SOURCE: Tax Resolution Institute

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March 10, 2010 17:00 ET

The Potential Price of Failing to Pay Payroll Taxes

Orange County Business Owners Imprisoned for Defrauding the Internal Revenue Service

LOS ANGELES, CA--(Marketwire - March 10, 2010) -  Why should business owners take the issue of unpaid payroll taxes so seriously? The consequences of willfully withholding payroll tax payments to the IRS can be severe. In the criminal case of married hair salon owners in Orange County, the criminal withholding of payroll taxes led to stiff prison sentences. In a recession economy, keeping up with payroll taxes can be a challenge for any business owner. But if such a challenge arises, the Tax Resolution Institute recommends it be addressed immediately.

Laguna Niguel residents John D. Pham and Anna A. Nguyen were more than your average married couple. Since 1985, they operated numerous hair salons under the Fantastic Sams franchise name in cities across Orange County. By failing to pay their payroll taxes and defrauding the Internal Revenue Service, the couple received stiff prison sentences.

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On October 1, 2009, Pham was sentenced to over three years in prison after pleading guilty to willfully failing to pay income and Social Security taxes withheld from the wages his employees. Although Pham and his wife had incorporated 10 companies from 1996 to 2004, all of which failed to pay payroll taxes, the main charge involved the employees of the Fantastic Sams franchises.

Anna A. Nguyen was sentenced to five months in prison after pleading guilty to conspiring with Pham to defraud the United States by preventing the IRS from collecting taxes owed. The couple's conspiracy added up to over $770,000 of payroll taxes that were never paid to the government. They diverted assets from the corporations they controlled for their own personal benefit. As a result, they will have to pay joint restitution in the future of over $620,000 to the IRS. When IRS auditors discover such cases of unpaid payroll taxes, they react with the utmost severity.

The Tax Resolution Institute recommends that business owners who are behind on their payroll tax payments understand clearly that the consequences can threaten not only the viable future of a business, but the business owner's freedom as well. Rather than allow for the IRS axe to fall, business owners with payroll tax problems need to take action and contact a tax professional.

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