Kansas Construction Business Owner Admits to Multimillion-Dollar Employment Tax Fraud

A Kansas construction business owner has pleaded guilty to an employment tax scheme that failed to pay the IRS over $2.2 million in due taxes.

Sheryl Clanton, from Bucyrus, Kansas, who owned and managed multiple construction firms, admitted in court to her deliberate neglect in accounting for and paying employment taxes to the IRS.

McCorkendale Construction Inc., specializing in the construction and upkeep of underground infrastructure, was under Clanton’s leadership from 2006 to 2011. As president, she bore the responsibility of filing periodic employment tax returns and ensuring the collection and payment of federal income, alongside Social Security and Medicare taxes, subtracted from her employees’ wages. Yet, from the initial quarter of 2010 till the end of 2011, the IRS went unpaid to the tune of approximately $980,536 in employment taxes.

In a seemingly evasive move in 2011, amidst looming tax obligations and an impending bank mortgage foreclosure, Clanton shut down McCorkendale. In its stead, she initiated McClan Construction LLC. From mid-2012 through to the end of 2017, Clanton evaded payment of around $1.1 million in employment taxes. Moreover, she failed to file the mandatory quarterly payroll tax returns.

Furthermore, Clanton established NJ Trenching LLC, another underground construction entity, towards the end of 2011. Over the subsequent three years, her failure to report or remit led to an unpaid tax sum nearing $100,000 for this firm.

All of these actions culminated in a substantial tax deficit exceeding $2.2 million to the IRS.

The implications of Clanton’s actions go beyond her enterprises. Small business owners should note the gravity of tax obligations and the severe consequences that can ensue from neglecting them. As Clanton’s case vividly illustrates, the repercussions of such evasion are far-reaching and can severely disrupt the trajectory of one’s business and personal life.

Sentencing for Clanton is slated for December 14. The potential repercussions she faces include a prison term of up to five years. Alongside incarceration, she may also be subject to a supervised release period, restitution, and additional financial penalties. The final decision on the sentence lies in the hands of a federal district court judge, who will weigh it in light of the U.S. Sentencing Guidelines and relevant statutory factors.

Clanton’s plea was announced by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

IRS-Criminal Investigation is currently probing deeper into the case. Trial Attorneys Robert Kemins and Dominick Giovanniello of the Justice Department’s Tax Division are in charge of the prosecution. Small business owners should be vigilant and ensure that they maintain clarity and transparency in their tax dealings to prevent such grave legal repercussions.

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Gabrielle Pickard-Whitehead Gabrielle Pickard-Whitehead is a staff writer for Small Business Trends and has been a member of the team for 7 years. She is based in the United Kingdom and since 2006, Gabrielle has been writing articles, blogs and news pieces for a diverse range of publications and sites. You can read "Gabrielle’s blog here.".