A Worcester, Massachusetts, jury found two men and a woman guilty of multiple tax crimes. The Internal Revenue Service and Justice Department worked together to convict the trio of multiple tax crimes based on fraud.
The charge stemmed from a payroll scheme in which the three paid employees with cash. The people also worked together to hide certain income and assets of employees as part of a so-called warehouse banking scheme. The three were also convicted because of taxes filed incorrectly in regard to their own income tax returns. One of the defendants received an additional conviction for tax evasion.
The central tax crime that the three committed was paying employees with cash and not withholding the payroll taxes that are required by law. They also promoted their plan to other employers as a way to avoid payroll taxes. The Justice Department estimates that 150 individuals were ultimately involved in the tax scheme and that over $2.5 million of wages were paid through the payroll scheme.
The defendants retained bank accounts at a number of financial institutions in an attempt to hide the source of the funds. According to evidence presented at trial, more than $28 million in deposits were entered into these banks. As a result of the conviction, a seven-year sentence has been handed down. One of the defendants has also been ordered to pay $3 million in restitution.
The IRS takes allegations of a tax crime very seriously. Tax courts can punish individuals who are found guilty of tax evasion or other tax crimes by sentencing them to time in prison, fining them large sums and imposing hefty fines and penalties on the defendants.
Source: Accounting Today, “Seven-Year Sentence in New England Tax-Fraud Case,” Jeff Stimpson, Sept. 10, 2012