The following is a news release from the Internal Revenue Service – Criminal Investigation Newark Field Office
OWNER OF TAX PREPARATION FIRM ADMITS FAILING TO PAY PAYROLL TAXES
The owner and operator of Tax John, Inc., a tax preparation firm with offices in Plainfield and Scotch Plains, New Jersey, pleaded guilty Nov. 14 to employment tax fraud.
John Armbrister, 57, a resident of Plainfield, New Jersey, entered his guilty plea in federal court before U.S. District Judge Katharine S. Hayden. Armbrister pleaded guilty to a one Count Information that charges him with failure to account for and pay over payroll taxes. Sentencing is scheduled for February 25, 2013.
“Business owners have a responsibility to withhold income taxes for their employees and remit those taxes to the Internal Revenue Service,” stated Shantelle P. Kitchen, Acting Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office. “The failure to withhold and pay over employment taxes is a very serious offense that will not be tolerated.”
At his plea hearing and according to court documents, Armbrister owned and operated Tax John, Inc., a tax preparation firm. Armbrister was an Enrolled Agent which permitted him to represent taxpayers before the IRS and he also taught tax preparation training classes.
Armbrister was responsible for collecting, accounting for and paying over payroll taxes for his employees. Armbrister was also responsible for filing with the IRS
Internal Revenue Service – Criminal Investigation Newark Field Office
Form 941, Employer’s Quarterly Federal Tax Returns, reflecting the employment taxes that Tax John, Inc., had withheld and paid to the Internal Revenue Service during that quarter. In addition, Armbrister was responsible for collecting, accounting for and paying over to the IRS withholdings from Tax John’s employees for federal unemployment taxes. Armbrister was also responsible for making and filing with the IRS yearly unemployment tax returns, Form 940, reflecting the unemployment taxes that Tax John, Inc., had withheld and paid to the IRS during the year.
During the years 2006, 2007 and 2008, Tax John, Inc. withheld employment taxes and unemployment taxes from the wages paid to its employees. However, Armbrister failed to timely file the required Forms 940 and 941, and failed to account for and pay over to the IRS the applicable employment taxes and unemployment taxes on behalf of Tax John, Inc. The amount of taxes Armbrister failed to remit to the IRS totaled approximately $79,230.
The charge of failing to account for and pay over payroll taxes carries a statutory maximum prison sentence of five years and a statutory maximum fine equal to the greatest of: (1) $250,000; (2) twice the gross amount of any pecuniary gain derived from the offense; or (3) twice the gross amount of any pecuniary loss sustained by any victims of the offense.
In determining an actual sentence, the sentencing judge will consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant's criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence.
Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.
The investigation was conducted by IRS-Criminal Investigation, Newark Field Office, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen and The United States Attorney’s Office, under the direction of United States Attorney Paul J. Fishman.
The Government is represented by Assistant United States Attorney Gurbir Grewal.