All too often business owners find all that money they have withheld from employees’ paychecks much too tempting. Instead of paying it to the IRS, as they are obligated, they keep it, and use it for other things, like the electric bill, or a supplier whose supplies are necessary for the business to stay in business. Other people’s money used for things for which it was not supposed to be used. This can lead to problems. For example:
A Wisconsin man was sentenced to 15 months in prison for failing to report and deposit federal payroll taxes.
Jeffrey Grams, 43, of Edgerton, Wis., pleaded guilty to the charge. After his prison sentence, he will be on supervised release for three years.
According to court records, Grams was the sole owner of Rock River Concrete and managing partner of Braton Property Group, both located in Edgerton, Wisc. He had corporate responsibility to collect, account for, and pay over payroll taxes for these corporations.
From 2007 to 2009, Grams collected federal income taxes and Medicare and social security taxes from his employees’ paychecks, but made no payments to the IRS for the withheld taxes.
In total, Grams collected more than $265,000 from his employees in payroll taxes that he did not turn over to the IRS.