Fair Share

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12567971 - tax forms 1040,1120,1065 u s income tax return

It’s expensive to hire employees, but you can’t run a company without a workforce. In addition to benefits like medical insurance, vacation, sick leave and 401k plans, business owners must consider how much it will cost to pay these taxes: Social Security, Medicare, federal and state unemployment and workers’ compensation. (This article says business owners should expect to pay 10 percent or more to cover them.) The owner of a Bean Station, Tennessee slaughterhouse and meat packing plant decided to reduce his company’s tax obligations by hiring illegal immigrants. What the business owner called cutting expenses, the government called tax fraud.

The owner of the Grainger County meatpacking plant was probably surprised when federal agents raided his plant in April 2018. At that time investigators found 104 unauthorized aliens working there. They also found evidence that the owner had previously reported to the Internal Revenue Service (IRS) that he only had 44 wage-earning employees. (That’s a big discrepancy. You don’t accidentally miscount leaving out 60 people.)

The plant owner not only took advantage of the IRS, but also the illegal immigrants he hired. For more than 30 years, the owner hired or authorized others to hire unauthorized aliens to work at the slaughterhouse. (He did so with the intent of reducing his company’s FICA tax obligations, unemployment insurance premiums, unemployment tax obligations and workers’ compensation insurance premiums.) Then, he paid them at a rate of $8 to $10 per hour, even when they worked overtime. (The Fair Labor Standards Act requires workers to be paid time and a half for overtime work.)

The Bean Station, Tennessee meatpacking business owner pleaded guilty to multiple felonies, including hiring 150 undocumented immigrants and tax fraud. The 61-year-old admitted he deliberately reduced his company’s taxes and is now on the hook for paying back $1,423,588 in restitution when sentenced. He is facing up to five years in prison, a $250,000 fine and three years of supervised release, just for the tax fraud. He also faces a maximum of 20 years behind bars, a $250,000 fine and another three years of supervised release for wire fraud. For hiring unauthorized aliens, he’s looking at six months in prison and a fine of not more than $3,000 per unauthorized alien. (Suffice to say, it’s going to be awhile before he gets out if the judge throws the book at him.)

So, what happened to the illegal immigrants that were involved in the fraud scheme? Further research revealed that 54 people were taken to an Immigrations and Customs Enforcement detention center. (I’m guessing they may be facing deportation.) Because of the meat packing plant owner’s frugality, he not only prevented proper revenue from being paid to the IRS, but also kept workers from receiving future Social Security or Medicare benefits. This is totally unfair to competitors who pay their taxes. It’s hard to compete if they are being undercut by unfair business practices. (When sentenced, let’s hope that this criminal gets his fair share of punishment.)

Today’s “Fraud of the Day” is based on an article entitled, Bean Station meat plant owner pleads guilty to tax fraud, hiring illegal immigrants,” posted on WCYB.com on September 12, 2018.

The owner of a Grainger County meatpacking plant pleaded guilty Wednesday in U.S. District Court to several felonies including hiring 150 undocumented immigrants at his facility.

Court documents say James Brantley, 61, of Bean Station, has employed illegal immigrants at Southeastern Provisions for 30 years. Prosecutors said he did this to reduce his company’s FICA tax obligations, unemployment insurance premiums, unemployment tax obligations and workers’ compensation insurance premiums.

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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.