WASHINGTON – A federal court in Sacramento, Calif., issued a preliminary injunction ordering Capitol Waste Inc. and Iva and Kenneth Whitmire of Sacramento to comply with federal employment tax withholding requirements and to timely pay all present and future employment tax, unemployment tax and income tax liabilities, the Justice Department announced today. Capitol Waste, Inc. and the Whitmires agreed to the preliminary injunction order.
The Justice Department filed suit on Oct. 8, 2008, seeking to enjoin the defendants from interfering with the administration of the Internal Revenue laws. The complaint alleges that the defendants have failed to comply fully with Capitol Waste’s employment tax, unemployment tax and income tax obligations since 2000. According to the complaint, Capitol Waste failed to pay almost $2.6 million in federal employment and unemployment taxes between 2000 and 2007.
According to court documents, Capitol Waste is a commercial waste disposal business based in Sacramento County, Calif. The complaint also alleges that the Whitmires have failed to comply with their individual income tax obligations since 2000.
Capitol Waste, Inc. was also ordered to file of all of its back employment, unemployment and income tax returns, and the Whitmires are required to file all of their back individual income tax returns within 90 days. The court order also prevents Capitol Waste from transferring any assets that would prevent timely payment of all present and future tax liabilities.
"All employers must comply with federal employment tax laws," said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. "Employers face not only a federal court injunction for failing to withhold and pay federal taxes, but also significant civil penalties and, in some cases, criminal prosecution. When employers fail to withhold FICA and income taxes, they are harming their employees as well as the United States, and the government will take action."
Assistant Attorney General Hochman thanked Tax Division trial attorney Adair F. Boroughs, who is handling the case for the government, for her efforts. More information about the Justice Department and its efforts to enforce the federal employment tax laws is available at http://www.usdoj.gov/tax/.