Court Orders Texas Businesses and Their Owners to Timely Pay Employment Taxes

A federal court in McAllen, Texas ordered Idalia Padron and Nino’s Home Care Inc. to timely file the business’s federal employment and unemployment tax returns as they become due and pay in full the reported amounts due. The court also entered a money judgment against Nino’s Home Care for more than $2.7 million, which represents its past unpaid employment taxes.

The complaint filed by the government against Padron and Nino’s Home Care alleged that Padron of Edinburg, Texas, operates Nino’s Home Care, a home health care service provider located at 121 W. Samano Street in Edinburg, and that Nino’s Home Care failed to pay its employment taxes for 20 tax quarters between 2005 and 2016. The complaint also alleged that Padron paid herself more than $100,000 in salary in 2015, a year in which Nino’s Home Care failed to pay over to the Internal Revenue Service (IRS) more than $850,000 in employment taxes.

Employers like Nino’s Home Care have specific responsibilities regarding employment taxes. When a business pays its employees, it does not pay them directly all the money they earn. Every business with employees has a legal responsibility to withhold from employees’ paychecks, and pay over to the U.S. Treasury, income taxes and the employees’ share of social security and Medicare taxes. Businesses that fail to collect these employment taxes or pay them over to the Treasury are subject to a number of potential enforcement actions.

Civil injunctions like the one entered by the court against Nino’s Home Care are one example of employment tax enforcement. An injunction order requires the employer and its principal officers to timely deposit and pay employment taxes to the U.S. Treasury. These court orders also impose various other requirements and prohibitions, including the obligation to provide current notice of each deposit to the IRS, as well as restrictions on opening and operating new businesses and transferring or dissipating assets.

For example, a federal court in McAllen, Texas also barred Jorge Gallegos and Con Brazos Abiertos LLC from failing to pay the business’s employment and unemployment taxes, in addition to requiring Gallegos to notify the IRS of any new company he may come to own, manage, or work for in the next five years. The government’s complaint alleged that Con Brazos Abiertos is a home health care service provider located at 505 S. Texas Blvd. in Weslaco, Texas. The government alleged that Gallegos of Mercedes, Texas, is the president and chief of Con Brazos Abiertos, and the business failed to pay its employment taxes for numerous quarters between 2011 and 2016. In addition to enjoining Gallegos and Con Brazos Abiertos, the court entered a judgment of more than $1 million against Con Brazos Abiertos for its unpaid employment and unemployment taxes.

If an employer violates a civil injunction, the Justice Department’s Tax Division will seek to have the employer and responsible individuals held in contempt, and request appropriate sanctions, including incarceration, to bring the business into compliance with the court’s order. Where appropriate, the Department will also seek compensation, from the principal officers or the business, for the damage the contempt has caused. In addition to this relief, courts have ordered businesses to close their doors for continued failure to meet their employment tax obligations. For example, a federal court in Washington held two individuals in contempt of court for a consistent pattern of failing to meet the businesses’ employment tax obligations. The court later ordered the two to close their dental care businesses, cease operating as employers, and barred them from opening any new businesses where the two would serve as employers by June 8.

The Tax Division works with its partners in the IRS to force employers who are cheating to follow the law and collect what is owed. Since 2003, the Tax Division has obtained more than 100 permanent injunctions against employers and tens of millions of dollars in money judgments. For more information about civil and criminal employment tax enforcement efforts, visit the Tax Division’s website.