A 10-month long investigation culminated in 11 felony charges that included wage theft and tax fraud. Allegedly, the construction company failed to pay their taxes. They also apparently failed to pay workers' compensation insurance premiums.
The investigation uncovered the company was withholding wages from employees, but not using them to make insurance payments. In a multi-agency initiative the U.S. Department of Labor worked with the California Department of Industrial Relations and the state District Attorney's Office.
The East Bay Times reports that the San Francisco Bay area firm was accused of owing more than one million dollars in back taxes. This is in addition to back wages and unpaid workers' compensation premiums. An aggravated white-collar enhancement could add even more jail time to their sentence.
The allegations have had broad consequences and the company had since lost its state contracting license.
While this story is related to a company located in California, it provides a warning. The IRS and DOL are devoting more resources to wage theft and the failure to pay proper employment taxes.
Whether an investigation into your business practices starts with a state or federal agency it could have tax implications. Federal criminal tax charges not only involve steep monetary penalties, but often prison sentences.
Involving a tax attorney early may be one way to prevent an indictment. It may be possible to negotiate a settlement with the IRS to address the back taxes. If charges have already been filed, an experienced tax attorney can still help protect your rights and build the strongest possible defense.