WASHINGTON – Randy L. Bragg, the operator of employee leasing company Consolidated Human Resources Arizona, Inc. (CHRA), pled guilty to two counts of willfully making and subscribing a false income tax return at the federal courthouse in Phoenix, Ariz., the Justice Department and Internal Revenue Service (IRS) announced today.
CHRA, which operated in Arizona, was required to withhold and pay federal taxes on the payroll wages of its employees, who work as temps for other companies. According to the plea agreement, Mr. Bragg filed employer’s quarterly federal tax returns and employer’s annual federal unemployment tax returns for the calendar year 2000 falsely reporting that his business paid no wages and had zero tax due and owing, when in fact, the business paid at least $4.7 million in wages during the year. Mr. Bragg admitted causing a tax loss of $1.2 million.
“Those in the business of handling payroll for employers have a responsibility to accurately determine, account for and pay over the appropriate payroll taxes; those willfully failing to do so should be prepared to face federal criminal prosecution and imprisonment,” said Richard T. Morrison, Acting Assistant Attorney General, Tax Division.
The maximum penalty for each count of willful filing of a false tax return is three years of imprisonment, a $250,000.00 fine, and payment of the costs of prosecution. Sentencing is set for January 14, 2008, before U.S. District Court Judge Earl H. Carroll.
"As the operator of an employee leasing company, Mr. Bragg had a fiduciary obligation to withhold payroll taxes and pay those monies over to the Internal Revenue Service,” said Eileen Mayer, Chief, IRS Criminal Investigation. “Our commitment to all of the employers who accurately and timely file their payroll taxes is that the IRS will aggressively pursue those who don’t.”
Acting Assistant Attorney General Morrison thanked Tax Division Trial Attorneys Monica B. Edelstein, Ellen M. Quattrucci, and Charles A. O’Reilly, who prosecuted the case. He also thanked the Special Agents of Internal Revenue Service, whose assistance was essential to the successful investigation and prosecution of the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.