Consistent with its ongoing employment tax enforcement efforts, the Justice Department recently announced developments in two cases involving the failure to properly withhold and remit federal employment taxes from employee wages.
On April 25, the Justice Department announced that Kae Wook Lee, the sole owner and CEO of Mona Lisa 7 Corporation, was sentenced to twelve months and one day in prison for failing to collect and remit federal employment taxes related to his operation of a karaoke bar in Queens, New York. The Justice Department’s press release states that Lee manipulated receipts from operations and paid employees in cash without collecting, accounting for, or remitting employment taxes to the IRS. The press release also states that he concealed the cash payroll from his accountant and executed false tax returns underreporting wages and the amount of employment taxes owed. In addition to the prison sentence, Lee was ordered to serve two years of supervised release and pay $612,500 in restitution.
On April 30, the Justice Department announced that the owner of a Greenville, Ohio glass company pled guilty to failing to truthfully account for and pay over federal employment taxes. The announcement explains that Gail Cooper owned Greenville Architectural Glass LLC from 2007 through 2015. In addition to various individual federal income tax failures for the years 2008 through 2014, Cooper caused her company to withhold from the wages of employees without remitting the withheld taxes to the IRS. She also failed to file employment tax returns from the first quarter of 2013 through the second quarter of 2015. Cooper admitted to causing a cumulative financial loss to the government exceeding $500,000, which she agreed to repay in restitution. Cooper will be sentenced in August and faces up to five years in prison and a $250,000 fine in addition to the agreed upon restitution.