In the most recent of a run of publicized indictments, the Department of Justice announced that two Philadelphia men involved in running a temporary staffing service company had been charged with several counts of federal tax crimes.
The charges stem from information uncovered in a wide-ranging criminal tax investigation into staffing company kickback schemes that turned over indictments and convictions against three other business owners in the northeast region. This is better for the IRS, as multiple convictions are used to justify their use of funds and manpower on extensive and aggressive criminal tax investigation practices such as this.
For this reason, even if you are suspicious that someone you are connected to is the target of an IRS criminal tax investigation, it is vital to contact the Tax Law Offices of David W. Klasing as soon as possible by calling (800) 681-1295 or clicking here to schedule a reduced rate initial consultation.
Defendants Allegedly Failed to Pay Over $3 Million in Employment Tax, Made $400,000 Bribe
Two Philadelphia men have been federally charged with tax evasion and bribery crimes tied to a temporary staffing company that they operated.
The U.S. Attorney’s Office for the Middle District of Pennsylvania announced that Den Lam, 48, and Danny Sing, 59, both of Philadelphia, were criminally charged for various federal tax offenses and commercial bribery.
Alleged Evasion Scheme
Authorities allege that Lam conspired with other individuals to evade federal income taxes for approximately $1.6 million in wages paid by Global Staffing Services, Inc.
Global Staffing was a temporary staffing company that Lam, Sing, and their co-conspirators owned and operated. Global Staffing leased temporary employees to a manufacturing business in northeastern Pennsylvania.
Lam also was charged with failing to withhold and remit approximately $1.36 million in federal employment taxes owed, but never paid, by Global Staffing to the IRS, authorities said.
Lam and Sing allegedly paid Global Staffing employees in cash, paid themselves in cash, and cashed all checks received from Global Staffing’s client to conceal the income and wages from the IRS, authorities said. Authorities said the majority of the illicit activity occurred during the taxable years between 2013 and 2020.
Sing also was charged with allegedly providing in excess of approximately $400,000 in bribes and kickbacks to managers and supervisors at Global Staffing’s client to obtain business for Global Staffing.
Other Co-Conspirators
Three other individuals were previously charged for their involvement in similar schemes that were uncovered in the course of the same IRS-CI investigation.
Mark Holmes, age 66, of Hughes Springs, Texas, pleaded guilty to failing to remit approximately $135,000 in employment taxes to the IRS that were owed by Encore. Holmes also pleaded guilty to accepting, as the General Manager of a Pennsylvania food services company, approximately $400,000 in bribes and kickbacks from two temporary staffing companies. One of the staffing companies was Penns Independent Staffing, which offered kickbacks in exchange for hiring their employees. The two temporary staffing companies, in turn, received approximately $7,800,000 from Holmes’s employer. Holmes awaits sentencing.
Nari Lam, age 29, of Wilmington, Delaware, pleaded guilty to failing to remit employment taxes to the IRS. From 2016 through 2020, Nari Lam, the owner of Penns Independent Staffing, failed to pay approximately $300,000 in employment taxes owed by Penns Independent Staffing to the IRS. Nari Lam awaits sentencing.
Madeline Nieves, age 48, of Plains, Pennsylvania, was indicted by a federal grand jury on tax fraud and conspiracy offenses. Nieves allegedly conspired with other individuals to defraud the IRS between 2018 and 2020 in connection with another temporary staffing company, Encore Staffing Solutions LLC, that she and her coconspirators owned and operated. Encore leased temporary employees to manufacturing businesses throughout Pennsylvania. Nieves also was charged with failing to report Encore employee wages to the IRS, resulting in approximately $67,000 in unpaid employment taxes by Encore. Nieves further was charged with three counts of tax evasion for failing to report her own personal income from Encore. Nieves also awaits trial.
Charges and Potential Sentencing
Lam and Sing were each charged through criminal information’s. A criminal information is similar to a criminal indictment, but it does not require the sign-off of a grand jury. Instead, a lone judge may consider the evidence to determine whether the charges are warranted.
The maximum penalty under federal law for each tax offense is five years of imprisonment, a term of supervised release following imprisonment, and a fine. The maximum penalty under federal law for the commercial bribery offense is 20 years of imprisonment, a term of supervised release following imprisonment, and a fine. The consequences may also include ordered restitution payments to the IRS for the concealed tax debt resulting from the alleged evasion.
IRS Investigations Are More Common and Invasive than Ever Before
Because the current administration has invested so heavily in the IRS’ investigations department, the agency is responsible for making a return on that investment. The only way to do this is to ensure that every action that they take returns at least one conviction.
This is why investigations like these often return charges against more than one defendant. Even if someone is not the initial target of the investigation, IRS agents will attempt to collect potentially harmful evidence against everyone within the scope of their focus, whether they actually did anything wrong or not.
Criminal tax charges are serious, so knowing how to handle yourself in the event of an IRS audit or criminal tax investigation is vital to saving yourself money, time, and damage to your personal reputation. If you suspect that you may be involved in a federal tax investigation, reach out to a Dual Licensed Criminal Tax Defense Attorney and CPA for help as soon as possible.
Call the Tax Law Offices of David W. Klasing Today for Help with Your Tax Issues
If you are facing an audit, criminal tax investigation, or criminal tax charges, the time to act is now. Schedule a reduced-rate case evaluation with our Dual Licensed Criminal Tax Defense Lawyers and CPAs by calling the Tax Law Offices of David W. Klasing at (800) 681-1295.
Businesses with Cash Payrolls Are a Target for the IRS
When you think of the IRS, you may commonly associate the agency with their efforts against large corporations and their executives. However, the reality is that the majority of the IRS’ criminal investigative and prosecutorial efforts each year are focused on small businesses and their owners. This is even more common for small businesses that frequently deal in cash, especially when using cash to meet payroll obligations.
This affects more than just bad actors. The government is naturally curious about businesses that operate in cash because they believe these entities are more susceptible to mistakes, if not outright fraud. This means that a small business that is operating fully within the federal tax code may still feel the heat from the federal government just because of how they conduct their day-to-day business.
Even if you haven’t done anything wrong, a federal audit can be a trying, costly, and damaging process. The best way to deal with the possibility of an audit is to prepare beforehand by ensuring that you have a thorough and reliable record-keeping system. If you have made mistakes in the past, you may have the ability to rectify them if you act now, thereby avoiding provoking the IRS and landing yourself in serious trouble.
As long as a taxpayer that has willfully committed tax crimes (potentially including paying employees or independent contractors in cash without issuing W2’s or 1099’s) self-reports the tax fraud through a domestic voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
Our Dual Licensed Tax Attorneys and CPAs Can Help Your Small Business Avoid an Audit
If you have concerns about IRS action against you or your small business, reach out to the dedicated Dual Licensed Tax Lawyers and CPAs at the Tax Law Offices of David W. Klasing. Call us today to find out more at (800) 681-1295.
Questions about delinquent payroll taxes and trust fund recovery penalty
- What happens if an employer continues to incur new payroll tax liabilities?
- California Employment Taxes Basics
- How Does the IRS Develop an Employment Tax Fraud Case from the First Indication of Fraud to a Criminal Indictment?
- Can more than one person be considered responsible by IRS
- How unpaid employment tax payments are allocated
- When a corporate officer is considered a responsible party
- Examples of trust fund recovery penalty determinations
- Failing to pay employment taxes after notice is given
- How to determine responsible person for trust fund recovery
- Assessing trust fund recovery penalty and option to appeal
- What is the trust fund recovery penalty?
- What are the penalties for failure to pay employment taxes
