August 2, 2021

New Jersey Employer Sentenced to Prison on Employment Tax Charges

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In recent years, the Internal Revenue Service (IRS) has increasingly directed its attention and resources to enforcing employment tax compliance. As a result, a growing number of employers are facing civil penalties and/or criminal prosecution on employment tax charges.

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On June 3, 2021, the U.S. District Court of New Jersey added another employer to this growing list, sentencing Donato DiPasquale, the owner and operator of a New Jersey asphalt maintenance business, to: (1) serve one year and one day in prison; (2) serve three years on supervised release; and (3) pay restitution in the amount of $435,270.58 less the $307,404.79 already paid.¹

Employers are required to withhold taxes from their employees’ wages,² safeguarding the withheld amounts in trust for the government until such time the employer remits those taxes to the government at periodic intervals (generally via electronic deposits).³ Employers are expected to file IRS Form 941, Employer's Quarterly Federal Tax Returns, in order to reflect the employment taxes withheld and paid to the IRS each quarter.

In DiPasquale’s case, criminal investigators determined that “for tax years 2010 through 2015, DiPasquale failed to pay over approximately $435,270.58 in employment taxes.”⁴ The IRS specifically noted in its news release that for the 2015 third quarter, DiPasquale admitted to not filing Form 941, although he paid seven employees $112,446.51 in wages.⁵ Thus, according to the IRS, that tax year 2015 third quarter alone deprived the IRS of over $26,000.

Michael Montanez, Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office emphasized the heightened IRS scrutiny in cases involving employment tax compliance and clarified that DiPasquale’s:

sentencing is a reflection of just how serious the courts view these crimes and Mr. DiPasquale is now a convicted felon with prison time to serve.⁶

We urge our readers to remain informed and reach out to our tax professionals if you have any questions or concerns regarding your employment tax obligations.

Footnotes

  1. USA v. DiPasquale, U.S. District Court District of New Jersey, Criminal Docket #: 3:19-cr-00094
  2. IRC §§3102, 3402. This includes federal income taxes, Federal Insurance Contributions Act taxes, and Railroad Retirement Act taxes.
  3. IRC §7501(a).
  4. https://www.irs.gov/compliance/criminal-investigation/ocean-county-asphalt-company-owner-sentenced-to-prison-on-employment-tax-charges#:~:text=DiPasquale%20was%20also%20responsible%20for%20filing%20with%20the,2015%2C%20he%20failed%20to%20file%20a%20Form%20941.
  5. Id. According to the IRS, the tax year 2015 third quarter failures alone deprived the IRS of more than $26,000 in payroll taxes on behalf of DiPasquale’s employees.
  6. Id.
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