Swept Under the Rug

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When new business owners set up their companies, it’s no secret that they must pay taxes to Uncle Sam. Depending upon the type of company established, businesses must pay income tax, estimated taxes, self-employment (if the company owner works for themselves), employment taxes, and an excise tax if certain conditions are met. The owner of a janitorial services company in Detroit, Michigan thought he could bypass the requirement and sweep his tax bill under the rug. But, the Internal Revenue Service (IRS) sorted through all the dust bunnies and found enough evidence to convict the company’s owner of tax fraud.

Taxes are necessary for keeping important federal programs afloat. Individual, as well as business taxes, go to fund health programs like Medicaid, Medicare, and the Children’s Health Insurance Program. They also pay for national defense and security-related programs; Social Security; interest on the nation’s $21 trillion debt bill; Veteran benefits; and food and education programs, just to name a few. (You can see how it would be difficult to fund these government assistance programs without the proper payment of income taxes.)

 The Detroit business owner was head of his cleaning services company, which operated under four different names, for 16 years. Approximately nine years ago, the IRS discovered the owner was not filing his individual income tax returns. So, the agency began the audit process to determine his income tax liability. (That is definitely not a fun process to go through.)

 Although the Detroit, Michigan man earned income from his profitable business, he had failed to file individual and corporate income tax returns since 2010. (The dirt began to pile up around this deceptive man’s messy business practices.) To cover up his crime, he lied during a 2011 audit. He provided false information about the ownership of his janitorial business, the company’s business bank accounts and his clients. He concealed the ownership of his business by having two relatives act as nominee entities and assumed business operations under them, even though he still controlled the businesses.

 The IRS cleaning crew sorted through this sloppy fraudster’s records and found enough information to convict the 52-year-old business owner from Detroit of tax fraud. He pleaded guilty of obstructing internal revenue laws and failing to file an individual tax return. His punishment was a prison sentence of one year and a day. (While the business man tried to trash the tax system, the IRS made a clean sweep of this man’s scam, effectively bagging him and putting him out for curbside pickup by the penal system.)

 Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, Michigan Janitorial Company Owner Sentenced to Prison for Tax Fraud,” released on January 23, 2018.

A Detroit, Michigan, resident who owned a janitorial service company was sentenced to 12 months and one day in prison today for obstructing the internal revenue laws and failing to file an individual tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to documents and information provided to the court, from approximately 2001, Braint N. Hall owned Braint N Hall Inc., which also did business as Sunrise Janitorial Service, Sunrise Janitorial and Maintenance Inc. and Detroit Industrial Cleaners Inc. To conceal his ownership of these firms, Hall caused two relatives to establish nominee entities, which he controlled, to assume their business operations, employees, equipment, and client contracts.  Despite earning income from these businesses, Hall has not filed individual or corporate income tax returns since 2010.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.