Poker Chip Company Owner Found Guilty of Tax Evasion

John M. Kendall, the chief executive officer of a poker chip producer based in Maine, has been convicted on three counts of felony. He stands guilty of evading taxes and could get a prison term of as many as 10 years.

His company Chipco International has now been shut down. While he was running it, he had diverted funds that he had withheld from his employees and used these funds on business expenses, lawyers’ fees, mortgage, and personal expenses at country clubs. Six of his off-book employees have pleaded guilty, but this did not save Kendall from having to face trial. These employees were asked to apply for benefits for the unemployed while they were all the time in Kendall’s employment. Although this case is related to the state of Maine, the IRS is equally concerned about employment tax as it comprises trust fund withheld from working people.

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Owners of businesses are personally liable and cannot give excuses. In the case of Colosimo versus the United States of America, the court refused to listen to the excuses of an entrepreneur who said that his bookkeeper had cheated him. In the case of Jenkins versus the United States of America, the chief executive officer of a publishing company was aware of unpaid payroll taxes and was therefore declared guilty.

According to the existing laws, entrepreneurs can be held liable even if they are unaware of the fact that taxes are not paid. In the case of Oppliger versus the United States of America, the court considered business owners to be liable and slapped a penalty of $2 million on them although the accountant had embezzled the funds.

In case of tax shortfalls, the IRS personally assesses every responsible person who owns or co-owns a company or has authority over its employees. The IRS has the power to assess a 100% penalty, also referred to as “Trust Fund Recovery Assessment,” against those responsible. The 100% penalty is equal to the unpaid taxes.

The IRS can issue this penalty against many responsible people, enabling it to keep track of them all. Whenever co-owners and signatories of a business get tax bills, they get into a fight and try to pass them on to someone else. One of those responsible may get into serious trouble although a guiltier person may go scot free.

In the meantime, the government will do everything to collect the taxes withheld on employee pay from the company.