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Digging a deep hole in Wisconsin

November 09, 2009

There's a heating contractor in Milwaukee who will never get out of a financial hole, if these allegations are true:

A federal court in Milwaukee, Wis., today issued a preliminary injunction ordering a Milwaukee heating contractor and its owner and president to comply with federal employment tax payment requirements. The preliminary injunction order, signed by U.S. District Judge J.P. Stadtmueller, was entered against Dykeman Family Corp. and its owner, Michael K. Dykeman. The order bars the company from disbursing any funds after wages are paid to employees until the taxes withheld from those wages have been paid to the Internal Revenue Service. Violations of an injunction can lead to civil and criminal sanctions, including fines and imprisonment.

The Justice Department filed the suit in September, seeking to enjoin defendants from continuing to run up unpaid payroll tax liabilities. The complaint alleges that defendants have failed to comply with their tax obligations since 2002. According to the complaint, the business failed to pay over $870,000 in federal employment and unemployment taxes between 2002 and 2007.

I suspect that they haven't exactly been putting unpaid payroll taxes into nice safe bank CDs in the meantime. The IRS isn't likely to collect much, while the owners are likely to not see financial daylight for a long, long time.

Withholding taxes are critical to the functioning of the income tax. If the IRS hasn't been able to stop non-compliance over seven years, something is awry somewhere in the enforcement process.

Tags: employment taxes.

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