Pyramiding (tax evasion)

Pyramiding is a practice in which an employer that withholds payroll taxes from its employees intentionally fails to remit those withholdings to the taxing authority. Businesses that engage in pyramiding often file for bankruptcy to discharge the tax liabilities and start anew under a new name and perpetuating the same scheme.[1][2] In the United States, employers may face federal as well as state criminal penalties for engaging in pyramiding.[3] Pyramiding is one of the more common forms of employment tax evasion.[4]

The term "pyramiding" refers to the accumulation of tax liability from each successive failure to remit payments.[5] Another term for a business that engages in pyramiding is an "in-business repeater".[6]

## References

1. ↑ "Employment Tax Evasion Schemes | Internal Revenue Service". 6 March 2019. https://www.irs.gov/compliance/criminal-investigation/employment-tax-evasion-schemes. Retrieved 25 March 2019.
2. ↑ Baer, Michael (24 April 2017). "IRS Fight Against Employment Tax Fraud Means Jail Time for Traditional Violators". Bloomberg Tax. https://www.bna.com/irs-fight-against-n57982087014/.
3. ↑ Salzman, Martha L.; Hibschweiler, Arlene M.; Tedesco, Michael J. (February 2018). "Employment tax penalties: Let's keep it civil". The Tax Adviser (New York, NY: American Institute of Certified Public Accountants). ISSN 0039-9957. https://www.thetaxadviser.com/issues/2018/feb/employment-tax-penalties.html.
4. ↑ Kehoe, Joseph; Matthews, Mark (June–July 2001). "Employment Taxes—Who Is Responsible?". Journal of Tax Practice & Procedure (CCH Group) 3 (3): 16. ISSN 1529-9279. https://heinonline.org/HOL/P?h=hein.journals/jtaxpp3&i=112. (Subscription content?)
5. ↑ "IRS Warns Businesses, Individuals to Watch for Questionable Employment Tax Practices" (PDF) (Press release). Washington, D.C.: Internal Revenue Service. 5 April 2004. p. 2\. IR-2004-47.
6. ↑ Grady, Terrence A. (October–November 2013). "The Criminalization of Payroll Tax Liabilities: Why This Harsh Direction?". Journal of Tax Practice & Procedure (CCH Group) 15 (5): 51. ISSN 1529-9279. https://heinonline.org/HOL/P?h=hein.journals/jtaxpp15&i=279. (Subscription content?)

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