It is an unfortunate reality that businesses often have cash flow problems. A common (and also unfortunate) approach that business owners take is to hold of on turning over to the IRS employment taxes. Most business owners know that they become personally liable for a Trust Fund Recovery Penalty (“TFRP”). Almost no business owner thinks that he/she could go to jail for it. A West Virginia business owner will do just that.
According to the DOJ press release (https://www.justice.gov/opa/pr/west-virginia-business-owner-pleads-guilty-failing-pay-employment-taxes):
According to documents and information provided to the court, from 2008 through 2012, Steve Lopez, 68, owned and operated Ready Transport Services (RTS), a transportation business that mainly provided taxi services. From 2009 through 2012 he also owned RTS Ice Cream, Coffee and Candy Shop. Both businesses were located in Montgomery, West Virginia. Lopez was responsible for collecting and paying over to the Internal Revenue Service (IRS) social security, Medicare, and income taxes withheld from his employees’ wages. He also was responsible for paying the employer’s share of his employees’ social security and Medicare taxes. Lopez admitted that he did not pay approximately $393,851 in employment taxes due to the IRS, including funds he withheld from his employees’ paychecks as well as money he owed as their employer.
Chief U.S. District Court Judge Thomas E. Johnston scheduled sentencing for March 14, 2018. Lopez faces a statutory maximum sentence of five years in prison as well as a period of supervised release, restitution, and monetary penalties.