant special agent in charge, to discuss ways in which company owners can protect themselves from payroll fraud and ways in which employees may protect themselves if they become victims of payroll fraud.
Assistant Special Agent in Charge Amanda Prestegard: “So we investigate all types of financial crimes, but of course, our main focus is on tax crimes: people who are failing to pay into the Treasury and are going to great lengths to not pay the taxes that they owe, and also those who are scamming taxpayers, whether that be return preparers or, unfortunately sometimes, employers or caretakers who are not turning over the taxes that they owe or helping their clients or emphasising the importance of paying their
“Right, so there are a variety of violations that are included in the Internal Revenue Code, but the ones that are at the forefront for us are tax evasion — people who are going to great lengths to avoid paying what they owe — and then there are violations related to return preparers, either those who are aiding and abetting in the filing of false tax returns or those who are assisting in preparing tax returns that provide false information.
“Right, so there are a variety of violations that And then we also have obstructing the IRS, which keeps us from doing our duty to help to assess and pay over taxes, so there are a lot of violations, and it’s just definitely across the board important for people to be very aware of the taxes they are filing, be aware of everything that is going into their tax return, regardless of whether they prepare it or they have somebody else prepare it, because ultimately their name is the one signed at the bottom of the tax return, and they attest that the information on the return
YOU ARE THE ONE WHO WOULD BE HELD RESPONSIBLE IN THIS CASE. Payroll fraud is a serious problem that affects a significant number of people. DESCRIBE HOW IT HAS AN IMPACT ON THE EMPLOYEES WHO ARE AFFECTED BY THIS.
“Right, so the IRS, a lot of what people think is that when we investigate these crimes, the government is the victim, right? But the tax due and payable is not paid to the IRS. “Right, so the IRS, a lot of people think that when we investigate these crimes, it’s the victim that is the government.
But when it comes to payroll or employment taxes, the real victim is the government, and sometimes the employee can be the victim as well. Because if there is money that is withheld from your paycheck — and you will see this on either your W-2 or your payroll statement — that money has to be paid over to the Internal Revenue Service (IRS).
However, if the employer is not turning that over to the IRS, and then also in some instances we’ve seen of someone hiring a payroll company, and their job is to withhold that money and pay it over to the IRS — if that is not done, that not only affects the money that is owed to the IRS, but it also affects Social Security, because your Social Security, which you are ultimately going to get in retirement, is calculated based on what you pay into the IRS as federal withholding.
Consequently, Calculations for Social Security and Medicare could be impacted as a result. When something is withheld and not paid over to the employee, it is the employee who will experience the consequences immediately. In addition to the fact that this is money that is owed to the Internal Revenue Service, the employer or payroll business is utilising it too, you know, pad their own pockets.
Therefore, it is truly in the best interest of the employees to check themselves to make sure there is money in Social Security, myssa.gov, and to make sure that the Social Security Administration is calculating and accounting for their income.
AND THAT IS WHO THE EMPLOYEES ARE REQUIRED TO CONTACT IF THERE IS A PROBLEM, CORRECT? They have to get in touch with the Social Security Administration as soon as possible.
“That’s it, you got it. If they realise that maybe it was not withheld, or if they get any inkling that their employer is not doing the right thing by properly withholding and paying over, then their first step would be to check myssa.gov to see if their wages are being properly reported and calculated.
If they realise that maybe it was not withheld, or if they get any inkling that their employer is not doing the right thing by properly withholding and paying over, then they should check my
AMANDA, WHAT ARE THE CONSEQUENCES THAT ONE COULD FACE FOR ENGAGING IN ACTIVITIES SUCH AS THESE? THE FINES CAN BE QUITE STRICT AT TIMES.
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“Absolutely, yeah. There will always be fines and penalties due to the late payments if you do not pay over to the IRS.
Additionally, there is a fraud penalty that can be 25 per cent or more if you are not timely filing and paying over. If you do not pay over to the IRS, there will always be fines and penalties due to the late payments.
Therefore, this is something that creates a huge problem for employees as well as for small businesses that rely on somebody else to do their employment taxes. Additionally, this is something that affects both of these groups.
Because starting today, you will be subject to penalties and interest if you have not made timely contributions to the IRS.
After that, I would explain that we have a lot of examples of criminal investigations that we have conducted as well as cases that have been indicted for failing to pay your employment taxes.
People who have a pattern of not properly withholding taxes or paying over to the IRS for their business or for several businesses they are representing are subject to very harsh sentences, which can last for ten years or even longer.
Although the judge ultimately decides the length of the sentence, we have seen judges hand down sentences of this severity.
Therefore, this is unquestionably something that we place a high priority on… Employment taxes are the primary contributor to the massive shortfall in tax revenue that exists in the United States. This shortfall is measured in billions of dollars.