FOR IMMEDIATE RELEASE|
MONDAY, MARCH 7, 2005
TDD (202) 514-1888
JUSTICE DEPARTMENT SUES TO STOP ALLEGED EMPLOYMENT TAX SCAM SOLD TO WESTERN DAIRY FARMS
“Brazen Tax-Evasion Scheme” Allegedly Cost Treasury $12 Million
WASHINGTON, D.C. - The Justice Department announced today that it has sued Michael Lee Yohe, of Newberry Springs, California, and Michael A. Thompson, of Filer, Idaho, seeking to bar an allegedly fraudulent employment tax scheme affecting more than 50 dairy farms and more than 1,100 farm employees in four western states. The complaint, filed Friday in Boise with the U.S. District Court for the District of Idaho, describes the defendants’ actions as a “brazen tax-evasion scheme” that has caused more than $12 million in employment and income tax losses.
Under some circumstances, federal law exempts from employment tax withholding laws in-kind payments of agricultural commodities for agricultural labor. The complaint alleges that the defendants and their corporations, Ag-Mart Services, Inc. and Mancat, Inc., help dairy farms located in Idaho, California, Arizona, and Oregon disguise cash wages the farms pay to their employees as purported in-kind payments of milk, so as to avoid employment tax withholding laws. The defendants allegedly prepare phony commodity statements that fraudulently contend the employees are paid in milk, with compensation based upon milk production, and arrange to have these documents distributed to the employees in lieu of traditional wage and earning statements. The complaint alleges that the employees are in fact compensated in cash, based upon an hourly wage or the number of shifts worked.
“The Justice Department and the IRS are committed to stopping tax fraud,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “Promoters who sell fraudulent schemes and employers that buy them are cheating all honest taxpayers.”
The complaint seeks an order barring the two men and their companies, which the government also sued, from promoting and operating the scheme, and from operating any professional employer organization or payroll services company. The complaint also seeks an order requiring the defendants to provide the Justice Department with their customers’ names, mailing and e-mail addresses, telephone numbers, and Social Security or taxpayer identification numbers.
More information about the Justice Department's efforts against tax scam promoters can be found at http://www.usdoj.gov/tax/taxpress2005.htm. Information about the Justice Department's Tax Division can be found at http://www.usdoj.gov/tax.