On August 16, the federal government filed a lawsuit in federal court in Iowa which should serve as a stark reminder to all construction industry employers about withholding taxes.  The federal court lawsuit complaint against a Des Moines contractor and its owner alleged employment tax “pyramiding” in violation of federal law.  The complaint alleges that the construction company withheld taxes from the wages of employees but did not deposit that money with the federal government.  Rather, the construction company used the withheld money as working capital.  Moreover, the construction company did not pay any “employer match” on the withheld taxes, resulting in a “pyramiding” of unpaid employment taxes.  The filing of this lawsuit serves as a reminder to all construction industry employers that the federal government takes very seriously the obligation of employers to withhold employee taxes and make employer match payments on a regular basis.  The failure to do so is likely to result in very expensive federal court litigation which could have a very unhappy ending.                                 
                                                                By Bill Harding, Chapter Attorney