NATIONALLY RECOGNIZED FEDERAL LAWYERS
How long for not paying payroll taxes?
|Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek, with over 40 years of combined experience handling federal criminal cases. You’ve probably heard about some of our cases – Anna Delvey’s Netflix series, the Ghislaine Maxwell juror misconduct case, defending against allegations in the Alec Baldwin stalking case. If you’re reading this article, you’re worried about criminal exposure for unpaid payroll taxes.
The short answer – you’re looking at a maximum of five years in federal prison under 26 USC 7202 for willfully failing to pay over employment taxes. Actual sentences in recent 2024-2025 cases range from one year to 50 months, depending on the tax loss amount, whether you cooperated, and aggravating factors. This article breaks down what really determines prison time for payroll tax crimes.
Recent Cases Show the Real Range
Federal law sets a maximum of five years and a $10,000 fine under 26 USC 7202. But nobody gets sentenced based on maximums – judges use the United States Sentencing Guidelines, which calculate sentences based primarily on tax loss.
In September 2024, Massachusetts businessman Det Tran got one year and a day for not paying $2.5 million in employment taxes. He paid workers $8 million in cash off the books and filed false quarterly returns. Compare that to an Oregon payroll services CEO who got 27 months in January 2024 for failing to pay $22.6 million. Or Matthew Brown in Florida – sentenced to 50 months in 2025 for $20 million in unremitted payroll taxes.
Yigal Ziv in Michigan got a year and a day for approximately $691,000 he withheld from employees but kept for personal use. Gary Sandiego, a tax preparer, got 16 months in October 2024 for causing $2.9 million in tax loss. The pattern is clear – tax loss drives the calculation, but cooperation and acceptance of responsibility create huge variations in actual sentences.
How Tax Loss Determines Your Sentence
The sentencing guidelines use tax loss to set your Base Offense Level. Small losses under $6,500 start at Level 6 – typically probation for first offenders. Tax loss between $95,000 and $150,000 puts you at Level 14, around 15-21 months. Once you hit $1.5 million, you’re at Level 20 looking at 33-41 months. At $20 million like the Brown case, you’re at Level 26 with 41-51 months for someone with no criminal history.
These guidelines became advisory after United States v. Booker in 2005, but judges still use them as the starting point. According to the United States Sentencing Commission, the average sentence for tax fraud was 15 months in 2024.
What Pushes Sentences Higher
Aggravating factors add levels to your Base Offense Level. Sophisticated means – hiding money offshore, using shell companies, systematic falsification – typically adds two levels. That might increase your range from 15-21 months to 21-27 months.
Abuse of trust matters enormously in employment tax cases. When you withhold taxes from employees’ paychecks and pocket that money, you’re violating a fiduciary duty. Those are trust fund taxes – money that never belonged to you. Federal judges view this worse than underpaying your own taxes, which is why employment tax cases often mean prison even for first offenders.
Criminal history increases your sentencing range through six Criminal History Categories. Your acceptance of responsibility is probably the most valuable reduction – plead guilty early, cooperate, don’t minimize your conduct, and you get a three-level reduction that typically cuts your range by 25-40%.
When IRS Brings Criminal Charges
Not everyone who fails to pay employment taxes faces criminal prosecution. The IRS Criminal Investigation division initiated over 2,300 investigations in 2024, but tens of thousands of businesses are behind on payroll taxes. Criminal charges require willfulness – you must know you’re required to pay and voluntarily, intentionally violate that duty.
A struggling business owner who falls behind during tough times has a different profile than someone running a systematic scheme. Recent trends show prosecutors targeting repeat offenders, large amounts (typically over $100,000), sophisticated schemes with false documents, and COVID-19 related fraud like bogus Employee Retention Credit claims. The Department of Justice Tax Division has actively prosecuted employment tax crimes throughout 2025.
The IRS pursues civil penalties aggressively even without criminal charges. The Trust Fund Recovery Penalty under 26 USC 6672 goes after responsible persons individually – if you had authority to pay the taxes and willfully didn’t, you’re personally liable even if it was a corporate obligation. But civil liability doesn’t mean criminal prosecution. Most cases stay civil unless there’s willful, prolonged, substantial fraud.
What to Do If You’re Facing Criminal Exposure
If IRS Criminal Investigation contacts you, get experienced federal defense counsel immediately. Do not talk to agents without your attorney – anything you say builds their case, and you won’t talk your way out of charges.
Early cooperation matters enormously. An experienced attorney can negotiate with prosecutors before charges are filed – sometimes keeping the matter civil rather than criminal. Once charges are filed, your attorney needs to understand sentencing guidelines to argue for departures and variances. Substantial assistance through cooperation can get you below the guideline range, sometimes substantially below.
At Spodek Law Group – we handle federal criminal tax cases with the same intensity we brought to Anna Delvey’s trial. These cases require attorneys who understand both tax law and federal sentencing, who can calculate guideline ranges and argue for departures. We’ve represented clients in complex federal cases for over 40 years, including a businessman facing a $12 million Ponzi scheme where we secured only six months despite massive fraud allegations.
Your best negotiating position is early in the process – before prosecutors invest months building their case. We’re available 24/7 because federal investigations don’t follow business hours. Prison time for payroll tax crimes typically ranges from one year to four years based on recent cases, but outcomes vary enormously based on how the case is handled from the beginning.