Section 7202 of the Code makes it a felony for any person to willfully fail to collect and pay over payroll taxes to the IRS. Put simply, a taxpayer may be subject to jail time if the government merely proves that the taxpayer: (1) was responsible for paying over payroll taxes; and (2) willfully failed to do so.
In many cases, business owners have difficulties rebutting the government’s contention that they are responsible persons. Thus, the issue of whether the business owner was willful in his conduct becomes a crucial issue.
Late last year, the Department of Justice (DOJ) issued a press release regarding the criminal indictment of Mr. Thrush, a business owner in the State of Michigan. According to the press release and the allegations in the indictment, Mr. Thrush failed to pay $238,223 in payroll taxes over a two year period. Moreover, Mr. Thrush allegedly failed to file income tax returns for three years related to his business income. That case has proceeded towards trial. See U.S. v. Thrush, No. 1:20-cr-20365 (E.D. Mich.).