According to a Department of Justice press release, Joseth “Joe” Limon of Harris County, Texas, pleaded guilty in the U.S. District Court for the Southern District of Texas to willfully failing to report and pay over the employment taxes his company withheld from workers’ paychecks. Limon owned Platinum Employment Group Inc., a labor-staffing company serving businesses in the greater Houston area. Prosecutors allege that, from 2013 through 2018, Platinum collected federal income tax, Social Security tax, and Medicare tax from its employees but never filed the required employment-tax returns or remitted the funds to the Internal Revenue Service. In all, Platinum shorted the Treasury by more than $8.8 million, money Congress earmarks to fund Social Security and Medicare, two cornerstones of the federal safety-net system. Limon now faces up to five years in prison when he returns for sentencing on Aug. 6, in addition to supervised release, restitution in the full loss amount, and substantial monetary penalties. If you or your business have fallen behind on payroll-tax obligations, or if you have been contacted by the IRS Criminal Investigation Division, it is imperative to consult an experienced tax attorney immediately to contain potential civil and criminal employment tax exposure.
Court records reveal that Platinum Employment Group operated as a classic “labor-leasing” firm: it hired laborers, placed them with client businesses, and issued paychecks to those workers. Under federal law, an employer must withhold the employee’s share of FICA (Social Security and Medicare) and federal income tax each pay period and hold those sums in trust for the United States until the next scheduled deposit date. These withheld amounts, known as “trust-fund taxes”, never belong to the employer. The company merely serves as custodian. Failing to turn them over is viewed by courts as stealing from both workers (who nonetheless receive credit toward future benefits) and the public fisc. When an employer willfully withholds but does not remit, the IRS may pursue the Trust Fund Recovery Penalty (under 26 U.S.C. § 6672) against any “responsible person” who had authority over the company’s finances and acted willfully. If the conduct is egregious, criminal prosecution under 26 U.S.C. § 7202 (“willful failure to collect or pay over tax”) becomes a possibility, as it did here.
Platinum’s non-compliance was not merely a bookkeeping oversight. From 2013 through 2018 the company filed no quarterly Forms 941. Internal payroll ledgers, however, showed clear, ongoing withholdings that should have been reported and deposited. By the time the IRS began investigating, the unpaid trust-fund component exceeded $8.8 million, not including the employer’s matching FICA liability, penalties, or accrued interest. Such a multi-year pattern of omission almost always signals intent, which prosecutors must prove beyond a reasonable doubt to sustain a § 7202 conviction. In practice, they rely on evidence that the business continued to pay other creditors, vendors, rent, owner salaries, while ignoring payroll-tax deposits. Courts routinely see this as “willful.”
Rather than rectify Platinum’s arrears, Limon closed the company and attempted to sidestep the growing liability by forming Rockwell Staffing LLC. Although the new entity performed the same labor-leasing function, he registered it in the name of his then-18-year-old daughter, hoping to obscure his ongoing control. When the IRS eventually assessed Rockwell’s unpaid employment taxes, Limon arranged for his daughter to submit an affidavit claiming Rockwell “had been a victim of identity theft” and bore no payroll-tax responsibility. That false statement exposed both father and daughter to potential criminal liability under federal law and demonstrated consciousness of guilt, powerful evidence in plea negotiations. The facade unraveled, and Limon ultimately admitted his role.
The maximum sentence for a single count of violating § 7202 is five years in prison, but sentencing guidelines weigh numerous factors, including the amount of loss, the duration of the scheme, acceptance of responsibility, and any obstruction. Courts also impose restitution equal to the tax loss plus interest and penalties, effectively restoring the Treasury and leaving the defendant liable for any shortfall. Given that trust-fund taxes are not dischargeable in bankruptcy, Limon’s financial exposure will likely persist well beyond any custodial term. Moreover, the IRS may still pursue civil Trust Fund Recovery Penalties against additional responsible parties at Platinum and Rockwell, including corporate officers, check signers, and financial-control personnel who acted willfully.
Takeaways for Employers
Quarterly filing is non-negotiable: Every employer must file Form 941 each quarter, even if no tax is due. Failure to file is itself a misdemeanor (§ 7203) and often the first red flag investigators notice.
Segregate Trust-Fund Monies
Best practice is to move withheld taxes into a dedicated account that is off-limits for operating expenses until deposits are transmitted electronically via EFTPS.
Document Reasonable Cause
If genuine cash-flow emergencies arise, contemporaneous records of efforts to obtain financing, defer other payments, or negotiate installment agreements can help demonstrate lack of willfulness.
Maintain Ethical Walls
Using nominees or relatives to conceal ownership rarely succeeds and typically leads to harsher penalties once uncovered.
If your company has missed payroll-tax deposits, filed late employment-tax returns, or received a notice of a trust-fund assessment, swift action is crucial. Voluntary disclosure, submission of delinquent returns, and prompt negotiation of an installment-payment agreement can dramatically reduce criminal employment tax-exposure risk. Waiting for the IRS to act limits available defenses and signals willfulness. Even where a criminal employment tax investigation has already begun, an experienced employment tax defense attorney can interface with IRS-CI and DOJ, present mitigating evidence, and negotiate plea terms that may minimize incarceration and financial penalties.
