Business Owner Charged With Tax Fraud and Workers Compensation Evasion

One of the most fundamental aspects of the “American Dream” is the ability to create and grow a business from the ground up. Many entrepreneurs endeavor to be their own boss, make their own hours, and reap all of the rewards of business ownership. For many, small business ownership pays off and owners spend their lives growing and bettering what they have created. But some business owners are willing to cheat in order to get ahead and will disregard the responsibilities of small business ownership that are imposed by law.

According to reports by Southern California news outlets, the owners of a hotel housekeeping company have been charged with tax fraud and workers’ compensation evasion stemming from their failure to disclose the existence of over 800 employees around Southern California.

Melquiades Brizuela Jr., Manuel Rodriguez, Veronica Lucas Cuin, Aimee Sunmyung Kwon, Daniel Kwon and Hyun Bung Chae have ownership interests in Good-Neighbor Services, a cleaning business based in Irvine. News reports indicate that the company provided housekeeping services to several high-profile hotels and resorts in the Los Angeles, Orange County, and San Diego areas including the Hotel del Coronado, La Costa Resort and Spa, Four Seasons, Los Angeles Airport Hilton and various Ritz Carlton properties. The six defendants are accused of setting up sham entities in order to hide the existence of hundreds of employees in an attempt to avoid paying payroll taxes or withholding for workers’ compensation.

When a person or business employs an individual as an employee, they are required to pay a payroll tax based on the wages of the employee.  Additionally, state laws require that employers pay certain amounts to the state for workers’ compensation in the event that the employee becomes injured while on the job. According to prosecutors, the six defendants in this case kept the existence of many of their employees a secret in order to reduce payroll tax and state workers’ compensation costs. Finally, the defendants are accused of threatening employees that were injured while working with termination so that their scheme would not be uncovered when the employee filed a workers’ compensation claim.

Owning a business typically keeps owners very busy and there are times where tax and other laws can be inadvertently broken. It is much easier to fix the problem proactively before it escalates into a criminal prosecution. If you are a small business owner and have run into a tax or accounting situation with legal uncertainty, it is imperative that you consult with an experienced tax attorney and accountant. When the IRS, Department of Justice, or state taxing authority escalates a situation to the point of a criminal prosecution, there are likely many lost opportunities to mitigate or even eliminate the negative consequences of a tax investigation.

Contact an Experienced Employment Tax Attorney

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing business and individual taxpayers in a plethora of different tax situations. From examination, to an investigation, and even full-blown litigation, the staff at the Tax Law Offices of David W. Klasing is here to zealously advocate for your physical and financial freedom. Don’t go up against the IRS, Department of Justice, or state taxing authority alone. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.