A Colorado businessman has been sentenced to 15 months of imprisonment for evading payment of over $700,000 in employment taxes. This judgment sends out a stern message to small business owners about the dire consequences of tax evasion, a practice that ultimately undermines the integrity of the economy.
From Bow Mar, Colorado, Frank Stevens has found himself on the wrong side of the law. He co-owned multiple businesses, including restaurants and an oil production firm. These establishments employed numerous individuals from whom Stevens withheld income and Social Security and Medicare taxes.
According to court documents and courtroom statements, this evasion began as early as 2002, spanning many subsequent years. Stevens systematically failed to forward the withheld payroll taxes to the IRS or file the necessary quarterly employment tax returns for his businesses. Following unsuccessful collection attempts from the businesses, the IRS assessed the tax against Stevens personally.
To stave off the IRS’s collection efforts through bank levies, Stevens strategically maintained low balances in his personal and business bank accounts, often reducing them to just $0.01. He also transferred funds or directed employees to transfer just enough to cover expenses, moving any leftover money to an account not subject to IRS levy. These maneuvers led to an estimated tax loss of about $737,128.
In addition to his prison sentence, U.S. District Judge Daniel D. Domenico ruled that Stevens must also serve three years of supervised release. Furthermore, Stevens has been ordered to pay a $10,000 fine and $1,096,138.14 in restitution to the United States.
The announcement came from Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. The IRS-Criminal Investigation team scrutinized the case and prosecuted by Tax Division Trial Attorneys Peter Anthony and Julia Rugg.
This incident provides a crucial lesson for small business owners. Compliance with tax obligations is not optional, and evading such duties can lead to severe consequences. The evasion of employment taxes not only defrauds the government but also unfairly burdens employees who rely on social safety nets like Social Security and Medicare.
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Small business owners must understand that while managing taxes can be challenging, they are a legal obligation. There are numerous resources available to assist businesses with tax compliance, including tax professionals, the IRS Small Business and Self-Employed Tax Center, and various software tools. As this case demonstrates, ignoring these obligations can lead to prison terms, heavy fines, and a damaged reputation that can critically harm a business’s future viability.
In conclusion, the conviction of Frank Stevens serves as a potent reminder to all business owners of the importance of tax compliance. It’s a sobering example that the risks of tax evasion far outweigh any perceived short-term benefits. Small businesses are the backbone of our economy, and their ethical and financial compliance is vital for the health and integrity of the whole economic system.
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