September 27, 2016
San Antonio Doctor Facing Prison for Payroll Tax Nonpayment
A San Antonio physician and surgeon is facing 41 months in federal prison after conviction on a complicated scheme to defraud the Internal Revenue Service (IRS) of quarterly payroll tax payments. The financial maneuvers employed by Dr. Anthony Sertich spanned several years, and involved, among other things, numerous personal and business bankruptcy filings (on behalf of his two offices, Advanced Artistic Facial Plastic Surgery of Texas and South Texas Otorhinolaryngology) to take advantage of automatic stays to prevent tax collection.
Criminal court filings reveal that Sertich failed to pay almost $300,000 in collected payroll taxes on behalf of employees between 2002 and 2010, instead using that money for his own personal expenses, including the mortgage on his home and alimony payments to a former wife. The withheld taxes that he failed to pass along to the IRS have since accrued more than $2.6 million in penalties and interest; as part of his sentence, Sertich is required to pay nearly $3 million in restitution to the IRS.
“Trust fund tax” recovery
Payroll taxes are called “trust fund” taxes because the employer is supposed to hold them in trust until they are paid over to the IRS. If the taxes are inadvertently or mistakenly not paid, then the IRS may not choose to impose an additional penalty (above and beyond the payment of interest on the past due amounts); if the failure to pay is willful, however, then a penalty equal to the amount of unpaid taxes may also be incurred.
The IRS has the burden of proving that the person responsible for a corporation/company’s failure to pay payroll taxes can be personally liable for willful failure to pay. Once that is done, however, in order to remove the penalty, the burden shifts to the person held liable to disprove either that the failure was willful or that he or she is in fact the responsible party.
The IRS is aggressive in collection efforts and will not hesitate to move forward with criminal prosecution against business owners and executives it deems responsible for non-payment of payroll taxes. If you are facing IRS collection, audit or tax crime allegations because of payroll taxes or another issue, contact an experienced tax attorney today.