Gourmet food guy / former DC lawyer guilty

[Demosthenes]

FOR IMMEDIATE RELEASE TAX
MONDAY, AUGUST 25, 2008 (202) 514-2007
http://WWW.USDOJ.GOV TDD (202) 514-1888
DISTRICT OF COLUMBIA GROCERY STORE OWNER SENTENCED
TO MORE THAN TWELVE MONTHS IN PRISON FOR TAX EVASION
WASHINGTON – U.S. District Judge Royce C. Lamberth sentenced Stephen B. Cohen of Washington, D.C., to 12 months and one day in prison for tax crimes involving his willful failure to collect and pay more than $500,000 of payroll and sales taxes, the Justice Department announced today. Cohen, a one-time lawyer, owned several businesses in the Washington area, including Washington Park Gourmet, a delicatessen and grocery store.

Cohen pleaded guilty to these offenses on March 10, 2008. According to a plea agreement, between June 1997 and December 2003, Cohen withheld payroll taxes from his employees’ paychecks but failed to pay over those taxes to the Internal Revenue Service (IRS). Cohen, who also owned Western Market, a grocery store in Bethesda, Md., pleaded guilty to withholding payroll taxes from his Western Market employees’ paychecks for 16 years while failing to pay over those taxes to the IRS as well. He also failed to pay sales taxes owed to the District of Columbia government. In addition, Cohen failed to timely file his federal individual income tax returns for tax years 1996 through 2006, and despite residency in the District of Columbia, failed to file District income tax returns for tax years 2003 to the present. According to documents filed with the court, the tax loss – including federal and District of Columbia taxes – is approximately $580,000.
In sentencing the defendant, Judge Lamberth noted that the conduct was a serious offense and stated that imprisonment was necessary for a deterrent effect. Judge Lamberth also sentenced Cohen to three years of supervised release and ordered him to pay restitution in the amount of $586,584 to the IRS and the District of Columbia Office of Tax and Revenue.
“Grocers and other business owners who withhold payroll taxes from their employees' paychecks hold that money in trust for the United States. It is not theirs, but satisfies their employees' obligations to the government,” said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division. “When businessmen, like Mr. Cohen, decide to steal their employees' money instead of paying it over to the IRS, they face being investigated, convicted and sentenced to prison. They will also have a felony on their records for the rest of their lives as well as having to pay back all the money with interest and penalties.”
“The tax law is very clear,” said Eileen Mayer, Chief, IRS Criminal Investigation (IRS-CI) Division. “Employers who withhold employment taxes from the salaries of their employees must pay those taxes over to the government. Failure to do so often results in consequences such as the sentence handed to Mr. Cohen today.”
Assistant Attorney General Hochman thanked Tax Division trial attorneys Shawn Noud and Jerrod Patterson who prosecuted the case, and IRS-CI and the D.C. Office of Tax and Revenue who investigated the case.

[Demosthenes]

Before I go get medieval on someone's ass, could anyone here provide a reasonable explanation of how this got past the IRS?

Cohen, who also owned Western Market, a grocery store in Bethesda, Md., pleaded guilty to withholding payroll taxes from his Western Market employees’ paychecks for 16 years while failing to pay over those taxes to the IRS as well.

[webhick]

Before I go get medieval on someone's ass, could anyone here provide a reasonable explanation of how this got past the IRS?

Cohen, who also owned Western Market, a grocery store in Bethesda, Md., pleaded guilty to withholding payroll taxes from his Western Market employees’ paychecks for 16 years while failing to pay over those taxes to the IRS as well.

Perhaps he never issued W-2s and the employees thought they if they didn't receive the W2, then they don't have to claim the income. It's possible that he said something to the effect of "I don't issue W2s, that way you don't have to claim it on your tax return." People are a little bit numb sometimes.

[Mr. Mephistopheles]

Before I go get medieval on someone's ass, could anyone here provide a reasonable explanation of how this got past the IRS?

Cohen, who also owned Western Market, a grocery store in Bethesda, Md., pleaded guilty to withholding payroll taxes from his Western Market employees’ paychecks for 16 years while failing to pay over those taxes to the IRS as well.

Perhaps he never issued W-2s and the employees thought they if they didn't receive the W2, then they don't have to claim the income. It's possible that he said something to the effect of "I don't issue W2s, that way you don't have to claim it on your tax return." People are a little bit numb sometimes.

On that same thread, if he wasn't issuing W-2s the he wouldn't file form 941 or pay into the trust fund. Then he just zipped along under the radar for 16 years.

[Quixote]

Before I go get medieval on someone's ass, could anyone here provide a reasonable explanation of how this got past the IRS?

Cohen, who also owned Western Market, a grocery store in Bethesda, Md., pleaded guilty to withholding payroll taxes from his Western Market employees’ paychecks for 16 years while failing to pay over those taxes to the IRS as well.

You need more info. It says he failed to pay the IRS. It does not say the IRS failed to collect the tax. The tax loss, state and federal is estimated at $580,000. If that loss represented just the payroll taxes for Western Market, that would be only $36,250/year. The annual payroll would be about $145,000, high for a convenience store, but way too low for a supermarket. Add in federal and DC income taxes and DC sales taxes (DC has sales tax?) and it becomes clear that some of that tax has been collected already.

[The Observer]

Before I go get medieval on someone's ass, could anyone here provide a reasonable explanation of how this got past the IRS?

Cohen, who also owned Western Market, a grocery store in Bethesda, Md., pleaded guilty to withholding payroll taxes from his Western Market employees’ paychecks for 16 years while failing to pay over those taxes to the IRS as well.

It may not have gotten past the IRS, because as you well know, the IRS is not allowed to publicize anything they have done in addressing the problem. Other than looking to see if notices of tax liens were recorded and if there were notices of sales posted in regards to the seizure and sale of the taxpayer's assets, there isn't going to be anything else to reveal how the IRS was dealing with the issue.

In regards to a seizure and sale of taxpayer assets, there are a number of obstacles that have to be overcome before that becomes a reality. Internally the IRS has to show that it tried to administratively resolve the liability before going ahead with a seizure and/or litigation. It means providing the taxpayer with legal notices of final demand for each and everyone of those quarters, providing appeal rights to contest any enforcement action that the IRS is going to take (some taxpayers and representatives get very adept at manipulating the system to appeal these as separate actions to further delay the outcome), ensuring that enforcment actions are taken in gradual steps (levy the bank first, then accounts receivables, seizure of smaller or less vital assets - taking a primary vehicle used for the business might damage the ability of the taxpayer to earn the money to pay off the taxes), and of course putting the taxpayer on an installment agreement to pay off the periods. Another alternative is assessing the trust fund recovery penalty against officers or other responsible and willful persons for failing to pay over the employees' withholding.

A seizure can't take place unless the IRS can demonstrate that the sale of the business assets and inventory will actually realize a net profit. Non-equity seizures are forbidden by law, so if the taxpayer is operating a service business or a business that has inventory/assets secured by a UCC filing or if the assets are old and without a market value, the IRS is unable to essentially remove the taxpayer from the business.

And finally, if Criminal Investigation is involved in pursuing a arrest, indictment or prosecution of the taxpayer, they will instruct the assigned revenue officer to belay collection efforts so as not to compromise the criminal investigation - which can and does last several years in some cases.

Much of this has been dictated by the outcome of RRA '98 and subsequent legislation and/or handwringing by bureaucrats. Some of it is the result of politics since many congresspersons only pay lip service to the idea that paying your taxes is an American responsibility - their legislative postures seem to indicate that while its a great idea to have laws on the books that make people liable, they really don't like passing laws that actually make it easier to collect those same taxes.

[wserra]

Before I go get medieval on someone's ass, could anyone here provide a reasonable explanation of how this got past the IRS?

Maybe we'd like to see you get medieval on someone's ass.

[grixit]

Non-equity seizures are forbidden by law, so if the taxpayer is operating a service business or a business that has inventory/assets secured by a UCC filing or if the assets are old and without a market value, the IRS is unable to essentially remove the taxpayer from the business.

That's probably why some tps think all they have to do is lien themselves to become immune to federal collection actions.

[webhick]

That's probably why some tps think all they have to do is lien themselves to become immune to federal collection actions.

And as long as they don't do it constantly or in a public place, no one will think they're a pervert.

[The Observer]

That's probably why some tps think all they have to do is lien themselves to become immune to federal collection actions.

Trying to fraudulently encumber assets to avoid seizure or repossession is not strictly a TP device. However, if I understand the point of your remark, I would venture to say that most TPs "liening" themselves aren't doing it because they understand it might trick the IRS into thinking there isn't any value present, but rather because some scamster convinced them that this was the "magic" way of becoming "freemen".

[Doktor Avalanche]

Before I go get medieval on someone's ass, could anyone here provide a reasonable explanation of how this got past the IRS?

And we have the pictures!

[The Observer]

Hey - I wasn't expecting the Quatloosian Inquisition!

[Doktor Avalanche]

Hey - I wasn't expecting the Quatloosian Inquisition!

Nobody expects the Quatloosian Inquisition!

[Doktor Avalanche]

I remember that picture of you in your cardinal get-up. Someone forgot to apply sunscreen that day, lobster man.

[Mr. Mephistopheles]

I remember that picture of you in your cardinal get-up. Someone forgot to apply sunscreen that day, lobster man.

So the Cardinal get-up is real?

[Mr. Mephistopheles]

Yep, it is mine, bought and paid for. Red cassock, red capelet, red zucchetto, big honkin' crucifix, rings, red goblet, faux red snakeskin shoes - all befitting a Rennaisance prince of the church.

Bonus - you be as lecherous as you want and no one says boo and many really enjoy.

Priceless. What some people do for entertainment.

[webhick]

Yep, it is mine, bought and paid for. Red cassock, red capelet, red zucchetto, big honkin' crucifix, rings, red goblet, faux red snakeskin shoes - all befitting a Rennaisance prince of the church.

Bonus - you be as lecherous as you want and no one says boo and many really enjoy.

I find it funny sometimes when men say things like that. I know a real reverend in his 60s who enjoys making advances on the ladies and he tells people that the ladies really find it funny and enjoy it as well.

Then one of my clients saw him at the mall making said advances on a Christmas elf with really nice legs. She was all nods and giggles to his face and the second he turned his back she looked ill.

So before you think it's cool to make lecherous remarks because "everyone enjoys them", remember that their outward reaction to you may be very different from the inward reaction.

[grixit]

Yep, it is mine, bought and paid for. Red cassock, red capelet, red zucchetto, big honkin' crucifix, rings, red goblet, faux red snakeskin shoes - all befitting a Rennaisance prince of the church.

Bonus - you be as lecherous as you want and no one says boo and many really enjoy.

Ippolito Medici?

[webhick]

Yep, it is mine, bought and paid for. Red cassock, red capelet, red zucchetto, big honkin' crucifix, rings, red goblet, faux red snakeskin shoes - all befitting a Rennaisance prince of the church.

Bonus - you be as lecherous as you want and no one says boo and many really enjoy.

Ippolito Medici?

Nope - Cardinal Synns.

And Webhick, lighten up. I limit it to things like asking the ladies "if they want to come back to my cathedral and see my etchings....they're from Paris." Or, "I can't remember, but I think the Pope is Urban.....and he certainly isn't Pius......" Or when asked by the man to bless his wife's breasts, I responded with, "But sir, how can I possibly improve upon God's perfection?"

Just didn't want you coming off creepy without realizing it. And don't tell me to "lighten up" - it was one freaking comment.

BTW, remarks like that would be funny. Too bad the reverend hasn't learned the difference between harmless jokes and sexual harassment.

[Mr. Mephistopheles]

Just didn't want you coming off creepy without realizing it. And don't tell me to "lighten up" - it was one freaking comment.

BTW, remarks like that would be funny. Too bad the reverend hasn't learned the difference between harmless jokes and sexual harassment.

I'll bet the reverend knows full well the difference.

webhick, you must know that giving "us boys" the female perspective on male behavior is like letting us sneak a peek in the Grand Female Book of Secrets including a special section on Expectations of Male Family and Acquaintances.