On April 5, 2018, Immigration and Customs Enforcement (ICE) – the federal agency tasked with investigating foreign nationals under the U.S. Department of Homeland Security – carried out one of the decade’s largest immigration raids, turning up evidence of nearly 100 undocumented workers at a Bean Station, Tennessee slaughterhouse. Working in conjunction with investigators from the Internal Revenue Service (IRS), federal prosecutors also filed charges against the slaughterhouse’s owner, James Brantley, who entered a plea agreement in August in U.S. District Court in response to charges of wire fraud and tax evasion. Brantley, who is expected to enter a formal plea in September, now risks years, potentially decades of prison time. This case should remind business owners that hiring undocumented workers is an incredibly dangerous practice virtually guaranteed to culminate in consequences far outweighing any perceived financial benefits.
ICE Raid Leads to Felony Tax Charges for Business Owner with Undocumented Workers
According to prosecutors, the defendant’s tax evasion scheme can be traced back as far as 1988: the year Brantley allegedly began to hire undocumented workers to kill, skin, and gut livestock at Bean Station’s Southeastern Provision meat-packing facility. Over the course of the two decades that followed, Brantley – who paid workers in cash without providing overtime compensation – allegedly cheated the federal government out of approximately $1.3 million in FICA taxes, or payroll taxes, which he failed to timely collect, remit, and match. This case bears similarities to that of Edward J. Tutunjian, a business owner long known as Boston’s “taxi king,” who was convicted of payroll tax fraud in 2016 after hiring undocumented workers who were paid in cash and denied overtime compensation. (You can read more about Tutunjian’s conviction and sentencing here.)
To carry out the scheme, Brantley falsely indicated on tax returns that many of his employees did not in fact exist. However, these claims were contradicted by the discovery of 97 undocumented workers during April’s raid.
Brantley committed three separate tax crimes: (1) failing to collect and remit federal payroll taxes (which include Social Security and Medicare taxes), in violation of 26 U.S. Code § 7202 (willful failure to collect or pay over tax); (2) failing to pay federal payroll taxes, as employers are generally required to make matching contributions; and (3) filing false tax returns by supplying inaccurate information about slaughterhouse employees, in violation of 26 U.S. Code § 7206 (fraud and false statements).
Though the defendant has agreed to enter a plea deal with prosecutors, Brantley’s legal fate remains uncertain, with the agreement cautioning that “no promises have been made… as to what the sentence will be in this case.” This caveat applies to most plea agreements, regardless of the underlying charges, due to the fact that judges – not prosecutors – ultimately have final say as to whether a given agreement will be accepted or rejected. Thus, while plea agreements have the potential to shield defendants from harsher sentencing, they should only be utilized with extreme caution by a skilled and experienced criminal tax defense attorney.
Brantley’s formal plea will not be entered until September 12. At sentencing, a date for which has yet to be scheduled, the defendant may be facing a prison sentence as long as 20 years for wire fraud charges and five years for tax evasion. Moreover, Brantley will likely be ordered to pay a hefty restitution order to the IRS, in addition to various fines and court fees.
Payroll Tax Audit Lawyers for Businesses in California
The IRS aggressively enforces compliance with federal payroll tax requirements, often working with state-level tax agencies like the California Employment Development Department (EDD) to obtain detailed information about business owners. If your business has been selected for a payroll tax audit – or if you are worried about an IRS criminal investigation – it is in your best interests to work with a knowledgeable tax evasion lawyer who will dedicate themselves to handling your case strategically.
At the Tax Law Office of David W. Klasing, our nationally recognized team of tax professionals has been representing business owners in tax audits for over 20 years and criminal tax cases for the last 8 years, making us eminently qualified to handle even the most complex of cases. For a reduced-rate consultation concerning an employment or payroll tax question, contact our tax firm online, or call (800) 681-1295. We work with corporations, LLCs, partnerships, and sole proprietorships in California and beyond.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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