Robert Kohnle, the head of an Oregon-based payroll services company, pleaded guilty to deliberately neglecting to remit over $24 million in payroll taxes due to the Internal Revenue Service (IRS).
Kohnle, hailing from Lake Oswego, operated as the president, secretary, and chief executive officer of Real Benefits Group Inc., which did business as Aliat. Aliat, classified as a professional employer organization, had a core mandate to provide payroll and related services for its assortment of clients. Per its service agreements, Aliat held the responsibility of obtaining payroll taxes subtracted from its clients’ employees’ salaries. This included crucial federal deductions such as federal income tax and contributions to Social Security and Medicare. Subsequently, these amassed payroll taxes were meant to be dispatched to the IRS.
However, in a glaring violation of the stipulated protocols, from the latter part of 2016 all the way through to the end of 2022, Kohnle deviated from these agreements. Despite collecting payroll withholdings from his clients, he circumvented the process and failed to transfer these sums to the IRS. Instead, in a worrying misuse of funds, Kohnle channeled this money to settle various other liabilities and creditors linked to Aliat, including personal withdrawals. The total tax deficit incurred by the IRS due to Kohnle’s maneuvers stands at a staggering $24,816,602.
This case sheds light on the importance of diligence and oversight for small business owners, especially those who entrust third-party organizations with handling their payroll services. Outsourcing crucial business functions, such as payroll processing, demands high trust. However, as exemplified by the Aliat case, gaps in adherence to fiduciary responsibilities can have dire consequences. This incident underscores the need for businesses, particularly smaller enterprises, to regularly review and validate the operations of any external partners handling monetary transactions or tax-related duties.
The legal repercussions for Kohnle are severe. His sentencing hearing is slated for January 8, 2024, where he might face a prison term extending up to five years. Additionally, Kohnle’s consequences could include supervised release, the obligation of restitution, and the imposition of monetary penalties. The U.S. Sentencing Guidelines, in conjunction with other pivotal statutory factors, will guide the federal district court judge’s final decision regarding Kohnle’s sentence.
The revelation of this tax evasion scheme was jointly announced by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Natalie K. Wight representing the District of Oregon. The IRS-Criminal Investigation unit will probe the intricacies of the case.
Justice Department’s Tax Division’s Trial Attorneys, Patrick Burns and Regina Jeon, are spearheading the prosecution of this high-profile case.
For small businesses across Oregon and beyond, this serves as a potent reminder about the necessity of monitoring and accountability when it comes to tax obligations and affiliations with third-party service providers.
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