WOMAN CONVICTED OF FAILING TO PAY OVER $2.6 MILLION IN FEDERAL PAYROLL TAXES WITHHELD FROM EMPLOYEES

FROM:  U.S. JUSTICE DEPARTMENT
Thursday, February 26, 2015
Washington State Business Owner Convicted of Failing to Pay Employment Taxes

A Burbank, Washington, woman was convicted by a jury yesterday after a five-day trial in the U.S. District Court in the Eastern District of Washington located in Spokane, Washington, of willfully failing to pay more than approximately $2.6 million in federal payroll taxes withheld from her employees, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Michael C. Ormsby of the Eastern District of Washington.

“Employers who willfully fail to timely collect, account for and deposit employment taxes are, quite simply, stealing from their employees and the U.S. Treasury,” said Principal Deputy Assistant Attorney General Ciraolo.  “Yesterday’s verdict sends a clear message to those individuals who view this obligation as optional – you will be investigated and prosecuted to the fullest extent of the law.”

According to the evidence introduced at trial and other documents filed in the case, Maria Elizabeth Townsend was the president and majority owner of Townsend Controls Inc. (TCI), an electrical contractor in Pasco, Washington.  The majority of TCI’s employees were members of Local 112 of the International Brotherhood of Electrical Workers (Local 112).  From at least April 1, 2007, through Sept. 30, 2009, Townsend withheld employment taxes from the wages of the members of Local 112 that TCI employed as well as its other non-union employees.  She willfully failed, however, to pay those taxes to the Internal Revenue Service (IRS).  Instead of paying the withheld taxes, Townsend purchased several automobiles and made large disbursements of corporate funds to her family members.

Townsend faces a statutory maximum sentence of five years in prison and a $250,000 fine for each count of failing to pay over employment taxes.  Sentencing is scheduled for June 4.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Ormsby commended the special agents of IRS-Criminal Investigation who investigated the case, as well as Assistant U.S. Attorney George J. C. Jacobs III and Trial Attorney Lisa L. Bellamy of the Tax Division, who are prosecuting the case.