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Appeals Court Holds Business Owner Criminally Liable for Payroll Taxes Even Though Taxpayer May Have Lacked Funds To Do So

The Ninth Circuit Court of Appeals upheld a taxpayer’s criminal liability for payroll taxes, holding that the government did not have to prove that the taxpayer had the ability to pay such taxes.  The taxpayer in this case managed nursing homes.  While it filed all of its income tax returns, it failed to pay the payroll taxes due in full.  After many attempts to collect, the IRS finally charged the taxpayer with willful failure to pay taxes.  The taxpayer argued that it could not be held criminally liable because it simply lacked the ability to pay.  However, the Court ruled that in order for the failure to pay the tax to be considered “willful” the taxpayer only had to voluntarily and intentionally neglect to pay the tax.  As a result, the taxpayer was held criminally liable.

Points of Interest

  • Most experts predict the credit crises will loom at least into the immediate future.
  • To achieve the ratios desired by finance professionals and bank personal, businesses must have higher incomes and carry more assets to gain access to credit.
  • With the right help and professional assistance, credit can be found and at the right price.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors