WASHINGTON, D.C. - A federal court in Boise, Idaho has permanently barred Michael Lee Yohe and two companies, Ag-Mart Services, Inc. and Mancat, Inc., from promoting an alleged employment tax-fraud scheme involving purported in-kind payments of milk to workers to avoid paying federal employment taxes, the Department of Justice announced today. The court order, entered by Judge B. Lynn Winmill of the U.S. District Court for the District of Idaho, requires the defendants to provide the Justice Department with a list of their dairy-farm customers and those customers’ employees, including names, addresses and Social Security or employer identification numbers. According to the Justice Department complaint filed in the case, Yohe-of Newberry Springs, California-and the Idaho-based corporate defendants helped dairy farms in Idaho, California, Arizona, and Oregon disguise cash wages paid to farm workers as purported in-kind payments of milk so as to avoid paying federal employment taxes. Under some limited circumstances, federal law exempts from tax-withholding in-kind payments of agricultural commodities for agricultural labor. The defendants allegedly prepared phony commodity statements that falsely reported that workers were paid in milk and arranged to have these statements distributed to workers in lieu of wage and earnings statements. The complaint described the defendants’ actions as a “brazen tax-evasion scheme” that caused more than $12 million in employment tax and income tax losses.
“The Justice Department and the IRS are working vigorously to stop tax scams at their source,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division.
The court’s order bars the defendants from promoting their in-kind payment program and bars the corporate defendants from engaging in any payroll, employee-leasing or labor management services.
The Justice Department has sought and obtained injunctions against more than
120 tax-scam promoters. Information about these cases is available on the
Justice Department website at http://www.usdoj.gov/tax/taxpress2005.htm