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Restaurant chain owners face allegations of criminal tax evasion

The Internal Revenue Service (IRS) has accused seven restaurant owners of tax evasion. The accusations led to an investigation by the IRS and local state tax authorities of seven businessmen.

Investigation details

The investigation began in 2016. Multiple restaurant locations were subject to the investigation. Authorities entered the properties with a search warrant, leading to temporary closures. The investigation and closures led the public to speculate about potential health safety issues.

The restaurants did not have food or health safety issues. Speculation continued even after a local publication stated officials clarified the investigation was not connected to such issues. Ultimately, the investigation led to evidence to support allegations of “cash skimming.” Essentially, the government has accused the entrepreneurs of removing almost 50 percent of all cash sales from the income reported to the tax authorities.

The IRS has accused the owners of the restaurant of failing to report over $8 million in sales. This allegedly led to approximately $675,000 in unpaid taxes. In addition to criminal tax charges, those involved in the alleged scheme also face charges of corrupt business influence and theft.

The case is ongoing. Charges of this nature can lead to monetary penalties, restitution payments and potential prison time.

Take away lesson for business owners

Business owners that find themselves in this type of situation are wise to take prompt action. It is generally best to act as soon as aware of an impending or ongoing investigation. Steps can be taken to mitigate the penalties that come with accusations of unpaid taxes. An attorney experienced in federal and local tax issues can help you find a resolution.

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