Court Bars Milwaukee Heating Contractor from Making Disbursements Before Paying Federal Payroll Taxes

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.

"When a business withholds taxes from employees’ wages, it is required by law to turn those taxes over promptly to the IRS," said John A. DiCicco, Assistant Attorney General for the Justice Department’s Tax Division. "Failure to pay withheld taxes is a serious matter that can lead not only to an injunction, but also to substantial civil and criminal penalties."

More information about the Justice Department and its efforts to enforce federal tax laws is available on the Justice Department Web site.