Fort Collins woman sentenced to prison for failure to pay over $300,000 in employment taxes
DENVER – Murleen Kay Kunzman, age 72, of Fort Collins, Colorado, was sentenced today by U.S. District Court Judge Robert E. Blackburn to serve 6 months in federal prison followed by 6 months of home detention for failure to pay tax to the IRS. Judge Blackburn also ordered Kunzman to pay the IRS $825,489 in restitution. Once released from prison, Kunzman will serve 3 years on supervised release. Kunzman, who appeared at the hearing free on bond, was ordered to report to a facility designated by the Bureau of Prisons pursuant to further order by the court.
Kunzman was charged by an Information in Denver on Wednesday, July 11, 2012. She pled guilty for failure to pay over employment taxes before Judge Blackburn on August 3, 2012. She was sentenced yesterday, December 5, 2012.
According to the information contained in the Information and plea agreement, Murleen Kay Kunzman, owned and managed CrossCountry Fulfillment, LLC ("CCF") between June 30, 2006 and September 8, 2011 in Fort Collins, Colorado. During this time, CCF employed approximately 65 employees and during that time failed to file federal employment tax returns (Forms 940 or 941). CCF withheld employee income taxes, but failed to submit the withholdings to the IRS.
Kunzman had the duty to collect, truthfully account for, and to pay over CCF employee's taxes. She was the person in control of CCF's finances and tax compliance and it was determined that she did not make any of the employment tax payments as required by law. The people that worked for CCF were treated as employees, and not independent contractors, as evidenced by the employees' statements regarding their work, Forms W-2, and other CCF documentation.
Furthermore, CCF took deductions for "payroll taxes" on its tax returns, even though those funds were never paid over to the IRS. Kunzman also did not pay the employee portion of FICA taxes that should have been paid over to the IRS.
The total taxes due and not paid by Kunzman and CCF was $324,309, which includes the amount of employer tax due ($127,782) plus the employee portion that was withheld and not paid over ($196,527). This covered 20 quarters from the 3rd quarter of 2006 through the 2nd quarter of 2011.
“Employers who collect the employment tax have a moral and legal obligation to pay that money to the IRS,” said U.S. Attorney John Walsh. “Those who don’t pay that money to the IRS so they can use it for personal expenses are essentially stealing from employees and taxpayers alike and will be prosecuted.”
"Business owners have a responsibility to withhold income taxes for their employees and then remit those taxes to the IRS," Lilia Ruiz, Acting Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “IRS-Criminal Investigation will vigorously pursue anyone who collects taxes and fails to remit those taxes."
This case was investigated by IRS-Criminal Investigation and prosecuted by Assistant U.S. Attorney Matthew Kirsch and Special Assistant U.S. Attorney Melissa Fowler.