Interesting Tax Court case for officer / shareholder / employees

If the client can't make a timely 941 deposit, maybe he shouldn't claim credit for the withheld income tax.  (Note that this case was extremely egregious.)

Mark W. May and Cynthia R. May v. Commissioner.
http://www.ustaxcourt.gov/InOpHistoric/MAY.TC.WPD.pdf

Husband was a corporate officer (and employee, and shareholder), and
failed to have the corporation pay in the federal & state income tax
withholding from his (or any other employee's) wages.  But when he
filed his 1040, he claimed credit for all the withholding shown on his
W-2, and deducted as state income taxes the state withholding shown on
his W-2.

He ended up with a tax evasion conviction, and a fraud penalty.  "Even
though he was technically subject to tax withholding, we believe Mr.
May is more analogous to a person filing a completely falsified Form
W-2, given his knowledge and participation in failing to remit the
withholdings."

Answer

2 people found this helpful

Wow....I just quickly scanned the ruling. 

I was under the impression that Paychex took the net payroll AND the tax deposit  immediately from the company checking account. - but this indicates that isn't the case.  

 

Was this answer helpful? Yes No
Original
abctax55 , ROLL Tide ROLL
AllStar
1 additional answer

No answers have been posted

More Actions

People come to Accountants Community for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach: