Earlier this month, the owner of a Houston-based staffing agency was sentenced to three years in prison after pleading guilty for failing to pay employment taxes related to his business.
The prosecution had argued that, from 2008 to 2012, Richard Floyd Tatum withheld roughly $12 million in payroll taxes from some 1,000 employees, opting instead to spend the money on upgrades to his ranch and indulge in travel expenses, rather than pay the Internal Revenue Service (IRS). He was also accused of filing false, delinquent tax returns for his company several times, including 2008, 2009 and 2013.
Officials with United States Department of Justice (DOJ) also presented evidence that Tatum, in addition to withholding the $12 million in payroll taxes, also neglected to pay more than $6 million in taxes owed for his employees’ Medicare and Social Security.
In addition to serving a three-year prison sentence, the court also ordered Tatum to make more than $18 million in restitution payments to the IRS.
Understanding Tax Liability
Tatum’s case serves as a strong example of the importance of understanding tax liability and the consequences for failing to honor tax obligations. Tax liability refers to the financial amount legally owed to a taxing authority, like state, local or federal government, for a taxable event.
Most financial activities qualify as taxable events, including:
- Earning taxable income
- Receiving or issuing payroll
- Interest or dividends
- Creation of capital gains (like selling assets to turn a profit)
- Withdrawing money from retirement plans
- Defaulting on a mortgage
Penalties for Failing to Honor Tax Obligations
It’s important to note that such taxes are legally binding and that taxing authorities have the power to utilize several legal options in order to enforce these payments.
Taxes serve an integral role in maintaining government and ruling systems in the United States, so those who fail to honor tax obligations face several potential penalties, including:
- Liquidation of assets
- Jail time, which varies depending on the severity of the offense
As a result, many individuals and corporate entities attempt to minimize their tax liability on a year-to-year basis. Generally, this is achieved through tax shelters, tax credits or donations.
Tax Litigation Firm in Texas
The important thing to remember in any tax case is that you must act quickly in order to avoid having wages, bank accounts and personal property, including your home, levied. That’s why, if you have received a notice from the IRS, or if you believe you have violated the U.S. Tax Code, it is important to retain legal representation as soon as possible.
In Texas, Scammahorn Law Firm, P.C. has a team of subject matter experts available to represent clients dealing with a wide range of IRS and tax-related issues. From our successful track record to our highly skilled team of attorneys, our firm’s expertise in this legal arena is unparalleled.
No matter what your tax-related issue is, our firm is committed to helping you build the strongest case possible. To discuss your legal options with one of our attorneys, contact Scammahorn Law Firm, P.C. at (903) 595-1000.