26 U.S.C. § 7202 – Willful Failure to Collect or Pay Over Tax
This statute criminalizes the willful failure to collect, account for, or pay over taxes owed to the United States, most commonly payroll taxes.
What this statute does.
Section 7202 applies to individuals who are legally responsible for collecting, accounting for, and paying over taxes—such as employment withholding taxes—and who willfully fail to do so.
This statute most often arises in cases involving:
- Unpaid payroll taxes (withheld income taxes)
- Unpaid Social Security and Medicare taxes (FICA)
- Trust fund taxes withheld from employees’ wages
Who can be charged.
Liability is not limited to the business entity. Prosecutors frequently target:
- Owners
- Officers
- Managing members
- Controllers or financial decision-makers
The key question is whether the person had authority and responsibility over tax collection and payment.
Required mental state.
The government must prove the failure was willful, meaning a voluntary and intentional violation of a known legal duty. Mere inability to pay, bookkeeping errors, or negligence are not enough on their own.
Penalties.
A conviction under § 7202 carries:
- Up to 5 years in federal prison
- Up to $10,000 in fines
- Payment of costs of prosecution
These criminal penalties are separate from civil tax assessments, penalties, and interest.
How it is used.
Section 7202 is commonly charged when withheld taxes were diverted for other purposes, such as operating expenses, payroll, or personal use.
If you are being investigated or charged under a federal tax statute, call (314) 900-HELP or contact our federal criminal defense attorneys to discuss your situation.
