Embeezzlment $300,000 Payroll Taxes

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  • #45976
    Terrence Power
    Participant

    My client hired a bookkeeper who embezzled all the payroll taxes. I have never dealt with a case like this before and think it’s over my head and feel they need a tax attorney. Does G and S take cases like this or should I refer to a local tax attorney? And not only did she steal the money she destroyed the Quickbook files. Another bookkeeper has been trying to recreate the 941s but in my opinion she’s lost, it’s an almost impossible task. Or should I just contact the IRS and see what they want to do? The taxpayer has the money to pay the taxes. Thanks.

    #45977
    Ira Levine
    Participant

    For how long a period was this going on? If once the payroll tax returns are filed and paid, your client may have grounds for penalty abatement.

    I imagine your client will need an attorney to sue the bookkeeper.

    #45978
    Terrence Power
    Participant

    Thanks IRA. This occurred over a 4 year period from 2016 to 2019. The bookkeeper has been convicted and found guilty but remains free. She has no money.

    #45979
    Eric Green
    Keymaster

    Terry we have had these cases before. How extensive was the payroll that the client cannot reconstruct it?

    #45992
    Terrence Power
    Participant

    Eric, I’m not sure what you mean by “extensive”. It was a small company with less than a dozen employees.

    #45993
    Eric Green
    Keymaster

    Sop why can they not reconstruct the payroll? Its 12 people and the owner should know what they were paid. They also got W-2s. It may not be perfect but under the circumstances they should be able to get pretty close.

    #45994
    Terrence Power
    Participant

    They reconstructed the payroll as best as they could and prepared W2’s and W3’s. Am I correct that they should leave the company alive then to pay the taxes and request penalty and interest abatement? Are there any hot tips I should be aware of? Or pitfalls? Thx

    #45995
    Eric Green
    Keymaster

    Terry, assuming they want to keep the company, then yes do exactly that – pay everything but the penalties and apply for abatement using the guilty plea as the basis – client was a victim. If they dont want to keep the company around then shut it down and wait for the TFRP assessments and deal with those as always.

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