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Business Owner Sentenced to 46 Months in Prison and Ordered to Pay $5 Million in Restitution for Failing to Remit Payroll Taxes to the Treasury

Business Owner Sentenced to 46 Months in Prison and Ordered to Pay $5 Million in Restitution for Failing to Remit Payroll Taxes to the Treasury

A 57-year-old Pennsylvania man was recently sentenced to 46 months in prison and three years of supervised release, and was ordered to pay over $5 million in trust fund recovery penalties and interest. According to federal authorities, the owner of a Berks County farm collected federal income, social security, and Medicare taxes from the paychecks of his salaried mushroom growing facility employees between 2007 and 2012, but he failed to remit any of the money to the United States Treasury. The tax fraud case was prosecuted following a lengthy investigation performed by the Internal Revenue Service’s Small Business and Self-Employed Division. The man, who faced a sentence of up to five years in prison, is currently scheduled to begin serving his prison sentence in October.


The U.S. Internal Revenue Code requires employers across the nation to withhold certain so-called trust fund taxes from a worker’s paycheck. The taxes are referred to in this way because they are held in trust for an employee until the money is submitted to the U.S. Treasury. Under federal law, an employer or other individual who is tasked with collecting trust fund taxes may be held personally liable if they are not paid.


Whether or not someone is considered a responsible person under the Code requires a “totality of the circumstances test.” Normally, if someone has the authority to pay delinquent taxes, he or she will probably be considered a responsible person by the IRS. In addition, a responsible individual is normally deemed to have willfully failed to pay any required payroll taxes if he or she knew the taxes were not being paid or demonstrated a reckless disregard for the payment of the trust fund taxes owed by a business. As this case shows, a U.S. taxpayer can face both fines and criminal penalties for a willful failure to comply with the nation’s income tax laws.



The financial penalties for failing to abide by U.S. tax laws can be significant. Even worse, a taxpayer may face jail time in certain situations. If you were accused of committing tax fraud, you should have a skilled tax lawyer on your side to help you protect your legal rights. To discuss any questions you may have about your federal payroll or other U.S. tax obligations, please contact certified tax law specialist William Hartsock through his website. Mr. Hartsock has decades of experience representing and advising clients in San Diego and across Southern California about payroll, international, and other tax law matters. To speak with a dedicated tax law advocate, give Mr. Hartsock a call at (858) 481-4844 today.


Additional Resources:

Judge Gives Berks County Businessman 46 month Sentence for Tax Crimes, United States Attorney’s Office, Eastern District of Pennsylvania Press Release dated August 22, 2014



Photo Credit: larryfarr, MorgueFile

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