Software Developer’s Payroll Tax Scheme Had a Glitch Which Landed Him in Jail
We have been advising that the IRS is criminally prosecuting taxpayers for failing to pay withholding taxes since October 29, 2019 when we posted The IRS is Now Criminally Prosecuting Employers For Failure To Pay Withheld Payroll Taxes! where we discussed that the IRS is stepping up criminally prosecuting business owners for failing to turn over withheld payroll taxes.
The latest criminal prosecution, according to DoJ, is of a Michigan
business owner who was sentenced to 12 months and one day in prison for
failing to collect and pay over to the IRS employment taxes withheld from his
employees’ wages on March 15, 2023.
According
to court documents and statements made in court, Yigal Ziv of West Bloomfield
owned and operated Multinational Technologies, Inc. (MTI), a software
development firm based in Walled Lake.
Ziv was responsible for filing MTI’s
quarterly employment tax returns and collecting and paying to the IRS payroll
taxes withheld from employees’ wages.
From the first quarter of 2014 through
the first quarter of 2018, Ziv collected approximately $691,000 in employment
taxes from MTI’s employees, but did not file employment tax returns or pay the
withheld taxes to the IRS. Even after learning of the IRS’s ongoing criminal
investigation in May 2018, Ziv did not file MTI’s employment tax returns from
the fourth quarter of 2019 through the fourth quarter of 2020 and did not pay
the IRS approximately $199,000 in payroll taxes withheld from MTI’s employees.
During that same period, Ziv directed MTI to spend hundreds of thousands of
dollars for his personal benefit, including home mortgage payments, luxury auto
lease payments and department store purchases. In total, Ziv caused a tax
loss to the IRS of $1,169,000.
In
addition to the term of imprisonment, U.S. District Judge David M. Lawson for
the Eastern District of Michigan ordered Ziv to serve one year of supervised
release and to pay a $5,000 fine and $897,271.80 in restitution to the United States.
Thinking of Borrowing From Your Company’s
Payroll Tax Withholdings?
Have Payroll Tax Problems?
Contact the Tax Lawyers at
Marini & Associates, P.A.
