Des Moines has an odd “Beggars’ night” tradition of having “trick-or-treats” on the night before Halloween. That means it’s not too early for a spooky story.
Once upon a time, a man ran a payroll service in Ohio. Employers sent their money to the man thinking he was paying their payroll taxes. The man instead kept the money. From ToledoBlade.com:
Robert Sacco, the former PaySource owner accused of bilking the IRS of $26.7 million, pleaded guilty to federal felony charges before his trial was scheduled to start Monday.
Sacco pleaded guilty to conspiracy to defraud the United States by impeding the Internal Revenue Service, money laundering, and tax evasion. “This is one of the highest amounts of employment tax fraud we’ve ever seen,” said Craig Casserly, spokesman for IRS office in Columbus.
Sacco defrauded the IRS by withholding money from employees’ paychecks for taxes, then keeping the money instead of paying it to the IRS, according to Carter Stewart, U.S. Attorney for the Southern District of Ohio.
Why didn’t the employers use EFTPS, the Electronic Federal Tax Payment System, to monitor their payments on line? The man made sure they couldn’t:
Dayton-based PaySource employed 40 people. It was a co-employment company — meaning that it hired a client company’s employees, thus becoming their employer of record for tax and insurance purposes.
So the payments weren’t made under the real employers’ tax numbers, and there was no way for them to monitor it using EFTPS.
The moral? There are legitimate co-employment companies that have plenty of satisfied customers. The problem is that the format is also handy for thieves because it makes monitoring very difficult. If you are considering outsourcing to a co-employment payroll provider, it’s extremely important to do careful due diligence, and to re-do it regularly. Without EFTPS, you can’t directly verify their performance, so you have to use other ways to assure compliance. If your payroll provider doesn’t remit your taxes, the IRS will still expect you to pay them.
Brutal Assault on Reason Watch:
Howard Gleckman, What is Mitt Romney’s Tax Plan? (TaxVox)
Patrick Temple-West, Essential reading: Washington Post reports Obama administration looking at new tax cut, and more (Tax Break)
Linda Beale, Romney’s CRUT Tax Shelter
William Perez, New York Provides Tax Relief for Hurricane Sandy
Peter Reilly, Hurricane Sandy Tax Planning
Richard Morrison, Chart of the Day: The Increasing Burden on Older Taxpayers (Tax Policy Blog)
Missouri Tax Guy: Small Business Health Care Tax Credit, Do you Qualify?
Brian Strahle, Companies Operating in D.C. Should ACT NOW!!
Jack Townsend, Render Unto Caesar and the Offshore Initiative
Robert D. Flach offers THE WANDERING TAX PRO’S TOP TEN LIST
Paul Neiffer, What the Fiscal Cliff Means To You?
Jana Luttenegger, 2013 Inflation Adjustments (Davis Brown Tax Law Blog)
TaxDood, Lance Armstrong’s Race for Deductibility. No doping allowed.
In case you were worried: One Reason The NFL Will Never Permanently Relocate A Team To London: The U.K.’s Tax Treatment of Nonresident Athletes (Anthony Nitti)
Tags: Anthony Nitti, Beggars Night, Brian Strahle, Des Moines, Howard Gleckman, Jack Townsend, Jana Luttenegger, Kay Bell, Linda Beale, Missouri Tax Guy, Patrick Temple-West, Paul Neiffer, Peter Reilly, Richard Morrison, Robert D Flach, Russ Fox, Taxdood, William Perez